Main Remedies for BOC

Question 1

What are the Main Remedies?

Answer 1

1) Common Law Remedy of Damages
- Pecuniary (financial) loss or;
- Non-pecuniary (mental distress, disappointment, hurt feelings or humiliation) loss) (typically not compensated other than contracts specifically for pleasure, relaxation and peace of mind)

2) Equitable Remedies
i) Injunction
ii) Specific Performance
iii) Recission
iv) Rectification

Question 2

Go into detail on Common Law Remedy of Damage

Answer 2

• Damages = sum of money paid to compensate innocent party
• Available ‘as of right’ -> as long as can prove breach of contract
• Put C back in position had contract been performed

Non-Pecuniary loss: Mental Distress:
- Addis v Gramophone (1909) - generally non-pecuniary loss cannot be claimed for mental distress alone
-> damages for mental distress not available in commercial contracts

• Watts v Morrow (1991) - Bingham LJ:
  -> “when a contract is breached, may suffer negative feelings but not receive damages for this
  -> but rule not absolute; where contract to provide pleasure, relaxation, peace of mind, etc. damages will be awarded if fruit of contract not provided”

Non-Pecuniary loss: Disappointment:
- Jarvis v Swan Tours (1972) - e. g where damages awarded for disappointment loss in contract for specific purpose of provision of enjoyment/entertainment
-> skiing holiday brochure where not go ahead as described

Non-Pecuniary loss: Discomfort:
- Farley v Skinner (2001) - e.g where damages awarded for discomfort (“loss of pleasurable amenity which may be of no economic value if of importance to C”)
-> Farley contracted with surveyor Skinner for potential house -> asking for survey on aircraft noise -> Skinner said unlikely -> turns out, very noisy
-> Lord Scott: “Farley wouldn’t have bought property if Skinner said about noise, so fair to receive some damages”

Question 3

What are the types of damages?

Answer 3

Compensatory Damages:

• Put non-breaching party in position as if contract had been performed as promised
• Calculated -> value of contract as promised minus value of contract received (‘loss in value’)
  OR
• When substitute goods bought, costs of covering minus original price

Incidental Damages:

• Cover non-breaching party’s ordinary expenses that directly arise from other party’s breach
• e.g. additional costs of shipping, storage, advertising, etc. that arise ∵ a non-breaching party has to make new arrangements as a consequence of other party’s failure to perform

Consequential Damages:

• Special losses caused by a breach -> in particular loss of profits
• Can only be claimed if reasonably foreseeable when contract was made + can be measured with reasonable certainty (Hadley v Baxendale)

Question 4

What are the limitations on awarding damages?

Answer 4

Causation

• Quinn v Burch Brothers (1966) - the breach must cause the losses. A voluntary act of C can break the chain of causation
  -> Burch (D) in breach of contract by not supplying step ladder to Quinn (C) -> Quinn used trestle table instead which moved causing injury to Quinn -> but Burch’s act not cause Quinn the injury (only provide opportunity for Quinn to injure himself)

Remoteness

• Hadley v Baxendale (1854) - D will only be liable for losses that were reasonably foreseeable as arising from the breach.
  -> D delayed returning crankshaft to C, making C unable to use mill during time, losing C profit -> D not liable as unaware mill would have to be closed during delay ∴ D had not reasonably foreseen consequences of delay + C had not informed him of them -> too remote
• Victoria Laundry v Newman Industries Ltd. (1949) - C could not recover for loss of exceptionally lucrative contract since D was unaware of contract
  -> delivery of boiler was delayed in breach of contract, D was aware this was needed for immediate use -> C won this claim for ordinary losses
  > But C also claimed sum for particularly lucrative contract they lost due to absence of boiler (non-ordinary losses) -> lost ∵ D unaware of contact

1. D liable for all ordinary losses (anyone entering contract could foresee without specialist knowledge)
2. D only liable for non-ordinary losses if they had knowledge of circumstances when entering the contract

Mitigation of loss

• Payzu v Saunders (1919) - C must mitigate their loss, cannot simply sit back and allow losses to pile up
  ALSO
• Pilkington v Wood (1953) - C must mitigate their loss, cannot simply sit back and allow losses to pile up
  -> D not expected to pay legal expenses for C to clear defective title as this legal cost unnecessary
  -> C not required to undertake unreasonable actions/incur excessive costs to mitigate loss

Question 5

How is loss calculated?

Answer 5

• Claim can be based on:

1) Reliance loss

• Anglia TV v Reed (1971) - C able to recover expenses incurred by relying on the contract; to put them back in position they would have been in before contract was made
  -> Anglia TV incurred expenses when Oliver Reed pulled out of a TV show

2) Loss of expectation

-> idea to put C in financial position had contract been performed

• Golden Victory (2007) - C will have expected a certain result from the contract, so damages for loss of expectation will compensate for this
  -> Charterparty agreement wrongfully terminated in 2001 -> C claimed damages for loss of expectation for remaining 4 years -> but Iraq war in 2003 meant contract would have terminated lawfully under war clause
  -> HoL argued damages includes all events up to hearing ∴ damages were limited as war clause break was included
• Ways to quantify loss of expectation:

a) The difference in value between the goods or services of the quality indicated in the contract and those actually delivered where they are of inferior value

b) The difference between the contract price and the price obtained in an ‘available market’ - such as for a car in Charter v Sullivan (1957)

c) Loss of profit

d) Loss of a chance - such as a chance of employment in Chaplin v Nicks (1911)

Question 6

Go into detail on equitable remedies

Answer 6

• Discretionary, not ‘as of right’ - like common law remedies
  -> court takes behaviour of both parties and overall justice of case into account
• Used where damages inadequate to compensate C

1.) Injunction

• Special court order compelling party to do/refrain from doing specific acts
• Warner Bros v Nelson (1937) - D can be given a prohibitory injunction that compels them not to do something

2.) Specific performance

• Court issues order requiring party to do specific act
• Usually in sale of land, otherwise very rare (especially contracts of personal service)

e.g agreement to sell rare piece of art but money not satisfactory compensation -> need artwork itself.

Court only consider this if:
i. Subject of contract must be unique
ii. Monetary damages are inadequate (Walters v Morgan (1861))
iii. Contract terms are clear and definite -> i.e where contract has been made fairly (Walters v Morgan (1861)) + must not cause great hardship/unfairness on D (Patel v Ali (1984))

3. Recission
   - Allows contractual party to cancel contract
   - May rescind if victim of officiating factor (e.g misrepresentation, economic duress)
   - Unravelling of a contract -> bring parties as far as possible back to position before entering contract
4. Rectification
   - Allows written document to be altered to correct mistakes
   - Granted when written agreement contradicts actual agreement made by parties
   - Only applicable in case of written contracts
   - If parties agree to rectification, may correct mistake by entering into deed of rectification

Craddock v Hunt (1923) - e.g of rectification
-> orally, adjoining yard to be excluded but included in written contract