Remedies Flashcards
Purpose of damages
Put C in the same position had the contract been properly performed (compensate for loss)
Punitive damages unavailable
Heads of loss
- Personal Injury
- Property Damage
- Loss of Profit
- Loss of Opportunity
- Mental Distress and Disappointment
Will the court award damages for distress or disappointment?
GR: No
EXCEPTION: Main objective was to provide pleasure, entertainment, enjoyment, peace of mind
EXAMPLE: hospitality / holiday
When is a damages clause valid?
Genuine attempt to pre-estimate loss likely to be caused by breach
Effect if damages clause is valid?
Sum specified is amount paid regardless of loss C suffers
Measure, remoteness and mitigation rules do not apply
When is a damages clause a penalty?
Attempt to put pressure on a party
Effect = unenforceable / invalid
When will a damages clause be a penalty? (test)
- Clause imposes a detriment on contract breaker disproportionate to legitimate interest of innocent party
* what is the innocent party’s legitimate interest?
* is the sum disproportionate to this figure? - Sum is unthinkable compared to greatest possible loss that could conceivably have arisen
- If breach is non-payment of a sum, penalty if sum in clause is greater than outstanding sum
- Clause is presumed as a penalty if a single lump sum is payable on happening of one or more of several events
What is expectation loss basis?
C can recover for the loss of the benefit they would have obtained had the contract been properly peformed
diminution, cost of cure, consumer surplus
How are damages calculated for:
* defective goods
* defective service
- value of goods without defect - actual value (diminution)
- cost of cure
How are damages calculated for loss of amenity?
If no difference in value + cost of cure is unreasonable:
Personal subjective non-monetary loss (consumer surplus)
i.e. leisure only OR not going to put right OR cost of cure excessive
When are damages calculated on a reliance loss basis?
Difficult to predict future losses; or
No future losses
What are reliance loss damages calculated
expenses incurred in reliance on contract + not mitigated against
includes pre-contract expenditure
Mitigation rule?
C cannot recover loss which would not have occured had C taken reasonable steps to mitigate (e.g. quotes, look for alternative employment, buying similar goods, selling goods)
What happens if C takes reasonable steps to mitigate but the attempt it unsuccessful?
C can claim for entire loss even if made worse
Effect if D proves C failed to mitigate?
No damages for loss caused by C’s failure to mitigate
When may C’s damages be reduced on the basis of contrib neg?
- The only cause of action for breach of contract is a negligent breach; and
- the breach gives rise to a claim in negligence
Effect of termination
Ends both parties’ future contractual obligations
When is specific peformance NOT available
- Damages is an adequate remedy (e.g. similar goods available)
- Continuous supervision would be needed
- Service contracts
- C acted inequitably / cause disproportionate hardship to D
When is action for agreed sum available?
- contract provides payment of a definite sum of money
- duty to pay has arisen
- payer refuses to pay
rules of remoteness and mitigation do not apply as not a damages claim
When is termination available?
Repudiatory breach:
1. breach of condition; or
2. serious breach of innominate term; and
3. no affirmation (bar to termination)
Anticipatory breach:
1. Terminate + sue for damages immediately
What options does an innocent party have if there has been a repudiatory breach?
breach of condition or serious breach of innominate term
- Affirm contract
- terminate contract
breach does not terminate contract automatically
What options does an innocent party have if the other indicates they are not going to complete their obligations?
Anticipatory breach
- Terminate + sue for damages immediately; or
- Affirm + wait until time fixed for performance
Types of injunction
Prohibitory: stops act
Mandatory: requires act (rare)
When will an injunction not be granted?
- force employment (but may uphold restraint of trade)
Factors the court will take into account when considering whether to grant an injunction to enforce a restraint of trade clause
- length of time (short ok)
- impact on career (minimal ok)
- D caan work elsewhere (would not remain idle / forced to perform contract / are they intelligent?)
NOTE: irrelevant other work may generate less money
What is a contract of guarantee?
Person (guarantor) guarantees that if another person (debtor) does not pay back money owed they will pay instead
Guarnator has a secondary obligation to pay
Must be evidenced in writing
Requirements for a valid contract of guarantee
- Evidenced in writing (otherwise void)
* written evidence of transaction (not necessarily a written contract)
* need not have been created for specific purpose of enforcement
* may comprise of a series of documents linked by reference - writing must have existed before creditor enforces contract
- writing must be signed by guarnator
What is an indemnity?
One party promises to reimburse the other party pound-for-pound in respect of a particular loss under a contract
primary obligation (no need to evidence in writing)
What are the differences between a guarantee and indemnity
- Writing: guarantee must be in writing / indemnity does not
- Obligation: an indemnity gives rise to a primary obligation / a guarnatee gives rise to a secondary obligation (only pay if debtor does not)
When will agreement to end a contract be binding and end contract?
Discharge by agreement / variation
Must contain all the elements of a contract (offer, acceptance, consideration and intention)
