Remedies

Question 1

AB Corporation v CD Company (The Sine Nomine)

Answer 1

Ratio: An efficient breach is not a ‘legitimate interest’ for the purpose of calculating a party’s restitution interest. There should be no award if wrongful profits where both parties are dealing with a marketable commodity. Damages will be adequate.

Question 2

Addis v Gramophone Company

Answer 2

Ratio: It is not possible to claim damages for injured feelings or repetitional harm under contract law.

Question 3

Anglia TV v Reed

Answer 3

Ratio: 1. A claimant can choose either its expectation or its reliance interest. 2. The claimant can claim for pre-contractual expenses.

Facts: Reed cancelled an appearance on Anglia TV at the last moment. They were unable to find a replacement and had spent money preparing the show.

Question 4

A-G v Blake

Answer 4

Ratio: Established test for restitution interest - exceptional circumstances and no other remedy adequate (available).

Facts: Blake published a memoir about his time in the intelligence services despite having undertaken not to divulge information about this. The Crown successfully recovered his royalties.

Question 5

Balfour Beatty Construction (Scotland) v Scottish Power plc

Answer 5

Ratio: A supplier of a commodity cannot be presumed to know the technical details of the way in which the commodity will be used.

Facts: A contract for a provision of power to a building site was breached, meaning work on a concrete structure being built through a ‘continuous pour’ method had to restart from scratch.

Question 6

Banco de Portugal v Waterlow and Sons

Answer 6

Ratio: Mitigation will not be weighed in nice scales. The mitigating party is only required to act reasonably in mitigation and will not lose out simply because the breaching party, who put them in the difficult position, could point to a less burdensome route that the mitigating party could have taken.

Question 7

Barclays Bank v Fairclough

Answer 7

Ratio: 1. Contributory negligence does not apply where the term breached imposes strict liability. 2. Skilled contractors owe those they work for a duty of care.

Facts: Barclays contracted with Fairclough for the cleaning of two of its warehouses roofs. The work was done inadequately by a sub-sub-contractor. Held that the sub-sub-contractor owed the sub-contractor a duty of care in respect of economic loss.

Question 8

Birse Construction v Eastern Telegraph Co

Answer 8

Ratio: Cost of cure is the usual remedy for defective works. But not if it is out of proportion and there is no intention to remedy the defect.

Question 9

British Westinghouse v Underground Electric

Answer 9

Ratio: Whilst there is no strict absolute duty to mitigate, ‘reasonable steps’ should be taken to mitigate by the wronged party.

Question 10

C and P Haulage v Middleton

Answer 10

Ratio: Claimant must show that he would be able to recoup the money he had spent if the contract had been properly performed.

Facts: Middleton had a licence for C and P’s property, which he improved despite a clause saying that he had to leave any improvements when he left. He was evicted prior to the end of the licence, and attempted to claim damages.

Question 11

Cavendish Square Holding BV v Talal El Makdessi/ ParkingEye Ltd v Beavis

Answer 11

Ratio: Established the new test for construction of liquidated damages/penalty clauses - if the clause is a secondary obligation it will be unenforceable if it imposes consequences which are out of all proportion to any legitimate interests of the innocent party in performance of primary obligation.

Facts: Makdessi - Contract for sale of a Middle Eastern marketing company contained restrictive covenants which, when breached, meant that El Makdessi was no longer entitled to the two final instalments of payment for the company. ParkingEye - Mr Beavis overstayed in a car park by an hour and was charged £85. Held that this was not a penalty as it was necessary for deterrence.

Question 12

Dunlop Pneumatic Tyre v New Garage and Motor Co

Answer 12

Ratio: The old test for construction of liquidated damages/penalty clauses - genuine pre-estimates of loss are not penalties. Overruled by Makdessi.

Question 13

Esso Petroleum v Niad Ltd

Answer 13

Ratio: Example of allowance of restitution interest.

Facts: Esso ran a scheme where they provided discounted petrol in return for knowledge about the price local competitors were selling petrol at and for selling at prices set by Esso. Niad breached this agreement by selling at higher prices for several months. Esso were unable to calculate how much they had lost and had an interest in depriving Niad of their profits as their scheme would otherwise be undermined.

Note: This decision has been criticised.

Question 14

Experience Hendrix v PPX Enterprises

Answer 14

Ratio: Emphasised the ‘exceptional’ interest required to award an account of profits.

Facts: An agreement not to issue licences to master recordings of Jimmy Hendrix’s music was breached. Restitution interest was considered as the defendant could not prove losses but was not allowed.

Question 15

Farley v Skinner (No.2)

Answer 15

Ratio: Damages can be awarded for loss of enjoyment if the major object of the contract is enjoyment or pleasure.

Facts: A surveyor incorrectly stated that noise levels over a house the defendant intended to purchase would be acceptable. This was not the case and the claimant was awarded £10,000 for loss of amenity.

Question 16

Vesta v Butcher

Answer 16

Ratio: Contributory Negligence is available as a defence if there is a breach of contractual duty and a tort.

Question 17

Galoo v Bright Graham Murray

Answer 17

Ratio: Mitigating factor - causation: the breach must be the dominant or effective cause of the loss.

Question 18

Hadley v Baxendale

Answer 18

Ratio: Established the test for remoteness - losses are recoverable if they arise in the usual course of things or were in the reasonable contemplation of both parties.

Facts: Repair of a steam engine was delayed, costing the mill owners losses that were unforeseeable to the repair-men.

Question 19

Hayes v Dodd

Answer 19

Ratio: Not possible to claim damages for mental distress unless enjoyment is the whole purpose of the contract.

Facts: The claimants’ business was irreparably damaged by the defendant’s decision to legally block the right of way to the land. Damages were awarded for economic loss but not for mental distress since this was a commercial contract.

Question 20

Jarvis v Swan Tours

Answer 20

Ratio: Damages for mental distress can be recovered if the relevant contract is one to provide enjoyment and entertainment.

Facts: Mr Jarvis booked a holiday on which he was promised many things. The holiday was woefully inadequate. Successfully awarded damages for mental distress.

Question 21

Koufos v Czarnikow (The Heron II)

Answer 21

Ratio: Only losses that are ‘not unlikely’ to occur (i.e. that have a substantial degree of probability of occurring) may be claimed.

Question 22

Lambert v Lewis

Answer 22

Ratio: If an intervening act is sufficiently likely to happen, the chain of causation will not be broken.

Facts: Claimant bought a trailer from the defendant that was broken. He continued to use it despite being aware of the issue and caused an accident. Held that the claimant’s actions broke the chain of causation.

Question 23

McRae v Commonwealth Disposals Commission

Answer 23

Ratio: Court will not award expectation interest where it is too speculative to enable the loss to be quantified.

Facts: CDC sold McRae the location of a shipwreck that never existed. McRae spent money preparing to retrieve their that was allegedly on the ship. Expectation interest could not be awarded.

Question 24

Monarch Steamship Co v A/B Karlshamns

Answer 24

Ratio: To break the chain of causation, a new intervening act must be unforeseeable.

Facts: A breach of shipping contract was interfered with by the outbreak of the war. The defendants should have foreseen this possibility and so the chain of causation was not broken.

Question 25

Omak Maritime v Mamola Challenger Shipping Co

Answer 25

Ratio: The burden of proof is on the defendant to prove that the claimant would not have recouped the money.

Facts: Claimants had not actually lost any money as they had been able to arrange short term contracts instead.

Question 26

Payzu v Saunders

Answer 26

Ratio: If the defendant’s substitute offer is the best available to the claimant, taking reasonable steps to mitigate may include accepting the offer.

Facts: Claimant failed to make first instalment payment due under a contract for silk on time. The defendant agreed to continue with the contract if payment was changed from monthly instalments to a lump cash sum. Claimant refused, purchased the silk elsewhere and sought damages as the market price of silk had increased in the interim.

Question 27

Pilkington v Wood

Answer 27

Ratio: There is no duty to embark on litigation to mitigate.

Question 28

Regus v Epcot Solutions

Answer 28

Ratio: Loss of amenity will rarely, if ever, be awarded in a commercial setting.

Question 29

Robinson v Harman

Answer 29

Ratio: Expectation interest seeks to put a party back in the same situation as if the contract had been properly performed.

Question 30

Ruxley Construction and Electrics v Forsyth

Answer 30

Ratio: The court may award damages for loss of amenity where neither cost of cure nor diminution in value are suitable.

Facts: A swimming pool was built but it was not as deep as requested. Its diminution in value was nominal and the buyer had no intention of remedying the fault by rebuilding the pool as it was still usable.

Question 31

Transfield Shipping v Mercator (The Achilleas)

Answer 31

Ratio: 1. Confirmed the Heron formation of the Hadley test of losses which are ‘not unlikely’ to occur being reasonable foreseeable. 2. It is important to consider industry standards/norms in deciding what is in the reasonable contemplation of both parties.

Facts: A dispute over how much should be paid for chartering a ship when it was delivered late. Transfield had chartered a ship from Mercator and during the delay the price that could be earned for the freight carriage was reduced. Transfield’s loss of profits were not recoverable.

Question 32

Victoria Laundry v Newman Industries

Answer 32

Ratio: Losses which are not in the normal contemplation of both parties cannot be claimed.

Facts: Claimants were able to claim for normal loss of profits but not for the loss of a particularly lucrative contract that the defendant’s were not aware of.

Question 33

World Wide Fund for Nature v World Wrestling Foundation

Answer 33

Ratio: Restitutionary damages will only be available in exceptional circumstances.

Question 34

Plantation Holdings (FZ) LLC v Dubai Islamic Bank

Answer 34

Ratio: Compensation is the fundamental principle of expectation interest.

Question 35

McGlinn v Waltham Contractors

Answer 35

Ratio: The claimant must act reasonably in regard to defective works.

Question 36

Johnson v Unisys Ltd

Answer 36

Ratio: An employer may have a general duty under implied duty to employee to prevent employee from suffering mental distress.

Question 37

Malik v BCCI

Answer 37

Ratio: Generally no damages for loss of reputation unless consequent financial loss.

Question 38

Chaplin v Hicks

Answer 38

Ratio: Loss of 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.

Question 39

Jackson v Royal Bank

Answer 39

Ratio: For the remoteness test from Hadley v Baxendale, the state of knowledge is that of the parties at the time of entering the contract.

Question 40

The New Flamenco

Answer 40

Ratio: Credit must be given for benefits caused by acts of mitigation.

Question 41

White and Carter v McGregor

Answer 41

Ratio: Duty to mitigate does not preclude a party, when suing on a debt, from going to the expense of performing his side of the contract after the other party has wrongfully repudiated.

Question 42

The Alaskan Trader

Answer 42

Ratio: To affirm a contract after a breach, the party must have a legitimate interest in doing so.

Question 43

Hounslow LBC v Twickenham Garden Developments

Answer 43

Ratio: To affirm a contract after a breach, the party must be able to do so without the co-operation of the other contracting party.

Question 44

Evening Standard v Henderson

Answer 44

Ratio: A negative injunction is an enforcement of a negative stipulation

Question 45

William Robinson and Co v Hever

Answer 45

Ratio: Court may limit the injunction to what it considers reasonable.