Damages and Equitable & other remedies

Question 1

What are the 4 limitations on awards of damages?

Answer 1

Type of loss
Remoteness
Mitigation
Specified damages

Question 2

What are the different types of losses?

Answer 2

Expectation loss / loss of bargain = position claimant would have been in had the contract been performed

Reliance loss = expenses incurred because of reliance on the contract being performed

Pecuniary loss = financial loss

Non-pecuniary loss = things such a physical inconvenience, pain and suffering

Question 3

What is the first test in assessing the remoteness of loss?

Answer 3

Whether a particular type of loss would have been in the reasonable contemplation of the parties at the time of the contract as being a likely consequence of the breach

Identify whether the particular loss is an inevitable / natural consequence of breach

If yes then damages are recoverable for the loss, if no then second test

Question 4

What is the second test in assessing the remoteness of loss?

Answer 4

Did the defendant know of special circumstances making the loss a likely consequence of breach?

If yes then damages recoverable, if no then loss is too remote

Question 5

Who has the burden to prove that the claimant failed to mitigate a loss?

Answer 5

The defendant

Question 6

What standard of mitigation must be taken by the claimant?

Answer 6

Reasonable steps to mitigate the loss caused by the breach

Question 7

What is the normal measure of loss for defective works?

Answer 7

The cost of putting it right, i.e. the “cost of cure”

Question 8

If a loss does not warrant cost of cure, but the loss does mean that the goods / service do not meet the personal preference of the claimant, then what measure may be used?

Answer 8

Loss of amenity / consumer surplus - i.e. represent the loss suffered

Question 9

If the main purpose of the contract is pleasure or enjoyment, what measure may be used for damages?

Answer 9

Damages for distress

Question 10

What is the difference between a specified damages / liquidated damages clause, versus a penalty clause?

Answer 10

A LD clause is a genuine attempt to pre-estimate the loss likely to be caused by the breach, and is binding

Penalty clause is an attempt to put pressure on a party to perform the contract because the sum stipulated is extravagant, and is unenforceable

Question 11

What is the impact of a LD clause versus a penalty clause?

Answer 11

Specified / liquidated damages clauses are enforceable and the specified amount is what the claimant will be awarded whatever their actual loss

Penalty clauses are unenforceable and damages will be assessed in the usual way

Question 12

What are the 3 remedies available that make the defendant perform the contract?

Answer 12

1. Actions for an agreed sum (i.e. suing for a fixed amount of money that is owed, must be past date for performance)
2. Specific performance (only available if damages are not an adequate remedy)
3. Injunction (only available if damages are not an adequate remedy)

Question 13

What are the 2 types of damages available in contract?

Answer 13

Compensatory
Restitutionary

Question 14

What is the general purpose of restitutionary remedies?

Answer 14

To prevent one party being unjustly enriched at the expense of the other party

Question 15

Can a claim in restitution be brought if there has been a total failure of consideration (i.e. no part of the contract has been performed)?

Answer 15

Yes, the payer can bring an action in restitution to recover the money if payee is in breach

Question 16

Can a claim in restitution be brought if the contract has been broken?

Answer 16

Yes, where one party has supplied goods or done work and then the other party breaches the contract, the party supplying the goods or doing the work may be able to bring a claim in restitution for a reasonable sum for the work done or goods supplied

Question 17

Can a claim in restitution be brought if a contract was never formed?

Answer 17

Yes, the party which was performed work would be entitled to a reasonable sum for work they had done

Question 18

What are “negotiating damages”?

Answer 18

Damages which compensate claimant for notional loss of the opportunity to bargain where that was the only loss

Question 19

When should “negotiating damages” not be awarded?

Answer 19

Where the claimant has suffered clear financial loss as a result of the breach - even if loss is difficult to calculate

Question 20

What are the requirements for a contract of guarantee to be effective?

Answer 20

Must be evidence in writing and signed

Question 21

Does an indemnity need to be evidenced in writing?

Answer 21

No

Question 22

What kind of obligation is an indemnity?

Answer 22

Primary obligation