Remedies Flashcards
What is the aim of an award of damages for breach of contract?
To compensate the C for the damage, loss or injury it has suffered as a result of the D’s breach. Punishing the D is not the aim.
Putting the innocent party in the same position post-breach that they should have been in had the contract been performed.
What are the three alternative mechanisms for calculating the expectation interest?
- Cost of cure-this represents the cost of substitute/remedial work required to put the C in the position they would’ve been in had the contract been properly performed.
- Diminution in value-the C’s expectation interest may be calculated by reference to the difference in value between the performance received and that promised in the contract.
- Loss of amenity-as seen in Ruxley v Forsyth (1995) where the C awarded £2,500 for loss of amenity after he did not get the pool he contracted for (6’0 deep instead of 7’6 deep).
What is the reliance interest and what is its aim?
An alternative basis for the assessment of damages that allows the C to recover the expenses which have been incurred in preparing for, in part performance of, the contract which has been rendered pointless by the breach.
This measure aims to put the C in the position they would have been in had they never contracted. It only allows recovery of wasted expenditure incurred prior to breach.
What is the general rule regarding damages for mental distress in contract law?
The general rule is that damages will not be awarded in relation to mental distress, anguish or annoyance caused by breach of contract-Addis v Gramophone Co Ltd (1909).
What are the exceptions to the general rule that damages for mental distress are not recoverable in contract law?
-Cases involving contracts whose whole purpose was the provision of pleasure, relaxation and peace of mind-Jarvis v Swan Tours (1973)
-Damages for non-pecuniary loss (loss of amenity) where a major object of the contract was to provide pleasure, relaxation and peace of mind-Farley v Skinner (2001)
What is the general rule regarding damages for loss of reputation in contract law?
The general rule is that damages will not be awarded for loss of reputation.
Are damages for loss of chance/opportunity recoverable in contract law?
The loss of an opportunity is recoverable in damages if the lost chance is quantifiable in monetary terms and there was a real and substantial chance that the opportunity might have come to fruition.
Otherwise, the loss of opportunity will be treated as too speculative.
Does causation need to be established in order to recover damages in contract law?
Yes, both factual and legal causation need to be established.
There needs to be a causal link between the breach and the loss suffered.
What is the test in Hadley v Baxendale (1854) for remoteness of damage in contract?
Hadley v Baxendale (1854) established that where two parties have made a contract which one of them has broken, the damages which the other party ought to receive should be such as may:
- Fairly and reasonably be considered either arising naturally from such breach of contract itself; or
- Such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it
Describe the case of Victoria Laundry v Newman Industries (1949) in relation to remoteness.
FACTS: The C ordered a large boiler from the D in contemplation of some lucrative dyeing contracts. The D was aware of the nature of C’s business, and that it was intended for the boiler to be put to use as soon as possible. The delivery of the boiler was delayed by five months and the C claimed for claimed for the extra laundry business they could have taken on with immediate use of the boiler and secondly, the loss of a number of lucrative dyeing contracts.
HELD: The C could recover the extra laundry business as these were losses in the ‘usual course of things’, but the lucrative dyeing contracts were considered too remote.
Are losses attributable to a failure to mitigate legally recoverable?
No, losses attributable to a failure to mitigate are not legally recoverable. An injured party must take reasonable steps to minmise the effect of the breach.
What is the restitution interest?
This represents the interest a C has in the restoration to them of benefits which the defaulting party has acquired at their expense.
Describe the case of AG v Blake (2001) in relation to the restitution interest and outline what an ‘efficient breach’ is.
AG v Blake (2001): the D, a former member of the Intelligence Services, undertook not to divulge any secrets and broke this undertaking by publishing his official memoirs. The Crown sought to recover the royalties he was paid and the Lords held there was an ‘efficient breach’ in that the breach was:
-cynical and deliberate
-enabled the D to profit elsewhere
-caused the D not to honour/perform his contract with C
What is a liquidated damages clause?
A liquidated damages clause stipulates a certain sum which is to be payable on a particular breach of contract.
Can the Court intervene in relation to liquidated damages clause?
The Courts have developed a jurisdiction to intervene in a contract to strike down a liquidated damages clause which requires the party in breach to pay an excessive sum such that it becomes a ‘penalty’.
