Exemption Clauses & Remedies

Question 1

Exemption clauses

Answer 1

Limit or exclude their liability for loss or damage in the event of failure to perform the contract properly.

Question 2

What are the 2 tests relating to exemption clauses?

Answer 2

(A) incorporation - whether an exemption clause truly is part of the contract between the parties.
(B) construction - meaning of the exemption clause.

Question 3

What are the two main statutes that govern limitation and exclusion clauses?

Answer 3

(A) unfair contract terms act 1977 - governs exemption clauses in business to business contracts.
(B) consumer right act 2015 - governs exemption clauses in business to consumer contracts.

Question 4

What are the two main statues that govern limitation and exclusion clauses?

Answer 4

(A) unfair contract terms act 1977 - governs exemption clauses in business to business contracts.

(B) consumer right act 2015 - governs exemption clauses in business to consumer contracts.

Question 5

Can exemption clauses protect a third party?

Answer 5

No.
Privity rule provides that only a party can rely on a clause in a contract.

Exemption - if a third party is named in a clause or identified as a member of a class entitled to benefit from it.

Question 6

Nominal damages

Answer 6

If there is a breach but the claimant has not suffered any loss, a court may award these damages - only if the contract has in fact been broken.

Question 7

Substantial damages

Answer 7

Intended to compensate the claimant for loss suffered, and not just to acknowledge the fact that the contract has been broken.

Question 8

How does the court calculate someone’s loss as a result of a breach of contract?

Answer 8

Compare the claimants position after the breach, with where they would have been if the contract had been properly performed.

Question 9

Reliance loss

Answer 9

Claim for expenses incurred because of reliance on the contract being performed.

Question 10

Pecuniary losses

Answer 10

Amount of loss profit or the amount of damage to property - consequences of breach that can be remedied by an award of damages.

Question 11

Non-pecuniary losses

Answer 11

Physical inconvenience such as pain or suffering

Question 12

Remoteness of loss

Answer 12

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.

Question 13

Mitigation of loss

Answer 13

Claimant has to take reasonable steps to mitigate the loss caused by the breach -
Reduce the amount of it (cannot just sit back and let the loss add up and then try sue the defendant).

Question 14

Specified damages (liquidated)

Answer 14

Genuine attempt to pre-estimate the loss that is likely to be caused by the breach.
The crucial figure is the amount of compensation stated in the clause - usually rules of damages, remoteness and mitigation do not apply.

Question 15

Penalty clause

Answer 15

Attempt to put pressure on a party to perform the contract because the sum stipulated is extravagant or otherwise disproportionately high.

Usual rules of damages, remoteness and mitigation will apply.

Question 16

Specific performance

Answer 16

Equitable remedy.
Claimant is asking the court, not for compensation, but for an order requiring actual performance.
Making the defendant do what they agreed to do, other than merely paying money.
Specific performance is only available if damages are not an adequate remedy e.g. purchases of land.

Question 17

Injunction

Answer 17

Equitable remedy - only available at the discretion of the court and will only be rewarded where damages would be inadequate.
Restrain the defendant from doing what they agreed not to do.

Question 18

Restitutionary remedy

Answer 18

Prevent one party being unjustly enriched at the expense of the other party.
(A) recovery of money paid where there has been a total failure of consideration.
(B) compensation for work done or goods supplied.

Question 19

Guarantees

Answer 19

A contract under which one person (the guarantor) guarantees that if another person (the debtor) does not pay back money owed then the guarantor will pay the money instead.

Question 20

Indemnities

Answer 20

One party promises to reimburse the other party in respect of a particular loss arising under the contract.

Question 21

When will negotiating damages be rewarded?

Answer 21

Where there is no financial loss.