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
