Remedies Flashcards
How to answer the question of legal damages
- Identify the breach
- Which losses can be compensated
- How much will be awarded
4.Any Mitigation of loss
5.Any Liquisated damages
Nominal Damages
Nominal damages are damages that are awarded if there is no loss suffered but the breach has been established
Negotiating damages /Wrotham Park damages
To represent the amount that the claimant might have accepted in exchange of the act
Loss of amenity
Contract law used not to allow compensation for things which are not easy to calculate in financial terms . The courts gradually to allow damages for some losses like these if sole purpose was to provide amentity this can be seen in the case of Jackson v Horizon this was able to claim loss of amenity as the claimant were not able to enjoy the holiday.
Other Loss of amenity Cases
Jarvis V Swan Tours- The claimant was disappointed in holiday
Ruxley Electronics V Forsyth- she did not get the swimming pool that he had contracted for
Farley V Skinner-the claimant was told by the sales person that the apartment was not subject to aircraft noise but there was noise
Remoteness of damages principle
This was established in the case of Hadley v Baxendale where the crankshaft broke in the Claimant’s mill. He engaged the services of the Defendant to deliver the crankshaft to the place where it was to be repaired and to subsequently return it after it had been repaired. Due to neglect of the Defendant, the crankshaft was returned 7 days late. The Claimant was unable to use the mill during this time and claimed for loss of profit. The Defendant argued that he was unaware that the mill would have to be closed during the delay and therefore the loss of profit was too remote. this created a 2 pqrt test for which losses were caused Defendant’s breach and can be compensated and which losses re too remote from the breach
Those which may fairly and reasonably be considered arising naturally from the breach of contract (objective)
- Such damages as may reasonably be supposed to have been in the contemplation of both the parties at the time the contract was made.(subjective)
Victoria Laundry V Newman
The claimant purchased a large boiler for use in their dying and laundry business. The defendant was aware that they wished to put it to immediate use and knew the nature of their business. The delivery of the boiler was delayed in breach of contract and the claimants brought an action for the loss of profit which the boiler would have made during the period in which the delivery was delayed. The claim contained a sum for a particularly lucrative contract which they lost due to the absence of the boiler.
Held:
The claimants could only recover losses which were in the reasonable contemplation of the parties which included the loss of profit that could be expected from the lack of use of the boiler, but the claimant could not recover for the loss of the exceptionally lucrative contract since the defendant was unaware of this contract.
What if it cannot be proved that d was aware of the possibility of that kind of loss
The Court may say it is implied taht D was aware because a reasonable person would have been aware this happened in the case of Heron whereA contract for the carriage of a cargo of sugar was delayed by 9 days. The market price of sugar dropped following this delay due to the arrival of another cargo of sugar. The claimant sought to recover the difference from the defendant for their breach of contract. The defendant argued the damages were too remote since it was just as likely that the market price could increase.
Held:Under the second limb in Hadley v Baxendale it was only necessary that the losses were in the reasonable contemplation of the parties as a possible result of the breach. There was no requirement as to the degree of probability of that loss arising. Since the defendant must have known that market prices fluctuate, the loss would have been in his contemplation as a possible result of the breach.
Loss of Bargain Principle
This means the court will grant a sum of money which will put Claimant in the same financial position as if the contract had been properly performed. This can be seen in the case of Charter v Sullivan whereThe defendant bought a Hillman Minx car from the plaintiff but refused to accept it. The plaintiff’s profit would have been £97. However, only nominal damages were awarded because he could only sell as many cars as he could get from the makers.
Reliance loss principle
This is an alternative to damages for expectation loss where these are too difficult to calculate ,claimant can recover any money they had spent because they had relied on the contract being performed as in the case of Anglia Tv v Reed where The claimant, Anglia Television, engaged Oliver Reed to play the leading role in a television play. Subsequently Reed pulled out and Anglia was unable to find a replacement. They abandoned the play but had incurred expenses amounting to £2,750.it was held Whilst damages generally seek to put the parties in the position they would have been in had the contract been performed, the parties may elect to claim reliance loss and recover expenses incurred in an abortive transaction. Thus Anglia was able to recover their expenses from the defendant.
Mitigation of loss
Damages may be reduce is the claimant has failed to mitigate the loss. When defendant has breached a contract, claimant must not do anything which makes the loss even greater than it is then the claimant’s loss will not be so great so perhaps no loss at all as in the case of Thai Airways v KI holdings, in this case the claimant mitigate their losses by procuring replacement seats and managing operational disruptions
liquated damages
Liquidated damages are an amount of damages which are stated in a term of the contract. The idea is that the parties have agreed in the contract, how much compensation will have to be paid by the other party if the contract is breached.
If the contract actually is breached, the court will order the defendant to pay this amount of damages (as stated in the contract).
However, the court will not do this if they see the term as a ‘penalty clause’ (an excessive/unfair sum).
The test for whether a term counts as ‘liquidated damages’ or a ‘penalty clause’ has changed recently. Use the new rules stated by the Supreme Court in Cavendish Square Holdings v Talal El Makdessi (2015) and Parking Eye v Beavis (2015)
Both these cases state that the clause/term which sets out an amount to be paid if the contract is breached must …
Be to protect a legitimate interest AND
Not be exorbitant or unconscionable
However
D does not have to show that s/he actually suffered loss.
The amount stated in the term does not have to be a genuine pre-estimate of the amount of loss.
The purpose of the amount in the term can be to deter a specific breach.
The aim of these new rules is to protect freedom of contract (what the parties freely agreed)
The effect is that courts are less likely to see these terms as ‘penalty clauses’ in the future and more likely to award the amount specified in the term.
