Midterm - Intro, Expectation, Reliance Flashcards
Remedial Choice: Introduction
Why are remedies important? Cite the case.
Ashby v White - “if the plaintiff has a right, [s]he must of necessity have a means to vindicate and maintain it”
issue in the courts is: how to vindicate and maintain?
Remedial Choice: Introduction
What is the objective of a damages award?
Tort: restore plaintiff to pre-tort position
Contract: restore plaintiff to position if contract performed as promised
Remedial Choice: Introduction
What factors affect a court’s assessment of damages?
Outcome determined by: - judicial discretion - balancing interests - social and economic factors - public policy
Remedial Choice: Introduction
What interests can be protected by a damages award? Briefly describe each.
- Restitution Interest - prevents unjust enrichment; restore status quo; quantum is value of D’s gain
- Reliance Interest - usual measure of damages in torts; purpose is to restore; secondary remedy for K
- Expectation Damages - usual for K breach; restore
- Punitive Damages: punish def and deter
Remedial Choice: Introduction
Describe the Restitutionary Interest (Purpose, Quantum)
- Restitution Interest
- prevents unjust enrichment
- restore status quo (i.e restorative justice)
- quantum is value of D’s gain (disgorge unjust profits)
- remedy for wrongful gain
Remedial Choice: Introduction
Describe the Reliance Interest (Purpose, Quantum)
- Reliance Interest
- purpose is to restore to pre-breach
- usual measure of damages in torts
- secondary remedy for K breach (reliance loss/wasted expense)
Remedial Choice: Introduction
Describe Expectation Damages (Purpose, Quantum)
- Expectation Damages
- purpose: restore plaintiff to pre-breach position
- primary measure of damages for breach of K
- based on expectation value or expectancy
Remedial Choice: Introduction
Describe Punitive Damages (Purpose, Quantum)
- Punitive Damages
- purpose: punish defendant and deter wrongful conduct
- no correlation w/ P’s loss - focus is on D’s conduct
- awarded for intentional/reprehensible conduct (rarely for contractual breach)
Remedies: Introduction
What two types of relief are available?
Substitutionary/Monetary - substitute money for loss; not direct relief, but suitable; MOST COMMON
Specific Relief - much rarer; specific performance or injunctions –> used where monetary remedy inadequate to protect the interest at stake
Expectation Damages
What is included under expectation damages?
- Pecuniary and non-pecuniary losses
- wasted expenses
- lost profits
- consequential losses (only recoverable if reasonable) (Ticketnet Corp)
Expectation Damages
How are expectation damages assessed? What evidence is relevant? Cite the case
- difference between P’s expected financial position absent breach and actual position due to breach
- profit P would have made, if any
- Relevant evidence: P’s past sales, what is reasonable in circumstances (i.e. expert evidence) –> Case: Agribrands Purina
Expectation Damages
What justifies the category of expectation damages? (since they are only hypothetical)
Note: This slide is less important (not in new lesson plan)
- distributive justice/legal construct (Fuller and Purdue)
- relatively new –> in response to capitalism and need to protect profit
- moral argument, psychological, will, economic, social policy, economic efficiency
Expectation Damages - Lost Profits
What are lost profits? Cite the cases
Canlin; Magnussen - Lost profits = past and FUTURE losses DIRECTLY CAUSED by the breach; includes lost opportunity
Expectation Damages - Lost Profits
What is the TEST for lost profits?
Test: establish 1) causation (must be direct consequence) (Magnussen) and 2) reasonably foreseeable AT TIME K was made (usually foreseeable in commercial transactions (Canlin))
Expectation Damages - Lost Profits
What factors reduce damages for lost profits?
- Contingencies: contingencies that would have affected P’s profits will be facotred in (Magnussen)
- Award will be reduced for expenses saved due to breach (Ticketnet)
- Losses must be reasonably foreseeable (e.g. Baxendale)
Expectation Damages - Lost Profits
Describe how opportunity to mitigate affects recovery of lost profits.
- OPPORTUNITY to mitigate is key; if P could have mitigated but failed to, loss not recoverable (Canli)
- Lost profits compensable UNTIL reasonable mitigation becomes effective (Sunnyside Greenhouse)
Expectation Damages - Lost Profits
What will the Court consider in determining reasonable mitigation?
court will consider:
1) nature of goods,
2) timing of breach, and
3) nature/effect of breach (i.e. if the D has caused loss of reputation and goodwill, that will impair ability of P to mitigate)
Expectation Damages - Lost Profits
Can the P claim for both gross profits and reliance/wasted expenses? What about net profits and wasted expense?
NO, because would amount to double recovery and unjustifiable windfall.
BUT CAN claim for both NET profits and wasted expense (i.e. expectation and reliance) (Ticketnet), including wasted expenses BEFORE the breach.
Expectation Damages - for Breach of K w/ Alt Mode of Performance
Summarize how damages will be assessed where there IS a minimum level of performance specified
When MINIMUM level of performance specified
- if D has discretion: P is awarded for lost profit based on MINIMUM level D was obliged to perform (Hamilton v Open Window)
- Rationale: freedom of contract
- no factual inquiry needed; unaffected by D’s behavior
Expectation Damages - for Breach of K w/ Alt Mode of Performance
Summarize how damages will be assessed where there is NOT a minimum level of performance specified
- damages assessed in manner MOST FAVORABLE to D (Paula Lee)
- Factual inquiry NECESSARY
- Will consider: past performance (Durham Trees), commercial reasonableness (Durham Trees), assumption of good faith w/ contractual terms
Expectation Damages - for discretionary benefits
What is the general rule for compensability of discretionary benefits?
When benefits are discretionary (i.e. employer paid them voluntarily), there is generally NO LEGAL ENTITLEMENT contemplated at time of K –> therefore not recoverable (Globe and Mail)
Expectation Damages - for discretionary benefits
What about where the discretionary benefits that form part of the normal relationship?
Even if not in K or contemplation…CAN be compensable where there is a REASONABLE EXPECTATION it will continue in the future (Dittmars v Ross).
Expectation Damages - for discretionary benefits
What factors will the court consider where discretionary benefits were a normal part of the relationship? Cite the case
Zeidel v Metro-Goldwyn - Court will consider:
1) NECESSITY of the benefits to make salary competitive, 2) REGULARITY, 3) PAST exercise of discretion (i.e. whether exercised against P in the past), 4) PROPORTION of benefit to overall salary
Expectation Damages - for Conditional Benefits
What is the general rule for compensability of CONDITIONAL benefits?
NO entitlement where (Zeidel):
1) dependent on PERFORMANCE/CONDITIONS–> i.e. not integral to compensation, 2) based on pre-discussed TARGETS and target not met or no criteria agreed upon, 3) renumeration absent bonus is COMPETITIVE, 4) bonus not expected to be automatic (Zeidel; Lewis v Northwest)
Reliance Damages - for Breach of Contract
What is the purpose of Reliance damages? Describe it.
Purpose: to restore P to same position absent breach
Often used as SECONDARY measure in Contracts; primary in Torts
In contracts: compensates WASTED expenses and opportunity cost
Reliance Damages - for Breach of Contract
When are Reliance Damages available in the contract context?
- As a compliment to expectation claim for NET profit
- As an ALTERNATIVE to expectation damages: a) where expectation damages are uncertain/speculative (Sunshine Vacation) or b) where P’s claim is in tort (Rainbow Caterers)
Reliance Damages - for Breach of Contract
What can be claimed under Reliance damages for breach of K?
- Expenses WASTED in reliance or in performance
- INCIDENTAL expenses within contemplation of parties
- POST-breach expenses necessary for MITIGATION (Ticketnet)
- PRE-contract expenses in parties’ reasonable expectations (eg Angila Tv)
Reliance Damages - for Breach of Contract
What limitations are there on Reliance damages for breach of K? Why do they exist?
CAN’T claim:
1) expenses that WOULD have been incurred absent breach (PreMD),
2) expenses that were NOT wasted (McRae)
Rationale: P shouldn’t benefit/be overcompensated
Reliance Damages - for Breach of Contract
What is the break-even presumption? Is it rebuttable? How?
PRESUMPTION that Plaintiff would have at least recovered expenses in a transaction/endeavour.
Presumption REBUTTABLE by D (D to show contract unprofitable) (Sunshine Vacation)
Reliance Damages - for Breach of Contract
How can the P’s damages be limited to expecation?
If P would have suffered NET LOSS absent breach –> can’t claim reliance (because D didn’t really worsen anything)
Onus on D to prove
Reliance Damages - for Breach of Contract
Can consequential losses be recovered under reliance where P would have lost money anyway? Cite the case.
Bowlay - Yes; where P would have lost money but the breach exacerbated the loss, INCREASED losses DUE TO BREACH are recoverable (but not expenses).
Reliance damages - concurrent liability
What damages are available for negligent misrepresentation?
Negligent misrep = a tort
Damages are limited to: RELIANCE and CONSEQUENTIAL loss (if any) (Beaver Lumbar)
Reliance damages - concurrent liability
What is the presumption for losses from negligent misrepresentation? Cite the case
Beaver Lumbar - PRESUMPTION for consequential loss is that P would have avoided losses without the misrep (if causation found and not too remote)
BUT D can rebut the presumption
Reliance Damages - Concurrent Liability
When can P also claim LOST PROFITS (ie expectation damages) for negligent misrep? Cite the case
Goldstar Management v Varvis - can claim where representation constituted CONTRACTUAL GUARANTEE
BUT ONLY possible where misrep induced P to enter into K (Tort claim stronger than Contract for Expectation damages)
Concurrent Liability (Reliance and Expectation) - Negligent Misrep What is the rationale for awarding the Plaintiff both lost profits and wasted expenses (Expectation & Reliance damages)
Mason v Bank of Nova Scotia - P can be awarded damages for opportunity costs b/c we can PRESUME and account for lost profits P could have earned ELSEWHERE but for the misrepresentation.
Concurrent Liability
Why would a plaintiff sue under tort (therefore reliance damages) rather than contract (expectation)?
1) Causation - plaintiff-favourable presumption from RAINBOW CATERERS -> Presumed neglig misrep induced P to enter into K and P would not have suffered same loss otherwise
2) Remoteness - reasonable foreseeability
Negligent Performance of Contractual Services
What is the basis for a claim under negligent performance of contractual services? Give an example
Basis of claim: detrimental reliance on professional advice/service
E.g. engineer failing to discover structural defect; solicitor fails to notice defect in title -> examples only re PROPERTY
Negligent Performance of Contractual Services
Identify the two different types of issues that can be found under this head of damages. Give example for each
1) Defendant’s negligence CAUSED defect or was RETAINED to REMOVE the defect - eg Kienzle v Stringer
2) Defendant FAILED to NOTICE defect or gave bad ADVICE - eg TILCO
Negligent Performance of Contractual Services
What is the measure of damages where the defendant’s negligence CAUSED defect or FAILS to cure defect
Measure of damages
1) Value P would have received BUT FOR the D’s negligence (expectation) and
2) CONSEQUENTIAL loss (reasonable and foreseeable –> from D’s negligence)
Negligent Performance of Contractual Services
What is the measure of damages where the defendant failed to NOTICE the defect or gave BAD ADVICE. What is the rationale?
Measure of damages: DIFFERENCE between purchase price and fair market value of property @ time of purchase (overpayment) plus CONSEQUENTIAL loss, CAN’T claim expected gain
Rationale - D only failed to inform of problems, didn’t CAUSE them
Negligent Performance of Contractual Services
When are P’s damages ASSESSED under this type of claim? What’s the rationale? Are there exceptions?
General rule: Market value at TIME OF K (b/c market fluctuates)
Exception: subsequent decline in property value CAUSED by D’s negligence (TILCO) –> damages include CONSEQUENTIAL decline in value
