Damages

Question 1

What are the aim of damages within a contract? Robinson v Harman 1848

Answer 1

The rule of the common law is that where a party sustains loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.” - be placed in the same position as before the damage.

Question 2

This aim of damages means that…

Answer 2

Since the aim is to protect the expectation interest of the parties, contract damages are not to be awarded to punish the party in breach.

Question 3

Do punitive damages relate to the loss suffered?

Answer 3

No - they will not serve to cast the innocent party forward to the position the party would have been in if the contract was performed.

Question 4

What can the loss of bargain be identified as?

Answer 4

• The profit lost as a result of the breach; or

* The difference in value between the contract price and the market price

Question 5

Where the breach causes damage to property, the innocent party’s lost bargain could be reflected by

Answer 5

• The cost of correcting the breach (the cost of cure); or

* Damages to reflect the difference in value between what the innocent party got and what was contracted for.

Question 6

Is it also possible to claim damages in which reflect non-financial expectation losses?

Answer 6

Yes -
• Damages for loss of enjoyment and disappointment/distress
• Physical inconvenience

Question 7

Will the mere fact that it is difficult to assess what the claimant has lost act as a bar to claim for expectation damages?

Answer 7

no -

Chaplin v Hicks 1911 - Claimant lost chance as d promised audition - c entitled to £100 damages.

Question 8

What was held in BCCI v Ali 2002?

Answer 8

claimant must show on the balance of probabilities that s/he has lost a “substantial chance rather than a speculative one

Question 9

What is the reliance interest?

Answer 9

This is damages in which restore previous position.

Question 10

So how is the award of reliance damages different to the award of expectation damages?

Answer 10

• An award of reliance damages casts the injured party back to the pre-contractual position;
• The traditional contract law measure casts the innocent party forward to the position they would have been in had the contract been performed.

Question 11

What was held in Anglia TV v Reed 1971?

Answer 11

Profit loss was too speculative - The film could have made a lot of money or it could have been a flop. On that basis, the CA awarded the claimant the expenditure incurred before the breach so that the damages restored the status quo.

Question 12

Is there always a choice for the innocent part or are reliance damages the only option only if there is either no lost profit; or very little lost profit; or if the lost profit is too speculative?

Answer 12

CCC Films Ltd v Impact Quadrant Films 1985 - The plaintiff has an unfettered choice: it is not only in those cases where he establishes by evidence that he cannot prove loss of profit or that such loss of profits as he can prove is small that he is permitted to frame his claim as one for wasted expenditure

Question 13

Can it be argued that the use of the reliance measure (wasted expenditure claims) is consistent with the expectation/performance interest?

Answer 13

Yes, such a claim can be seen as the claimant arguing that if the contract had been performed, the expenditure would have been recouped

Question 14

What is the traditional common law position if there is no loss resulting from a breach?

Answer 14

The traditional common law position is that if there is no loss resulting from a breach then there is no basis for compensation.

Question 15

What is disgorgement damages’ or ‘gain-based damages’?

Answer 15

However it is common for other jurisdictions (in particular the civil law jurisdictions) to strip the guilty party’s profit made from the breach and award to the innocent party. Such a claim is founded in the law of unjust enrichment and it is to reverse the wrongful transfer of wealth (the remedy of restitution)

Question 16

What was held in the case of Surrey County Council v Bredero Homes 1993?

Answer 16

Whilst they Council had not suffered any loss as a result of the breach, the developer had profited from its breach as it had 5 additional houses to sell.

Question 17

What was held in the case of Wrotham Park Estate v Parkside Homes [1974] ?

Answer 17

The successors in title of the original owner then brought an action against Parkside. . As for damages, the claimant estate had suffered no loss. In fact the value of their estate had not been reduced as a result of the additional houses built. However, Brightman J acknowledged that the defendants expected to make £50 000 profit and on that basis, awarded the claimant 5% of this (£2500). This amount was to reflect the amount that the claimants could have negotiated to release the restriction for the defendant.

Question 18

Why did the Wrotham Park damages give rise to a significant debate?

Answer 18

it could be seen to represent restitutionary damages (gain-based damages).

Question 19

What was held in the case of Attorney-General v Blake?

Answer 19

There was no financial loss on the part of the Government so the AG claimed the profit (disgorgement of the gains made from the breach). By way of exception, the HL (by a majority of 4-1) allowed for the full account of profits. This appeared to be a clear instance of disgorgement damages (restitution of unjust enrichment).

Question 20

What did the Blake case reveal?

Answer 20

The Blake case resulted in a few cases where judges seemed think that an account of profits could be awarded in the commercial context. Esso v Niad revealed this.

Question 21

What was held in Mance LJ?

Answer 21

The record company had used some of the recordings that they agreed to hand over. The CA did not award the full profits made. Instead, damages were awarded to reflect the amount that Hendrix could reasonably demand from the record company for releasing the limit on the music (a Wrotham Park award).