PQ - BOC and Damages

Question 1

What are the 2 types of losses?

Answer 1

i) pecuniary loss

ii) non-pecuniary loss

Question 2

How is cost of cure examined for pecuniary losses?

Answer 2

D may claim damages for the cost of curing the defect/completing the work
- cost of cure can only be recoverable is reasonable [Ruxley v Forsyth] - pool case

for reasonableness, consider

1) Purpose of contracting
2) Intention to cure
3) Proportionality of cure

Exception: Radford - if C actually effects the cure, she can claim the cost of cure.

Question 3

When can distress/ disappointment be compensated?

Answer 3

• Can only be compensated where the loss is
  1) Consequent upon physical inconvenience or injury [Farley v Skinner] - House near airport

2) Purpose of the contract is non-pecuniary: Affording the claimant with pleasure must be an important object of the contract [Jarvis v Swan Tours]

Question 4

What are the limitations to recoverable pecuniary damages?

Answer 4

1) the mitigation rule

2) Remoteness

Question 5

What is the mitigation rule?

Answer 5

D must prove that C failed to take reasonable steps to mitigate his losses

1) Kaines - when C does not receive goods or services contracted for, D must make reasonable efforts to buy substitute performance
2) Yetton v Eastwoods - when C is wrongly dismissed by his employer, D must make reasonable efforts to obtain alternative employment
3) Selvanayagam - when C sustains physical injury from breach, he must make reasonable efforts to reduce the injury ie undergo an operation unless the operation entails risk of complications.

Question 6

What are the limits on the recovery for non-pecuniary loss?

Answer 6

1) Non-pecuniary purpose must be [Farley v Skinner]
a) important to the claimant
b) made a specific term of the contract
c) clearly communicated to the defendant

2) Commercial Claimants excluded, Lord Cooke in Johnson v Gore wood says players “expected to meet” commercial life with “mental fortitude”
3) The loss should be caused by the breach - D must know the importance of the C’s non-pecuniary purpose and foresee loss from breach [Farley v Skinner]

Question 7

What is the test for remoteness?

Answer 7

1) External Test [Hadley v Baxendale]
Was the loss foreseeable?

2) Internal Test [The Achilleas]
Did D assume responsibility for the loss?

Question 8

How do you apply the Hadley v Baxendale test?

Answer 8

1) Was the loss foreseeable at the time of contract formation?
2) Only the type of loss needs to be foreseeable, not the extent [Victoria Laundry]

Differentiated between ordinary profit and special profit, C could recover for ordinary profit but not special profit (Contract from the Ministry of Supply)

Question 9

How do you apply The Achilleas test?

Answer 9

1) ask if the D has objectively assumed responsibility for the loss
e. g. In the facts, D could have assumed responsibility for the delay in returning the vessel but not the price of the charter of the boat.

Question 10

What losses are covered in Hadley v Baxendale test?

Answer 10

1) Normal losses: Losses that arise naturally out of the contract
2) Abnormal losses: Loss arising from knowledge of special circumstances outside the ordinary course of things
- these special circumstances need to be communicated to the defendant