Damages Flashcards
Condition
Term going to the root of the contract
Remedy is termination or damages
Warranty
Less important term
Remedy is damages
Innominate Term
Neither condition nor warranty
(Remedy depends on consequences)
Hong Kong Fir
Test for determining classification or term found in
Schiler v Wickman
Test for determining classification of term:
Factors to consider
- circumstances surrounding making of contract
- contract as a whole
- whether the parties described the term as a condition or warranty (this can be rebutted)
Damages are intended to compensate claimant, not punish defendant
Obagi
Expectation Loss
Robinson v Harman
Aim is to put claimant in the position they would have been in had the contract been properly performed
Robinson v Harman
Expectation loss takes into account
- difference in value
- loss of amenity (Ruxley Electronics)
- loss of opportunity (Chaplin v Hicks)
- loss of pleasure; usually no (Addis v Gramophone) unless contracts purpose was claimant’s enjoyment (Jarvis v Swans Tours)
Reliance loss
Aim is to put claimant in position he would have been in had the contract never been entered into
(Anglia TV)
Specified damages clause
A genuine attempt to pre-estimate the loss likely to result from a breach
Penalty
An attempt to put pressure on a party to perform the contract
Not enforceable
Assessing whether there is an agreed damages clause
Need to assess clause at time contract was made, not time of breach
Dunlop Guidelines
Is sum extravagant or unconscionable? yes=penalty
If breach consists of not paying money, or sum stated in clause is greater than amount ought to have been paid = penalty
If single lump sum payable on happening of one or more event = presumed penalty
Cavendish Square Holding v Makdessi guidelines
- Was there a commercial justification?
- Was the provision extravagant or oppressive?
- Was deterrence its predominant purpose?
- If relevant, was it negotiated on a level playing field?
Hadley v Baxendale Limb 1
Usual loss arising in ordinary course of things
Victoria Laundry Limb 1
Liability is in respect of imputed knowledge that parties are assumed to know
Hadley v Baxendale Limb 2
Loss reasonably supposed to have been in contemplation of both parties, at time contract made, as the probable result of a breach
Victoria Laundry Limb 2
If it is an unusual loss, D is liable if they had actual knowledge of special circumstances
Heron II
Degree of probability is ‘not likely’ (narrower remoteness test than tort)
If type of loss is within reasonable contemplation of parties, all loss of that type will be recoverable even if full extent of loss not contemplated
Parsons v Uttley Ingham
Normal profit is a different type of loss to high profits resulting from a specially lucrative contract
Brown v KMR
In complex cases, look at commercial context not simply reasonable contemplation
The Achilleas
Main rule of quantification is position claimant would have been had contract been performed properly
Robinson v Harman
Ruxley v Forsyth
Test of reasonableness - compensate for loss truly suffered
