Limits of Damages (L21) Flashcards
What are the requirements and limits of damages?
Requirements:
- Breach of contract.
- Loss.
Limits of recoverable loss:
- Causation.
- Remoteness of loss.
- Mitigation of loss.
What did Lord President Robertson conclude in Wilson v Carmichael & Sons (1894) 21 R 732?
The proximate cause of the mistake of the customers getting late instead of early plants was the omission of the pursuer or his son to notice that the plants which he sold to his customers were late cabbages, and this was not a natural consequence of the defender’s breach of contract.
Recoverable loss was:
- “The profitable occupation of his ground” to September 1891.
- But not consequential losses of customers arising in 1892 or future custom.
What is the 2-branch test from Hadley v Baxendale?
Alderson B:
Damages following breach ‘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.’
What is regarded as within contemplation under branch 2 of the Hadley v Baxendale test?
“If special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract would be the amount of injury which would ordinarily follow from a breach of contract under the special circumstances so known and communicated”.
How was the test applied in Hadley v Baxendale?
“The only circumstances here communicated by the plaintiffs to the defendants at the time the contract was made were that the article to be carried was the broken shaft of a mill and that the plaintiffs were the millers of that mill.”
- “The want of a new [shaft] was the only cause of the stoppage of the mill”.
- “In the great multitude of cases of millers sending off broken shafts to third persons by a carrier under ordinary circumstances, such consequences would not, in all probability, have occurred” [BRANCH 1].
- “Special circumstances were here never communicated” [BRANCH 2].
Loss was therefore too remote:
“The loss of profits here cannot reasonably be considered such a consequence of the breach of contract as could have been fairly and reasonably contemplated by both the parties when they made this contract.”
What did the Lord Ordinary say about the remoteness of loss in Balfour Beatty Construction v Scottish Power 1994 SC (HL) 20?
“The defenders could certainly contemplate that if the supply failed the plant would not operate and that if it was operating at the time the manufacture of concrete would be interrupted. What they did not know was the necessity of preserving a continuous pour for the purposes of the particular operation.”
“The fact that an interruption of the pour could lead to a condemnation of the whole operation seems to me to be beyond the defenders’ reasonable contemplation.”
What did Lord Jauncey say in the HL about the remoteness of loss in Balfour Beatty?
“It must always be a question of circumstances what one contracting party is presumed to know about the business activities of the other.”
“The Second Division were in error in imputing to the Board, at the time of entering into the contract, technical knowledge of the details of concrete construction with which they had not been furnished by Balfour Beatty.”
What was said in British Westinghouse v Underground Electric Railway Co about the mitigation of loss?
“[The law] imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps. This … principle does not impose on the plaintiff an obligation to take any step which a reasonable and prudent man would not ordinarily take in the course of his own business”.
What did Sheriff Collins say in Peebles v Rembrand Builders Merchants Ltd, 2017 GWD 15-236 about the mitigation of loss?
It was, in all the circumstances, unreasonable for the pursuers to insist on removal and replacement of the tiles in 2012, and thus to refuse to permit … a further opportunity to carry out effective remedial works.
By unreasonably refusing to allow the remedial works to be repeated in 2012 the pursuers have failed to mitigate their loss … from this date.
