remedies 1 - principles of compensation Flashcards
remedies for breach
- enforcement of contracts is usually by compensation for loss caused (damages)
- there are various possible ways of measuring damages but the “expectation loss” is the primary method of doing so –> “what did I expect to make out of this contract?” = what you would have been paid had the contract gone through
- in limited situations actual performance may be compelled
- equitable remedies of specific performance and injunction
- consumer remedies (repair, replacement)
contract law is not punitive
- contract law does not seek to punish those in breach of contract
- damages = punishment, rectify the situation
- contract clauses seeking to impose a penalty for breach of contract are void as a matter of public policy
- longstanding rule dating from when credit was difficult to attain, so debtors may be better protected (since they could be imprisoned)
- in practice, many contracts (esp commercial) will instead provide for a specific sum to be paid in the event of breach = liquidated damages
- if liquidated damages clause penalise the party in breach, they will not be enforced by the courts
has the claimant suffered an actionable type of loss?
- financial losses are traditional type of loss in contract cases
- compensation for non financial loss is not generally recoverable
some scope for non financial losses
- consumer surplus: the consumer’s additional non financial interest in performance
- distress: recovery of damages where the claimant has suffered physical discomfort or loss of pleasure, peace of mind etc
performance interest
the interest in actual performance of the contract - given limited protection by English law (claim for an injunction/specific performance) –> personal contract eg for a painting, a particular artist to paint a particular work for art
expectation interest
the interest in the value of performance - the sum necessary to put the claimant into the position would they have been in if the contract had been performed eg movies and music contracts –> incalculable because you do not know how much something will gross = don’t know what the value of the contract is
reliance interest
puts the claimant into the position they were in before the contract was made which involves compensating expenditure made in performance of the contract which is wasted as a result of the breach eg actors who pull out of productions, cannot recast
restitutionary interest
restoration to the claimant of a benefit conferred on the defendant to which the defendant is not entitled –> able to claim the money back eg people stealing buses
how is he loss converted into damages?
- loss of a chance
- expectation loss measure of damages
- difference in value
- cost of cure
- loss of amenity
- reliance measure of damages
- restitution
loss of a chance - chaplin v hicks 1911
- C entered a beauty contest organised by H, a famous actor
- 50 finalists chosen through regional heats, 12 winners would hve. role in a production with H
- C made it to final but did not recieve her invite until it was too late to attend
- sued for loss of chance of gaining employment for £100
- did not have to demonstrate that she would have won the competition, but that she had been deprived of the opportunity to do so
- if there is no linear pathway, loss of chance will not work, Chaplin worked because it was CLEAR
Expectation losses
- most common basis for award of damages
- seeks to replicate successful performance of the contract
Robinson v Harman 1848
“The rule of the common law is, that where a party sustains a 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”
(British Westinghouse Co Ltd v Underground Electric Railways Co Ltd 1912)
“He who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed”
Compensating expectation losses
- 2 possibilities for compensating expectation losses
- Difference in value: what is the difference between what the claimant wanted and what they actually received
- This is the most usual means of rectifying expectation losses
- Cost of cure: the amount it would cost the claimant to get a third party to perform the contract or rectify the breaches caused by the defendant
Which option to choose?
- Sometimes the diminution of value is very small, but nonetheless significant to the injured party = reasonableness is key
- Where cost of cure is higher than the diminution in value, the injured party is able to claim the cost of cure
- If the cost of cure is unreasonable 0 the claimant cannot claim on this basis
unreasonable = Ruxley Electronics “if the cost of the cure is wholly disproportionate” to diminution in value
