Particular types of loss

Question 1

3 Types of loss with special rules

Answer 1

1. Mental distress
2. Loss of reputation
3. Loss of chance

Question 2

General rule: damages to mental distress

Answer 2

not awarded re mental distress, anguish or annoyance caused by breach of contract

Question 3

Exceptions to the general rule for damages to mental distress

Answer 3

(a) Initially compensation limited to cases involving contracts whose whole purpose was the provision of pleasure, relaxation and peace of mind (Jarvis v Swan Tours).

(b) recently = allowed damages for non-pecuniary loss (in this case loss of amenity) where a major object (though not the whole purpose) of contract was to provide pleasure, relaxation and peace of mind (Farley v Skinner)

Question 4

General rule: loss of reputation

Answer 4

damages = not awarded for loss of reputation.

Question 5

Exception to general rule for loss of reputation

Answer 5

Malik v Bank of Credit and Commerce International:

• an employee had worked for the Bank of Credit and Commerce International (BCCI), which collapsed in 1991, amidst allegations that the bank had operated in a corrupt and dishonest manner.
• employee claimed that having worked for BCCI had adversely affected his employment prospects.
• HL: employee did have basis:
• contracts of employment = implied term of trust + confidence such that employer is under an obligation to carry out its work in an honest way.

=Damages awarded - BUT ltd to C’s financial loss, which was suffered due to an inability to obtain alternative employment resulting from breach of this implied term.

Question 6

What are damages for loss of chance

Answer 6

loss of an opportunity = recoverable in damages if lost chance is:
(a) quantifiable in monetary terms +
(b) there was a real and substantial chance that the opportunity might have come to fruition.

= Otherwise, loss of opportunity treated as too speculative. courts = reluctant to treat the loss as too speculative + will award damages based on expectation interest even if precise quantification of loss may not be straightforward.

Chaplin v Hicks:
- C denied, in breach of contract, chance to go through to final round of contest.

• held: could be compensated for loss of the chance of winning the competition.

NOTE: in Chaplin, C = less than 50% chance of winning.

Where chance of winning / obtaining benefit = 50% or greater, C should seek to recover their expectation loss in full + they’ll succeed if this can be proved on balance of probabilities.

Question 7

General rule: damages on behalf of another

Answer 7

damages cannot be recovered on behalf of another party / for losses suffered by another party.

Question 8

Aim of an award of damages for breach of contract?

Answer 8

to compensate innocent party for the damage or loss they have suffered as a result of the other party’s breach of contract