remedies 1 - non financial losses

Question 1

Non financial losses are…

Answer 1

• relatively straightforward to quantify
• expectation losses = difference in value/cost of cure which can compensate what has actually been lost by D
• contracts made for enjoyment or happiness
• more contentious, concern the value of the claimant and the value the claimant personally places on the performance of the contract

Question 2

consumer surplus

Answer 2

• economic theory representing the difference between the price someone is willing to pay and the price they actually play
• allows companies and suppliers to set their basis
• provides a theoretical basis to compensate the claimant where they have not recieved what they consider to be the full value of the contract
• remains a controversial approach, but is recognised by courts

Question 3

Ruxley Electronics & Constructions Ltd v Forsyth [1996] AC 344

Answer 3

• F comissioned RE to build swimming pool (£18,000)
• contract specified diving depth should be 7 ft 6 in deep because F was tall
• diving area was only 6 ft deep
• F did not intend to use the pool for diving

bases for compensation:
- dimunition in value of property, no actual losses, nominal damages only
- cost of cure: estimated at £21,560 to remove pool and start again
- loss of amenity: estimated at £2500 as a loss of the opportunity to dive in the pool should you choose to do so
- initially only LoA, then CA awarded CoC the HL overturned this

Question 4

Watts v Morrow [1991] 1 WLR 1421

Answer 4

• W bought house based on report by surveyor suggesting property only required “ordinary ongoing maintenance and repair”
• builder advised them that further work was needed
  W commissioned another surveyor’s report, which revealed a number of defects requiring immediate attention
• Watts recovered damages for the excess purchase price paid in reliance on the report, and not the cost of conducting the repairs.
• The proper measure of damages was the sum necessary to put Watts in the position he would have been if the report had been correctly prepared.
• Therefore, the loss he suffered was the difference in value of the property as it was presented in the report, and its value in its actual condition.
• Modest damages for physical discomfort were awarded.

Question 5

2 competing approaches

Answer 5

‘Very Object’ Watts v Morrow 1991
- assumes both parties have same expectation
- damages recoverable for physical inconvenience and discomfort caused by breach and mental suffering directly related to that inconvenience

‘consumer surplus’ Ruxley Electronics 1996
- subjective consumer perspective

Question 6

Farley v Skinner 2001

Answer 6

• F bought house near Gatwick airport
• S advised that aircraft noise was unlikely to be problem
• early morning noise intolerable and F wasn’t able to freely enjoy his garden in the morning
• F awarded £10,000 for his discomfort

Question 7

damages - how much?

Answer 7

• Lord Scott endorsed consumer surplus
• Lord Steyn relied on fact that peace and quiet were part of the very object of the contract (Watts v Morrow)
• damages for non financial losses will generally be small

Question 8

Jarvis v Swan Tours 1973

Answer 8

• J booked holiday to Switzerland
• brochure promised local skiing opportunities, english speaking staff, house party, local yodellers and other benefits but was sorely disappointed when he arrived
• J awarded £31 (half the cost of holiday) to reflect services that were not recieved
• CA: Denning awarded a further £134