Remedies

Question 1

Purpose of damages

Answer 1

Put C in the same position had the contract been properly performed (compensate for loss)

Punitive damages unavailable

Question 2

Heads of loss

Answer 2

1. Personal Injury
2. Property Damage
3. Loss of Profit
4. Loss of Opportunity
5. Mental Distress and Disappointment

Question 3

Will the court award damages for distress or disappointment?

Answer 3

GR: No
EXCEPTION: Main objective was to provide pleasure, entertainment, enjoyment, peace of mind

EXAMPLE: hospitality / holiday

Question 4

When is a damages clause valid?

Answer 4

Genuine attempt to pre-estimate loss likely to be caused by breach

Question 5

Effect if damages clause is valid?

Answer 5

Sum specified is amount paid regardless of loss C suffers

Measure, remoteness and mitigation rules do not apply

Question 6

When is a damages clause a penalty?

Answer 6

Attempt to put pressure on a party

Effect = unenforceable / invalid

Question 7

When will a damages clause be a penalty? (test)

Answer 7

1. 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?
2. Sum is unthinkable compared to greatest possible loss that could conceivably have arisen
3. If breach is non-payment of a sum, penalty if sum in clause is greater than outstanding sum
4. Clause is presumed as a penalty if a single lump sum is payable on happening of one or more of several events

Question 8

What is expectation loss basis?

Answer 8

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

Question 9

How are damages calculated for:
* defective goods
* defective service

Answer 9

1. value of goods without defect - actual value (diminution)
2. cost of cure

Question 10

How are damages calculated for loss of amenity?

Answer 10

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

Question 11

When are damages calculated on a reliance loss basis?

Answer 11

Difficult to predict future losses; or
No future losses

Question 12

What are reliance loss damages calculated

Answer 12

expenses incurred in reliance on contract + not mitigated against

includes pre-contract expenditure

Question 13

Mitigation rule?

Answer 13

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)

Question 14

What happens if C takes reasonable steps to mitigate but the attempt it unsuccessful?

Answer 14

C can claim for entire loss even if made worse

Question 15

Effect if D proves C failed to mitigate?

Answer 15

No damages for loss caused by C’s failure to mitigate

Question 16

When may C’s damages be reduced on the basis of contrib neg?

Answer 16

1. The only cause of action for breach of contract is a negligent breach; and
2. the breach gives rise to a claim in negligence

Question 17

Effect of termination

Answer 17

Ends both parties’ future contractual obligations

Question 18

When is specific peformance NOT available

Answer 18

1. Damages is an adequate remedy (e.g. similar goods available)
2. Continuous supervision would be needed
3. Service contracts
4. C acted inequitably / cause disproportionate hardship to D

Question 19

When is action for agreed sum available?

Answer 19

1. contract provides payment of a definite sum of money
2. duty to pay has arisen
3. payer refuses to pay

rules of remoteness and mitigation do not apply as not a damages claim

Question 20

When is termination available?

Answer 20

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

Question 21

What options does an innocent party have if there has been a repudiatory breach?

breach of condition or serious breach of innominate term

Answer 21

1. Affirm contract
2. terminate contract

breach does not terminate contract automatically

Question 22

What options does an innocent party have if the other indicates they are not going to complete their obligations?

Anticipatory breach

Answer 22

1. Terminate + sue for damages immediately; or
2. Affirm + wait until time fixed for performance

Question 23

Types of injunction

Answer 23

Prohibitory: stops act
Mandatory: requires act (rare)

Question 24

When will an injunction not be granted?

Answer 24

1. force employment (but may uphold restraint of trade)

Question 25

Factors the court will take into account when considering whether to grant an injunction to enforce a restraint of trade clause

Answer 25

1. length of time (short ok)
2. impact on career (minimal ok)
3. D caan work elsewhere (would not remain idle / forced to perform contract / are they intelligent?)

NOTE: irrelevant other work may generate less money

Question 26

What is a contract of guarantee?

Answer 26

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

Question 27

Requirements for a valid contract of guarantee

Answer 27

1. 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
2. writing must have existed before creditor enforces contract
3. writing must be signed by guarnator

Question 28

What is an indemnity?

Answer 28

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)

Question 29

What are the differences between a guarantee and indemnity

Answer 29

1. Writing: guarantee must be in writing / indemnity does not
2. Obligation: an indemnity gives rise to a primary obligation / a guarnatee gives rise to a secondary obligation (only pay if debtor does not)

Question 30

When will agreement to end a contract be binding and end contract?

Discharge by agreement / variation

Answer 30

Must contain all the elements of a contract (offer, acceptance, consideration and intention)