Damages to Contract

Question 1

what are the remedies for damages?

Answer 1

Damages
-Action for agreed sum (Debt) i.e. for the price or other contractual remuneration. -White & Carter (Councils) Ltd. v McGregor 
No duty to mitigate
Summary judgment
-Restitutionary claims
Total failure of consideration
	     Quantum meruit
-equitable remedies

Question 2

what does restitution allow?

Answer 2

Restitution in a general sense allows for the recovery of money paid or the value of benefits conferred

Question 3

what is rest concerned with?

Answer 3

Restitution is concerned with the benefits conferred on the guilty party and the fact that he should not be unjustly enriched at the injured party’s expense

Question 4

what is rest unlike?

Answer 4

It is unlike a damages action, which seeks to compensate the injured party for his loss

Question 5

what is recovery of money paid?

Answer 5

An example of restitution is where there is an action for money had and received where there has been a total failure of consideration (no contractual performance), e.g. price paid for non-existent wreck in McRae v Commonwealth Disposals Commission

Question 6

what if only partial in money paid?

Answer 6

It seems that if the failure of consideration is only partial, the advance payment cannot be recovered.
Whincup v Hughes (1871) LR 6 CP 78
Stocznia Gdanska SA v Latvian Shipping Co

Question 7

what is quantim merit?

Answer 7

where a party is claiming recompense for a benefit (other than money) which has been conferred and there is no express contractual provision for remuneration. See, for example, British Steel Corp. v Cleveland Bridge & Engineering

Question 8

what are the equitable remedies?

Answer 8

specific performance

injunction

Question 9

what is specific performance?

Answer 9

This remedy is discretionary and is only available where damages would not be an adequate remedy.
Sky Petroleum Ltd v VIP Petroleum Lt

Question 10

where would courts not grant specific performance?

Answer 10

a court will not usually order specific performance of a contract involving personal services, such as a contract of employment.
Warren v Mendy

Question 11

damages for the breach of contract?

Answer 11

(1) Damages on proof of breach;
(2) In addition, where the breach is repudiatory, the innocent party ALSO has the option to terminate or affirm. If he terminates both parties’ future obligations are discharged.
(3) There will be a repudiatory breach where the term broken is either a condition, or is an innominate term and the effects of the breach deprive the innocent party of substantially the whole benefit it was intended he should get from the contract.

Question 12

how quantum is fixed in claims for damages for breach (unliquidated damages).?

Answer 12

(1) Compensation principle and;
(2) Measure of recovery by the courts.
Identify the basis for that compensation – loss of expectation (measures) or reliance loss;
(3) Limitations on the ability to be fully compensated – remoteness, mitigation, contributory negligence and the fact that some losses may not be recoverable, i.e. distress and disappointment.

Question 13

what is the compensation principle?

Answer 13

The basic aim of contractual damages

To compensate the claimant for the loss he has suffered as a result of the D’s breach of contract.

Question 14

what is the award for compensation principle?

Answer 14

the award is only assessed by reference to the claimant’s loss and the claimant cannot recover more than his actual loss. Surrey County Council v Bredero Homes Ltd -damages nominal vs Attorney General v Blake could recover profits

Question 15

what is the 2nd step?

Answer 15

Identifying the Loss

Question 16

what is the q for identifying loss?

Answer 16

For what loss is the Claimant entitled to be compensated?

Question 17

focuses on compensating?

Answer 17

focuses on what the claimant expected to receive and compensates him for its loss.

Question 18

focuses on what the claimant expected to receive and compensates him for its loss.

Answer 18

1. Breach – identify the breach
2. Causation – the breach must have caused loss to the claimant- you can recover damages for breach on proof of breach that whether you can recover to any great extent turns on the loss you suffered , if suffered no loss damages= purely nominal (has to be causal link)
3. so in other words prove the loss
4. Compensate the claimant for the loss

Question 19

how do we work out to compensate c?

Answer 19

1.Measure the loss (quantum)
2.Is all of the loss recoverable ? (limitations on recovery- e.g mitigation rule/ remoteness rule/contrib neg)that c suffered
some losses not uncoverable e.g distress and dissapointment resulting from breach= not recoverable

Question 20

(compensatory recoveries)?

Answer 20

expectation loss

Question 21

what are the 2 ways of calculating expectation loss?

Answer 21

1. (a) Difference in Value Measure- the difference between the value of the performance as promised, and the actual value received.
2. (b) Cost of Cure Measure

Question 22

what is • S.50(3) SGA 1979- difference in value measure?

Answer 22

• S.50(3) SGA 1979 - non-acceptance by buyer (i.e. breach by buyer). Seller’s damages are the difference between the market price of the goods on the date of the buyer’s non-acceptance and the contract price.

Question 23

what is • S.51(3) SGA 1979 ). ?

Answer 23

• S.51(3) SGA 1979 - non-delivery of goods by the seller in a B2B contract (i.e. breach by the seller).-Buyer’s damages are the difference between the market price of the goods on the date of non-delivery and the contract price-If the trader refuses to deliver or does not deliver the goods at the agreed time, then the consumer may treat the contract as at an end. In this case the trader must without undue delay reimburse all payments made under the contract.

Question 24

What will be the normal measure of damages where a contract to supply is cancelled?

Answer 24

difference between what the contractor expected to receive had the contract been properly performed and what he actually received.-It follows that the measure of damages would, subject to mitigation (see limitations below), normally be the net profit on the contract.

Question 25

Damages for defective performance?

Answer 25

The starting point for the measure of damages is the difference between the value of the performance as promised and the value actually received.

Question 26

what is (b) Cost of Cure Measure ?

Answer 26

This “cost of repair” or “cost of achieving the contractual performance requirement” may greatly exceed the difference in value measure of damages.and only cost of cure (to achieve the promised performance) is appropriate

Question 27

when can cost of cure be awarded?

Answer 27

Ruxley Electronics and Construction Ltd v Forsyth
• Recovery of cost of replacement had to be reasonable, i.e. not out of all proportion to the benefit to be obtained;
 Intention to rebuild was relevant to assessing the loss for which compensation was required – and hence was relevant to the reasonableness of awarding cost of replacement

Question 28

what is Damages for negligent valuations ?

Answer 28

Cost of replacement tends to be relevant to land and buildings on land. It has the effect of guaranteeing the result of the obligation. It follows that in order to recover cost of repair on the Ruxley criteria, the obligation broken needs to be a strict obligation if qualified only value damages can be given-Watts v Morrow

Question 29

what is Wasted expenditure loss?

Answer 29

recovery of expenditure which has been incurred in preparing for or performing the contract – and which has now been wasted as a result of the breach., i.e. expectation is compensated by restoring the status quo – putting the claimant in the same position that he was in before the contract was made.
See Omak Maritime Ltd v Mamola Challenger Shipping Co, The Mamola Challenger

Question 30

what cant it be?

Answer 30

too speculative-McRae v Commonwealth Disposals Commission recovered
cant be too speculative- must be able to prove so look at decision in this case-Anglia TV v Reed

plaintaff had abadon couldnt find actor in right time - wasted was reasonable as result of ds breach this loss caused within both - d knew thatt some expend incurred = respinsibility for it (not too remote)

Question 31

limitations on wasted expenditure?

Answer 31

Claimant cannot claim wasted expenditure if this expenditure would have been wasted anyway under the terms of the contract.
Cannot put claimant in better position than if the contract had been properly performed.

Question 32

case limitation on wasted?

Answer 32

C & P Haulage Co Ltd v Middleton -
D had a contractual licence to use Ps’ garage.
Ps wrongfully ejected D but D saved on this rent as he was permitted to use his own premises.
Instead he sought the costs of fixtures for the garage.
However, these were not recoverable under terms of the contract.
It followed that these wasted expenses were not caused by the breach but by the terms of the contract.

Question 33

(b) Claimant can choose whether to claim expectation or wasted expenditure loss - subject to one important limitation.

Answer 33

In general, the claimant has a choice whether to claim lost expectation (in a forward/profit sense) or lost expectation (in a wasted expenditure sense) BUT cannot claim wasted expenditure loss (and will be limited to lower lost profit expectation loss) if the expenditure would have been wasted anyway under the terms of the contract (so called “bad bargains”).
This is because to award wasted expenditure in such circumstances would amount to putting the claimant in a better position than he would have been in if the contract had been properly performed. Bad bargain losses flow from the fact that the claimant made this contract on these terms – and is not a loss flowing from the breach.
C & P Haulage Co. Ltd. v Middleton [1983] 1 WLR 1461[Poole 383-384]
D had a contractual licence to use Ps’ garage. Ps wrongfully ejected D but D saved on this rent as he was permitted to use his own premises. Instead he sought the costs of fixtures for the garage but these were not recoverable under terms of the contract. Therefore, these wasted expenses were not caused by the breach but by the terms of the contract.

Equally, since the overall principle of calculation is compensation for losses suffered and the types of losses must be looked at as a whole, where the result of the breach is positive (no loss of expectation) and the effects of breach wipe out any wasted expenditure, then the wasted expenditure cannot be recovered. To do otherwise would put the claimant in a better position than if the contract had been performed and the breach had not occurred.

**Omak Maritime Ltd v Mamola Challenger Shipping Co, The Mamola Challenger [2010] EWHC 2026 (Comm), [2011] Bus LR 212 [Poole, 384-388]
Charterer repudiated charter but the owner was able to re-hire at a higher rate (no lost expectation).
The judge rejected the claim for wasted expenditure in preparing the vessel for the original charter on the basis that it would put the owners in a better position overall (due to the re-hire receipts) than they would have been in had the contract been properly performed. This wasted expenditure, unlike the position in C&P Haulage, was caused by the breach (on the basis that these costs would have been covered by the hire) but the overall position meant that they could not be recovered separately because there was no loss of hire.
What is the applicable burden of proof?
There is a presumption in favour of the innocent party (the claimant) to the effect that he would have recovered his wasted expenditure had the contract been properly performed. It was for the D (guilty party) to seek to rebut this by showing that the expenditure would not have been recovered (CCC Films v Impact Quadrant [1985] QB 16 [Poole, 388-389], and Omak Maritime Ltd v Mamola Challenger Shipping Co).

Further reading:
D. McLauchlan, ‘The redundant reliance interest in contract damages’ (2011) 127 LQR 23.
in preparing the vessel for the original charter on the basis that it would put the owners in a better position overall (due to the re-hire receipts) than they would have been in had the contract been properly performed. This wasted expenditure, unlike the position in C&P Haulage, was caused by the breach (on the basis that these costs would have been covered by the hire) but the overall position meant that they could not be recovered separately because there was no loss of hire.
What is the applicable burden of proof?
There is a presumption in favour of the innocent party (the claimant) to the effect that he would have recovered his wasted expenditure had the contract been properly performed. It was for the D (guilty party) to seek to rebut this by showing that the expenditure would not have been recovered (CCC Films v Impact Quadrant [1985] QB 16 [Poole, 388-389], and Omak Maritime Ltd v Mamola Challenger Shipping Co).

Further reading:
D. McLauchlan, ‘The redundant reliance interest in contract damages’ (2011) 127 LQR 23.
(c) Can a claim be made for BOTH expectation and reliance loss? BOTH are compensatory claims (Omak Maritime)
• Yes, as long as the claimant is not compensated twice for the same loss.
• In typical claim could combine lost profit (net profit) and expenses.

Question 34

what are the limitations on the ability to be fully compensated? (4)

Answer 34

1. Remoteness – it is not possible to recover for losses which are too remote a consequence of a breach and to this extent an injured party may not be fully compensated for loss he suffers - guilty cant be responsible
2. Mitigation – the injured party cannot recover for a loss which he failed to minimize (steps to keep to minimum and fail cannot recover) in accordance with his duty to mitigate
3. Contributory negligence – the injured party’s damages may be reduced to take account of the claimant’s own fault in contributing to his loss
4. Damages for disappointment and distress – as a general rule non-pecuniary losses cannot be recovered in contract

all these limitations mean that a party may very rarely be fully compensated for whatever loss they have actually suffered (innocent party may not be fully compensated

Question 35

what is the 1st principle & case?

Answer 35

Remoteness of damage : Hadley v Baxendale & in particular by principle in baron v olderson - in order to be recoverable a loss must be in the reasonable contemplation of both parties parties at the time they made the contract as the probable result of its breach

Question 36

what was said by alderson

Answer 36

Losses
“Should be such as may fairly and reasonably be considered either
arising naturally i.e. according to the usual course of things, from such breach of contract itself, or
such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it”.

Question 37

what is recognised in hadley v baxendale?

Answer 37

the 2 limbs-
Normal loss - arises naturally as a result of this type of breach.
Imputed knowledge - so within both parties’ reasonable contemplations.
Heron II is an example and loss of profits due to delay in Victoria Laundry
Abnormal loss - does not arise naturally dependent on special facts
Only within the parties’ reasonable contemplations if they both had actual knowledge of these special facts
Loss of profits on lucrative dyeing contracts in Victoria Laundry.

Question 38

example of application of limbs?

Answer 38

Ps, millowners in Gloucester, engaged Ds (carriers) to take mill shaft to Greenwich as pattern for new shaft.
Delayed – in breach of contract – so stoppage at mill was extended.
Ps sought damages for loss of profit attributable to the delay
Held : Ps could not recover for this loss of profits because this loss did not arise naturally; it depended on special facts (whether Ps had spare shaft) – and Ds had no knowledge of this fact.
It follows that if loss turns on special facts, it will not be normal loss

Question 39

decision in victoria laudnry?

Answer 39

Victoria Laundry v Newman Industries : normal and abnormal losses

Ps operated a laundry business and purchased a boiler for dying fabrics which they told the Ds, suppliers, would be put to immediate use in their business.
The boiler was delivered late. The CA held :
Ps were able to recover their normal loss of profits on the use of the boiler in the period of the delay (normal loss when equipment purchased for a business)
Ps were not able to recover loss of profits on some government contracts which they ‘could have accepted’ had the boiler arrived on time.
This loss was abnormal loss depending on these special facts and was too remote since there was no evidence that the Ds knew of the intentions with regard to these special contracts.

Question 40

what does the heron 2 case give?

Answer 40

what are normal losses- loss must not be a special fact

Question 41

what happened in heron 2?

Answer 41

Shipowners chartered a vessel to the charterers for the carriage of sugar from Constanza to Basrah.
They knew that the charterers were sugar merchants, the cargo was sugar and that there was a sugar market at Basrah.
The route taken meant that arrival was delayed and the market price of sugar fell. The charterers sought damages based on the difference in market price for their sugar caused by the delay
Although the shipowners did not actually know of the intention to sell the cargo immediately on arrival, the HL considered that this must have been within their reasonable contemplations as probable so that the market fall was normal loss.
Imputed knowledge that any delay in delivery might adversely affect price received in the market.

if probable = normal loss

Question 42

what other principle do you need to know with remoteness?

Answer 42

The type/extent of loss principle : Parsons v Uttley Ingham

Question 43

what is The type/extent of loss principle : Parsons v Uttley Ingham?

Answer 43

Provided the type of loss caused by the breach is within the reasonable contemplations of the parties(hadley test), the extent of it need not be- if they contemplated this loss the fact that that financial loss is signficantly worse than they contemplated would not make difference

Its the type of cost you need to contemplate not extent of it

Question 44

what happened in the Parsons v Uttley Ingham case?

Answer 44

loss not too remote as some illness was in parties reasonable contemplations, not necesary to contemplate actual illness that occurred

other cases: brown v kmr services limited- financial loss- full extent of financial = too remote (rejected because type of loss was perfectly within parties contemplations e.g lloyds)

Question 45

what happened in the case Transfield Shipping v Mercator Shipping, The Achilleas?

Answer 45

did he need actual knowledge of terms of recharter in order to say loss fell in remoteness & so fully recovered

could not recover if abnormal loss as depended on special facts & no knowledge of it

hw could argue normal loss

Lord Rodger and Baroness Hale adopted a more traditional approach - the loss was not normal loss because it would not follow ‘in the ordinary course of things’ but was the product of market conditions that had led the owners to concede the discount.
Lord Walker considered that the parties had not contracted on the basis that there should be unlimited recovery for losses associated with the re-charter because the charterers had no control over the terms of that contract.

Question 46

overall for remoteness?

Answer 46

Casebook, notes to The Achilleas
Sylvia Shipping Co Ltd v Progress Bulk Carriers Ltd
Supershield Ltd v Siemens Building Technologies FE Ltd
normal/abnormal loss

Question 47

what is the new case in this area post achilleas?

Answer 47

John Grimes Partnership Ltd v Gubbins

company late in implementing work= breach- developer lost deminunation of value of land etc as result of breach was that within remotess- was it within parties reasonable?or test of achileas did drainiage company assumed resposnibility for loss- yes based on type / thingy principal (parksons dec)

significant- achileas not achieved major change still based on hadley and heron2 - law implied law based on reasonable contemplations

so application of hadley- leads to acceptance of responsibility but if seen as inapprop for type of loss then guilty party could not accept respons (achile) but here it didnt happen so full extent recoverable

Question 48

what is mitigation of loss?

Answer 48

The claimant is under a “duty” to mitigate his loss by taking all reasonable steps to minimise it.

What are reasonable steps in the circumstances is a question of fact.
Payzu Ltd v Saunders
Pilkington v Wood

Question 49

If a claimant fails in this “duty”?

Answer 49

that claimant will be prevented from recovering for losses which it failed to mitigate.

Question 50

what does british westinghouse show?

Answer 50

If the mitigating act wipes out the loss from the breach, the claimant is only entitled to nominal damages for the breach
British Westinghouse

Question 51

what if get adittional loss?

Answer 51

BUT if the reasonable steps in mitigation increase the loss, that additional loss is also recoverable
Banco de Portugal v Waterlow & Sons Ltd

Question 52

what is the law reform on contrib neg?

Answer 52

Law Reform (Contributory Negligence) Act 1945 (1) (4) interpretation section

Question 53

what is the key case for contrib neg?

Answer 53

Vesta v Butcher - everything depends on ds liability and gives 3 categories of d liability

Question 54

what are the 3 categories?

Answer 54

 Category 1 cases: D’s breach is of a strict contractual obligation-No apportionment for C’s contributory negligence.
Barclays Bank plc v Fairclough Building Ltd

 Category 3 cases: D’s breach is breach of a qualified contractual obligation and there is concurrent liability in tort (which would be covered by the 1945 Act).
There will be apportionment in a contract claim to take account of C’s contributory negligence.

 Category 2 cases: D’s breach is a breach of a qualified contractual obligation but there is no corresponding liability in tort.
No clear authority although the Law Com considered that contributory negligence should apply to such liability.

Question 55

what are damages to dissapointment and stress?

Answer 55

compensate an innocent party because he can only recover for economic (pecuniary) loss in contract and not for physical loss or disappointment (Addis v Gramophone Co. Ltd

Question 56

what are the exceptions of dissapointment and distress?

Answer 56

Exceptions (not commercial contracts) where “the major or important” object of the contract was
To obtain some form of pleasure or peace of mind
(Jarvis v Swans Tours – holiday contracts – enjoyment part of expectation); or
To relieve a source of distress (Heywood v Wellers – solicitor employed to obtain a non-molestation injunction)
Prior to Farley v Skinner it needed to be ‘the very object’

Question 57

what is the case for the very object?

Answer 57

farley v skinner no.2 - Potential purchaser specifically asked surveyor whether property would be seriously affected by aircraft noise.
Report said unlikely but there was noise as the property was close to navigation beacon outside Gatwick.
In Watts v Morrow CA had rejected argument that survey contract was a contract whose very object was to provide peace of mind.
BUT HL held only needed to be a major or important object and not the sole object of the contract.
there was a specific request= major

Question 58

what happened in Hamilton-Jones v David & Snape (a firm)?

Answer 58

Claim for damages for mental distress
Said to be caused by alleged negligent handling of proceedings to ensure that children were not removed from the jurisdiction by claimant’s ex-husband.
Distress based on loss of custody of the children
Primary purpose under legislation was to protect the children
But major part of the basis of this contract was to protect the claimant’s peace of mind
£20,000 distress damages awarded.

Question 59

what happened in Haysman v Mrs Rogers Films Ltd?

Answer 59

‘One’ of the important objects of contract to hire out a home for filming was peace of mind to the homeowner
Express promise to cover damage to property and to restore any damage.
Damages for distress available in the event of breach yes similar to farley and skinner as expressed it as important issue and needs to be right so if not = distress damages

Question 60

what is the final exception?

Answer 60

Distress consequent on physical inconvenience or disruption

Question 61

what is Distress consequent on physical inconvenience or disruption

Answer 61

Distress consequent on physical inconvenience or disruption
Breach leads to a physical consequences and it is this physical position which gives rise to distress – not the breach itself.
This is indirect distress and is recoverable.
Watts v Morrow
Aircraft noise in Farley v Skinner