Remedies 2

Question 1

Fours limits on the protection of expectation interest:

Answer 1

1. Mitigation
2. Causation
3. Contributory Negligence
4. Remoteness

Question 2

Mitigation

General Principle

Answer 2

C has a duty to avoid loss caused by D’s breach.
C cannot recover damages for losses that were reasonably avoidable.
British Westinghouse Electric & Manufacturing Co [1912] AC 673 (HL)

Question 3

Mitigation
Reasonableness
British Westinghouse Electric & Manufacturing Co [1912] AC 673 (HL)

Answer 3

C does not have to ‘take any step which a reasonable and prudent man would not ordinarily take in the course of his business’ (British Westinghouse Electric & Manufacturing Co [1912] AC 673 (HL) 689).

Question 4

Mitigation
Reasonableness
Pilkington v Wood

Answer 4

Don’t have to take significant financial risks

Question 5

Mitigation
Reasonableness
James Finlay & Co Ltd v Kwik Hoo Tong Handelsmaatschappij

Answer 5

Don’t have to risk reputation

Question 6

Mitigation
Reasonableness
Clippens Oil Co Ltd v Edinburgh & District Water Trustees

Answer 6

Don’t have to do something unaffordable

Question 7

Mitigation
Reasonableness
2 limbs

Answer 7

1. Positive duty to act reasonably to avoid losses

2. Negative duty to avoid acting unreasonably to make loss worse

Question 8

Mitigation

Positive Duty

Answer 8

C must take positive steps to reduce losses. What’s required is fact specific, but examples include:

Question 9

Mitigation
Positive duty
Kaines (UK) v Osterreichische Warrenhandelsgesellschaft Austrowaren GmbH [1993] 2 Lloyd’s Rep 1)

Answer 9

Claimant who fails to recieve goods or services in breach of contract has a duty to make reasonable effort to find a substitute

Question 10

Mitigation
Positive duty
Yetton v Eastwoods Froy Ltd [1967]

Answer 10

Employee wrongfully dismissed. Must make reasonable effort to get alternative employment

Question 11

Mitigation
Positive duty
Anderson v Hoen, The Flying Fish (1865)

Answer 11

Claimant who sustains property damage has a duty to accept help to reduce losses

Question 12

Mitigation
Positive duty
Selvanayagam v University of the West Indies [1983] 1 WLR 585)

Answer 12

duty to seek medical help where loss relates to physical injury

Question 13

Mitigation
Positive duty
Selvanayagam v University of the West Indies [1983] 1 WLR 585)

Answer 13

duty to seek medical help where loss relates to physical injury

Question 14

Mitigation
Positive duty
The Soholt [1983] 1 Lloyd’s Rep 605

Answer 14

May be required to renegotiate with contract breaker
A ship was bought and the contract for sale of the ship was lawfully terminated by buyers when it was delivered late. Could not claim the difference between contract and market price of the ship bc the claimants should have renegotiated the contract with the sellers in light of the late delivery

Question 15

Mitigation

Negative Duty

Answer 15

C must not take unreasonable steps that increase losses. Again, reasonableness fact specific, but examples of reasonable steps include:

Question 16

Mitigation
Negative duty
Reasonable steps
Holden Ltd v Bostock & Co Ltd (1902)

Answer 16

Reasonable to spend money on advertising to mitigate loss of business caused by the breach of contract

Question 17

Mitigation
Negative duty
Reasonable steps
Bacon v Cooper (Metals) Ltd [1982]

Answer 17

When an asset is not delivered it is okay to incur hire charges to replace that asset

Question 18

Mitigation
Negative duty
Unreasonable steps
Compania Financiera Soleada SA v Hamoor Tanker Corp Inc, The Borag [1981]

Answer 18

Would not be reasonable to take out a high interest loan to release a ship which was wrongly detained in breach of contract

Question 19

Causation

General Principle

Answer 19

Must be causal link between breach and loss. May be broken by:
• Independent act of 3P, although see Stansbie v Troman [1948] 2 KB 48 (KB)
• Acts of God (Monarch Steamship Co Ltd v A/B Karlshamns Oljefabriker [1949] AC 196 (HL))
• Unreasonable act by C (Lambert v Lewis [1982] AC 225 (HL))

Question 20

Damnum

Answer 20

loss you suffer that someone has caused you

Question 21

Inuria

Answer 21

Injury

Question 22

Exception to 3rd party causation

Stansbie v Troman

Answer 22

House painter painting a house
went out and left the door unlocked
couldn’t argue against the causal chain between his leaving the door open and the theft as a 3rd party act bc it said in his contract that he should prevent theives breaking in to the house

Question 23

Act of God causation

Monarch Steamship Co Ltd v A/B Karlshamns Oljefabriker [1949]

Answer 23

Unseaworthy ship supplied in breach of contract. Defendant liable for any damage caused by any foreseeable problems at sea. Typhoon, however, breaks that chain. Cause of loss is the the typhoon not the seaworthiness of the ship

Question 24

Unreasonable act by C breaking chain of causation

Lambert v Lewis [1982]

Answer 24

Knew coupler was defective but carried on using it anyway. Personal injury claim was thwarted by the unreasonable act of continuing to use this coupler he knew was defective

Question 25

Contributory Negligence

Answer 25

Common law position:

C’s negligence which does not break causal chain but exacerbates her loss does not reduce damages (Quinn v Burch Bros (Builders) Ltd [1966] 2 QB 370 (QB))

Question is does Law Reform (Contributory Negligence) Act 1945 apply to contract as well as tort claims?

Forsikringsaktieselskapet Vespa v Butcher [1988] 2 All ER 43 (HL)
Barclays Bank v Fairclough Building Ltd and Others [1995] 1 All ER 289 (CA)

Question 26

Remoteness

Answer 26

Losses caused by D cannot be recovered if they are too remote.
Only liable for foreseeable losses as a result of the breach at the time time of the breach

Question 27

Test for remoteness

Answer 27

Est in Hadley v Baxendale
Whether losses could have been reasonably contemplated as consequences of a breach at the time the contract was entered.
Losses recoverable are:
Those “arising naturally, that is, according to the usual course of things, from such breach of contract itself” and
“such losses 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.

Question 28

Hadley v Baxendale (1854)

H ran a mill, B were a carrier. They delivered a shaft late leaving H unable to run for a few days losing profits

Answer 28

• B knew what was being carried and that as a result of the breach the mill did not operate for a few days losing profits
• Despite that court did not say B was liable for that loss of profits bs
  o B not aware that the operation of the entire mill depended on ths shaft
  o Would have been quite reasonable for them to think H would have another shaft or would be able to get one
  Established test for remoteness

Question 29

Koufos v C Czarnikow Ltd (The Heron II) [1967]), 2 clarifications:

Answer 29

• C must forsee type of loss, not extent.

* Must forsee as a serious possibility (vs tort where a slight possibility sufficient)

Question 30

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 
V had contract to buy a boiler from N. N knew that V needed the boiler immediately for it’s laundry business. Despite that N delivered the boiler 5 months late

Answer 30

In this case N were held liable for losses suffered by V bc
- V and N had a pre-existing business relationship and N had expertise in the area. Fully aware that late delivery would have led to loss of profits
Also important bc of second limb of remoteness test
- V had entered into some exceptionally profitable gvt contracts with MoD which could not be performed. Wanted to claim damages on those contractsbut couldn’t bc they did not arise naturally in the way that ordinary lost profits would and they were not brought specifically to the attention of N.

Question 31

Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) 2008
Ship returned to ship owner late in BoC. As a result owners were unable to charter ship to a lucrative follow-on charter. Lost profits which they claimed for breach of contract. Argued that these losses would have been foreseeable to the charterers

Answer 31

HofL said damages not recoverable

• 3/5 judges Hoffman Hop and Walker said that although the loss from the follow-on charter was foreseeable by the charterers it was nevertheless not recoverable as damges bc it is essential to the remoteness doctrine that the duty-bearer undertakes responsibility for loss. In this case it could not be shown that charterers undertook such a responsibility as there was an understanding in the shipping industry that late return of a ship damages should just reflect the difference between the charter price and the market rate not necessarily the loss of a particular charter that was particularly lucrative
• Other 2 judges Hale and Roger said the losses were not foreseeable so were not recoverable. This was the correct reasoning