Remedies Flashcards
Damages
What are damages and when will they be awarded?
Damages in contract seek to put the party back in the position they would’ve been if it was performed. The court must:
Be satisfied the party in breach of contract caused the loss in question,
Identify the consequences that flowed from the breach and the extent to which they should be compensated (remoteness of damages) and
Determine the measure of the loss. They’ll consider whether claimant mitigated the loss.
Damages
How does causation work for damages and what section applies?
Injured party must prove the party in breach wholly or partially caused the loss being claimed.
S.2 Civil Liability Act 1961 Amount of damages may be reduced where the person claiming damages contributed in some way to the loss. Reduction proportionate to responsibility for loss.
Damages - Remoteness of Damage
Hadley v Baxendale [1854]
H owned mill. B employed to carry the shaft when it broke & had to be sent for repair. B delayed in transporting it. As a result, mill was out of business for a long time. Sued for loss of profit.
RULE: When parties made a contract and one broke it, the damages the other may receive are:
The normal damage that may reasonably be expected
Special damages of which both parties must have been aware of should a breach occur.
Damages - Remoteness of Damage
Victoria Laundry v Newman Industries [1949] Reformulated Test
P only entitled to recover (1) that part of the loss that actually occurred (natural consequences) and that part that, at the time the parties entered into the contract, was reasonably foreseeable.
Foreseeability: The ordinary reasonable man, having the specialist knowledge that the parties had at the time of contract, would foresee the loss resulting from the breach.
Damages - Remoteness of Damage - First Limb
Wilson v Dunville [1879]
FIRST LIMB: Losses that flow naturally from certain breaches of contract. No subjectivity:
Held the natural consequences of feeding animal fodder to animals with lead pellets was that they’d be injured as a result. Irrelevant the loss was outside D’s reasonable contemplation.
Damages - Remoteness of Damage - Second Limb
Waller v Great Western Railway [1879]
SECOND LIMB: Specialist knowledge of defendant meant he’d foresee the loss:
Railway co failed to transport W’s horses to a sale in Dublin so horses had to be ridden to Dublin.
Sold for lower price than expected. Due to change in diet, horses’ condition worsened more than usual. D couldn’t have known of this. Only recovered for cost of hiring people to ride, fatigue, etc
Damages - Remoteness of Damage - Second Limb
Victoria Laundry v Newman Industries [1949]
N contracted to deliver a boiler. 5 months’ late despite knowing they needed it immediately for their laundry business. Sued for loss of profits and loss of lucrative government contract.
Held liable for loss of profits flowing directly from breach, but as they were unaware of the gov contracts, they couldn’t be said to have the specialist knowledge. No damages for this part.
Damages - Remoteness of Damage - Second Limb
Kemp v Intasun Holidays [1987]
K booked package holiday in Spain, but hotel booked out on arrival. Had to stay in staff quarters of other hotel that was dirty and dusty, aggravating K’s asthma. But IH not made aware of asthma
Awarded £800 for asthma attack, but court held shouldn’t have got this: no SK of her asthma
Damages - Mitigation
General Rule?
Common law imposes an obligation on the plaintiff to take reasonable steps to mitigate their losses.
Damages - Mitigation
Brace v Calder [1895]
Manager wrongfully dismissed upon dissolution of partnership. He refused an offer of re-employment by 2 partners. Failed in action for damages as he failed to mitigate his losses.
Damages - Mitigation
Cullen v Horgan [1925]
Held where seller fails to deliver the goods, buyer must at some point accept the contract has ended & make reasonable attempts to source goods from elsewhere. If not, could get no damages
Damages - Mitigation
Payzu v Saunders [1919]
P contracted to buy silk from S on credit terms. P didn’t keep up w payments so S withdrew credit
But S was willing to contract w P if he made cash payments. P refused to continue dealing despite the fact that there was no alternative silk supplier.
Held by failing to negotiate with S on basis of cash payments, P had failed to mitigate losses.
Damages - Mitigation
Lennon v Talbot (Ireland) [1985]
Held if the terms presented in the new offer are prejudicial and differ to a great extent to the breached contract, then Payzu not applicable.
Damages - Mitigation
Hyland v Dundalk Racing [2015]
D sought contributions from bookmakers towards refurbishment of track. H said no basis for this and D was breaching contract. D still sought payment. They rejected.
As a result, they were unable to take up at the track for some years. Held they had not acted reasonably after a certain point so damages reduced by 20%. Should have paid the nominal fee to take up their pitches rather than take huge loss on principle.
Calculating Loss: Heads of Loss
Hawkins v Rogers [1951]:
Calculated according to amount P stood to make if contract carried out. Includes foreseeable profits: ]: Race horse prevented from entering races due to breach. Court assessed damages on basis of horse’s performance in other races despite fact no guarantee horse would’ve won
Calculating Loss: Heads of Loss - Expectation Loss
General Rule and relevant section?
This aims to compensate the plaintiff for what he would have expected had the court been performed.
Damages: Difference bw position P would’ve been & position P’s in now in due to the breach
S.50(2) SGA 1893 Where there is an available market for the goods, the measure of damages is to be ascertained by the difference bw the contract price and the market/current price at the time when the goods ought to have been accepted or, if no time fixed, the time of refusal to accept.
Calculating Loss: Heads of Loss - Cost of Cure
Ruxley Construction v Forsyth [1995]
P may expect damages for defective performance of a contract which equals the costs associated with correcting the defect in performance. Often occurs in construction contracts:
R constructed swimming pool for F. Contract specified 7 feet 6 inches, but R did 6 feet 9 inches.
It was still safe for swimming and diving, but F refused to pay for it. R sued for breach of contract and F counter-sued for non-performance.
R argued as pool was perfectly serviceable to make them demolish and reconstruct at their expense was disproportionate given the minor breach. Would have cost £21k
F awarded £2.5k for loss of amenity. To award full damages would’ve been excessive partly due
to fact F wouldn’t have used it for reconstruction, but awarded for ‘disappointed expectations’
Calculating Loss: Heads of Loss - Consequential Loss
Stoney v Foley [1897]
10 sheep warranted as sound were sold by F to S. Then developed a disease and S’ land was deemed unfit for use for 5 months’. In addition to compensation for loss of sheep, S got damages for being unable to let the land for 5-months.
Calculating Loss: Heads of Loss - Consequential Loss
Leahy v Rawson [2003]:
]: R contracted to build an extension but did it so negligently it had to be
demolished. Awarded damages for reconstruction and for loss of income he may have got from B&B.
Calculating Loss: Heads of Loss - Account of Profits
AG v Blake [2000]
P’s action not necessarily limited to own damage, but to profits D may make as a result of breach:
B was British spy who also worked for KGB. Signed lifetime confidentially contract w UK.
Later published memoirs. Paid £60k and then to be paid £80k. UK brought action and damages sought was remaining £80k to be paid. Argued he’d profited from the breach of contract w them.
Despite no loss suffered (info already out there), court upheld their claim.
Calculating Loss: Heads of Loss - Reliance Loss
Anglia TV v Reed [1972]
Based on the injured party altering his position in reliance of the contract being performed. Normally used if court can’t estimate expectation loss bc impossible to determine what profit P would’ve made
Famous actor contract to star in a film but at v late stage in production he decided not to.
Film not completed. Hard to estimate likely profit that would’ve made so A sued for reliance loss
Held entitled to recover for the loss sustained in making the film as it’d relied on its contract w R
Also held entitled to costs that had arisen before production as R would’ve contemplated these
Calculating Loss: Heads of Loss - Restitution Loss
Hickey v Roches Stores [1976]:
Where P has paid a deposit and D refuses to supply the goods. Avoids D becoming unjustly enriched.
- Where wrongdoer intended his wrongdoing and acted mala fide, court must assess damages looking not only at loss suffered by P but the gain unjustly obtained by D.
Calculating Loss: Heads of Loss - Reputation Loss
Addis v Gramaphone [1909]:
Damages for loss of reputation generally not recoverable
Calculating Loss: Heads of Loss - Reputation Loss
Malik v BCCI [1997]:
M sued employer for breach of implied duty of trust and confidence by operating their business dishonestly and corruptly. M had difficulty getting new job as they suffered damage to their reputation by association or “stigma damage”.
Unjust Enrichment
General Rule?
Where a party breaks a contract deliberately to take a more lucrative offer, P may be entitled to sue not only for loss suffered but for profits D may have made as a result of the breach
Unjust Enrichment
Hickey v Roches Stores [1976]
R deliberately breached on basis they calculated by carrying on business w/o H they could still make a profit even with the breach. Court stated obiter that when calculating damages in such a scenario involving mala fides by D, must consider profit D made as well as loss to P
