Remedies 1 Flashcards
Remedies for breach:
• Damages
• Restitution (aims to make the defendant give up the gain or the benefit that has been conferred onto them through their breach)
• Specific remedies:
o action for the agreed sum (as in White and Carter)
o agreed damages (agreed in the contract)
o specific performance or injunction
3 interests (*See Fuller and Perdue “The Reliance Interest in Contract Damages” (1936) 46 Yale LJ 52 and 373):
- Expectation (as if the contract were performed)
- Reliance (as if the contract was never entered)
- Restitution (giving back or giving up, if the defendant made money from their breach (e.g. offered more money from someone else for the service promised to C) the claimant may claim that profit)
Expectation Damages
Compensatory
Robinson v Harman (1848) quote
‘… the rule of the common law is, that where a party sustains loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed’.
Expectation Damages
Compensatory
Leads to:
- Nominal damages
- C not safe from a bad bargain
- No recover of D’s profits from breach (unless exceptional case, see AG v Blake))
- No punishment (even where Defendant makes a deliberate and calculated breach of contract) (Addis v Gramophone Co Ltd)
Expectation Damages
Measuring Loss
GH Treitel, The Law of Contract
‘A contract can… give rise to two quite separate expectations: that of receiving the promised performance and that of being able to put it to some particular use’.
Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd 1978
Parsons a pig farmer
Bought a food storage hopper
Uttley Ingham installed it defectively - pig nuts went mouldy, the pigs died
Claims
- Financial loss in not receiving the promised performance (a food storage hopper)
- Consequential loss.
Parsons made not better off as he expected if he had been given an effective hopper, not able to sell his pigs.
Worse off as a result of not receiving the effective hopper. Financial loss of the value of the pigs
Financial losses of not getting the promised effective hopper, of not being able to sell his pigs, of his pigs dying
Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd 1978
Parsons a pig farmer
Bought a food storage hopper
Uttley Ingham installed it defectively - pig nuts went mouldy, the pigs died
Claims
- Financial loss in not receiving the promised performance (a food storage hopper)
- Consequential loss.
Parsons made not better off as he expected if he had been given an effective hopper, not able to sell his pigs.
Worse off as a result of not receiving the effective hopper. Financial loss of the value of the pigs
Financial losses of not getting the promised effective hopper, of not being able to sell his pigs, of his pigs dying
Expectation Damages
Measuring Loss
The Promised Performance
Diminution in value (compare performance given to market value of promised performance)
Cost of cure (cost of paying for a substitute)
Expectation Damages
Measuring Loss
The Promised Performance
Diminution in value (compare performance given to market value of promised performance)
Cost of cure (cost of paying for a substitute)
Expectation Damages Measuring Loss The Promised Performance Tito v Waddell Company mining on island. Promises to restore it afterwards. Breach. Islanders claimed expectation damages for their loss of promised performance
Diminution and CoC Can lead to divergent results:
Islanders said damages should be cost of cure ($73,000 per acre)
Diminuition in value of the island was about $75 per acre
Courts refused to reward damages on a cost of cure basis in this case
In part bc none of the islanders were on the island any more, all had moved
Not appropriate to award cost of cure, as they aren’t even there to benefit from it
Diminution in value or cost of cure?
S 18 Landlord and Tenant Act 1927
Diminution of value
S 53(3) Sale of Goods Act 1979 Says loss of value proper way to assess damages in case of loss of goods
Buildings contracts (Mertens v Home Freeholds [1921] 2 KB 526 (KB)) Cost of cure is starting point in building contracts This is bc the developments you make are for your own purposes, it doesn’t matter if it doesn’t improve value bc others don’t like
Radford v de Froberville
Wanted a boundary wall on adjoining land. Wouldn’t enhance the value of Radford’s land in any way. No loss of financial value in the wall not being built
Expectation damages still awarded on a cost of cure basis
May be other interests besides financial when contracts are breach, e.g. aesthetic or privacy interests
Courts willing to protect those other interests through award of cost of cure damages
What if Cost of cure extremely high relative to diminution in value?
Loss of Amenity
*Ruxley Electronics and Construction Ltd v Forsyth [1996]
Ruxley to build F a swimming pool for approx. £18,000
Built 9 to 18 inches shallower than specified in contract
Still perfectly safe for diving swimming etc
Didn’t devalue F’s property in any way to have a pool slightly shallower than expected
F argued this was a building contract and thus needed cost of cure damages of £21,000 to demolish the previous pool and rebuild it to his specifications
HL said awarding cost of cure in this case would be completely unreasonable
No evidence F had any intention of actually ripping out the pool and putting a new pool in - unjustly enriched - interest of his at stake was not significant
Cost of cure would be disproportionate bc F had received most of what he had bargained for. Swimming pool he could swim and dive in etc. To award him £21000 in damages would b far in excess. Loss of bargain relatively small so should not get such large cmpenstaion
‘A failure to achieve the precise contractual objective does not necessarily result in the loss which is occasioned by a total failure…’(357).
Loss of Amenity
*Ruxley Electronics and Construction Ltd v Forsyth [1996]
- Court said he still deserved st for it not being exact to his specifications
o Diminution would undercompensate
o Cost of cure would overcompensate
o Instead gave loss of amenity damages, give effect to loss of personal preference brought about through breaches like this
o Loss of Amenity available in circumstances where ‘the value of the promise to the promisee exceeds the financial enhancement of his position which full performance will secure’. (360)
o Loss of Amenity there to protect non-financial interests
o Very controversial case and damages
Loss of amenity damages called arbitrary
Fails to uphold contract/bargain
The court, though, had to do justice some way and the fairest thing to do is to reflect the frustration felt by Forsyth by awarding him a smaller more proportionate amount of money
Court admitted loss of amenity impossible to award precise financial valuation, however this is obvious bc the loss is not financial. No different to awarding damages for a loss of arm or leg, has no definite financial value but should stll be compensated - Loss of amenity ‘is incapable of precise valuation in terms of money, exactly because it represents a personal, subjective and non-monetary gain…’ (360-361).
When is loss of amenity available?
‘the value of the promise to the promisee exceeds the financial enhancement of his position which full performance will secure’. (360) Ruxley v Forsyth
Loss of Amenity and precise valuation
Loss of amenity ‘is incapable of precise valuation in terms of money, exactly because it represents a personal, subjective and non-monetary gain…’ (360-361) Ruxley v Forsyth
Loss of Amenity
*Ruxley Electronics and Construction Ltd v Forsyth [1996]
o Diminution would undercompensate
o Cost of cure would overcompensate
Loss of amenity damages gives effect to loss of personal preference/protect non-financial interests
o Very controversial case and damages
Loss of amenity damages called arbitrary
Fails to uphold contract/bargain
have to do justice some way and the fairest thing to do is to reflect the frustration felt by Forsyth by awarding him a smaller more proportionate amount of money
Court admitted loss of amenity impossible to award precise financial valuation, however this is obvious bc the loss is not financial.
Jacob & Youngs v Kent (1921)
Builders used different kind of pipe than specified in contract (redlin). Made no difference to value of house. Instead claimed for cost of cure of tearing down the house and rebuilding a new one with right pipes
Justice Cardozo threw out the case and awarded only nominal damages
No non-financial interest at stake here, just an excuse the home-owner was using to get awarded damages. Didn’t really care. Different from Ruxley where there was a non-financial interest at stake
Non-Pecuniary Loss
Generally damages unavailable
Farley v Skinner
‘The general principle is that compensation is only awarded for financial losses resulting from breach… “a contract breaker is not in general liable for any distress, frustration, anxiety, displeasure, vexation, tension or aggravation which his breach of contract may cause to the innocent party”’.
- Don’t generally like to award non-pecuniary damages. Why?
o Very difficult to prove. May be faking frustration etc
o Difficult to quantify. How can you measure frustration?
o Where to draw the line? Opens floodgates for claims
When are Non-pecuniary damages available 1?
Contracts for Enjoyment or Damages for Distress
- Where the purpose of the contract was to provide enjoyment, peace of mind, or freedom from distress, damages may be awarded
Loss of some benefit
Jarvis v Swan’s Tours Ltd [1973] QB 233 (QB)
Paid Swan’s tours for his annual holiday
Their brochures had promised him certain things, weren’t delivered.
- Sued Swan’s tours and won
- Paid back money for holiday, and also awarded for his disappointment, frustration, anxiety from the holiday
Diesen v Samson 1971 SLT (Sh Ct) 49
Photographer failed to turn up for claimant’s wedding day
Obvious how that could have caused distress
Awarded damages
Lamm v Shingleton 231 NC 10; 55 SE 2d 810 (1949)
Undertaker failed to properly deal with a corpse
Awarded damages
Watts v Morrow [1991]
Changed rule so sole object of the contract must be these things, not just where it is incidental
Did so to put a cap on these kinds of claims.Also caused problems such as in Knott v Bolton
Knott v Bolton (1995)
Couple paid an architect to design their dream home
Architect breache, home not built correctly
Denied damages for distress in accordance with Watts and Morrow bc there was also an economic purpose as most home purchases do
Court said the couple could not show that their sole purpose was enjoyment peace of mind etc
Looks unfair, unclear why they shouldn’t be able to get compensation
Watts and Morrow rule perhaps went too far in other direction
Farley v Skinner (No 2) [2001]
If court followed Watts v Morrow, Farley would fail. Economic reasons as well
Court disregarded Watts v Morrow and awarded him£10k for loss of enjoyment
Departing from Watts v Morrow, court said pleasure must be a distinct and important motivation, not sole motive
House set some restrictions on such claims though
i) Some damages would not be available to commercial claimants, only consumers
ii) The non-pecuniary interest must be important to the claimant
iii) For reasons relating to remoteness, must be evidence to show the defendant was aware of the claimant’s non-pecuniary interest
iv) Only small damages to be awarded for non-Pecuniary interests, the damages in Farley v Skinner was the high end
v) NP damages only available where there is no alternative available
When are Non-pecuniary damages available 1?
Contracts for Enjoyment or Damages for Distress
- Where the purpose of the contract was to provide enjoyment, peace of mind, or freedom from distress, damages may be awarded
Loss of some benefit
When are Non-pecuniary damages available 2?
Distress as a Result of Physical Injury, Inconvenience or Discomfort
Damages for pain and suffering
Suffers some harm
Hobbs v L&S Railway Co (1875) LR 10 QB 111 (QB)
Train didn’t run. Family had to walk home. Argued alternative basis in Farley v Skinner that thee aeroplane noises were a physical inconvenience
When are Non-pecuniary damages available 3?
Loss of Performance to Third Party
Most of these cases were covered in Privity
Reliance Damages
Reliance damages are available, but restricted
Generally, C can choose either expectation or reliance damages (CCC Films (London) Ltd v Impact Quadrant Films).
Reliance damages are costs of relying on other’s performance, costs preparation etc. Only going to be prefereable where the claimant has made a bad bargain, where the money they have spent on the contract is more than the profit they expect from the contract
Has this choice in theory but are 2 exceptions
Reliance Damages
1st Exception:
• When it is a bad bargain can only receive up to as much as how much you would have received in expectation damages. Courts respect contractual allocations of risk
Reliance Damages
1st Exception:
C & P Haulage v Middleton [1983]
C &P wrongly ejected from premises. Bc of that breach claimed the expense of the money they spent on improving the premises
Damages were denied as the contract had prevent the lease from removing any of the improvements at end of lease. Had the contract been properly terminated C and P would not have gotten any value for the money they spent on the improvements
Reliance Damages
2nd Exception:
In some cases claimant will be forced to claim reliance. This is where amount from Expectation damages would be too speculative
Reliance Damages
2nd Exception:
Anglia TV v Reed [1972]
Reed had contracted to star in a film Anglia TV were making. At last moment Reed repudiated his contract and refused to be in the film. Didn’t have enough time to find a replacement and thus had to abandon the film altogether
Couldn’t claim expectation as it is unclear what profits would have been. As a result, rewarded lost expenses rather than expectation damages
