Remedies Flashcards
Whats the purpose of damages?
The purpose is to put the claimant in the position they would have been had the contract been performed properly.
What are liquidated damages?
Compensation agreed in advance by the parties should a breach of contract occur, there will be a term within the contract stating the amount.
Sum will only be accepted if it represents an accurate and proper assessment of loss.
What happened in Bridge V Campbell Discount?
Clause in agreement for a car included to cover depreciation of the vehicle.
- Did not reflect the actual depreciation, therefore became a ‘penalty’ and was unenforceable.
What criteria were set out to decide whether liquidated damages could be used?
In Dunlop Tyre v New Garage and Motor stated:
- Extravagant sum will always be treated as a penalty.
- Large sum for failure to cover small debt will be a penalty.
- Fixed sum used to cover variety of breaches will be penalty.
What were the new rules regarding liquidated damages that were set out in Parking Eye V Beavis?
New rules widen the enforceability of penalty clauses and the courts will now consider the wider commercial context of the agreement, they include:
- Penalty does not need to be financial.
- Party wanting to reply on the penalty does not need to face a loss.
- Clause can be used to act as a deterrent against a specific breach.
- No longer has to be a pre-estimate of actual loss.
- Applies to commercial and consumer contracts.
What are unliquidated damages?
Damages which are decided by the courts and have not been agreed in advance.
What can unliquidated damages be awarded for?
- Nominal damges awarded when they have not suffered a loss but there has been a breach so small amount awarded.
- Charter V Sullivan - Substantial damages are the usual type and compensate for the loss suffered.
- Exemplary damages award the injured party money in excess of the amount actually needed. To show the courts disapproval.
How do the courts calculate compensatory damages?
Can be hard to calculate loss when performance has not been completed so they look at :
- Loss of a bargain this is the amount for the loss of the opportunity including loss of profits and loss of chance.
- Victoria Laundry V Newman industries
- Chaplin V Hinks - Consequential loss, loss must be foreseeable in order for it to be recoverable. Cannot be too remote and costs incurred to sort out the consequences can be recovered.
- Loss of profit must show that the breach has affected earnings, for established businesses look at previous earnings and for new businesses look at the investment put in.
- Anglia Television V Reed - Emotional distress can be awarded in consumer contracts.
What is meant by mitigation of loss?
Claimant must do his best to keep the losses suffered to a minimum, and cannot recover losses that could have been avoided.
British Westinghouse Electricity V Underground Electric Railway of London:
- No damages awarded as new turbines more efficient than original so covered the cost of replacing them.
Pilkington V Wood:
- Do not have to completely remove or solve the loss but would not be able to claim if they had made the loss worse.
What is meant by causation?
The loss must be caused by the breach.
- The breach of contract must be the main cause of the claimants loss, using the ‘but for’ test.
- Breach of duty plus an intervening act can still form the basis of liability.
Stansbie V Troman-
- Breached duty of securing the premises. Resulted in a burglary.
- Liable for the loss as burglary did not break the chain of causation.
What is meant by remoteness?
Is the test used by the courts to determine whether the losses resulting from a breach of contract are recoverable.
- They must be aware of the consequences at the time of making the contract.
Hadley V Baxendale-
- Ordered new crankshaft as had broken. Shaft delivered late and tried to sue for loss of profit.
- Un-aware the mill couldn’t operate without it so the claim was unsuccessful as it was too remote.
What is direct loss?
The type that would normally arise from a breach and is presumed to be in contemplation at time contract was made.
Koufos V C Czarnikow-
- Able to recover damages for the late delivery of cargo as they knew the market for the cargo.
- Liable for the loss that a reasonable man would consider not unlikely.
What is abnormal loss?
Type of loss that is out of the ordinary, its only recoverable is at the time of the contract D knew that it could happen.
Victoria Laundry V Newman Industries-
- Lost profits when boiler delayed as well as big contract.
- Could recover for loss of profit but not for valuable contract as D was not aware.
If loss in contemplation then it doesn’t matter if the amount was more than foreseeable.
Wroth V Tyler-
- Breach of contract delayed house sale, foreseeable prices could rise.
- Not foreseeable as to extent but liable for entire loss.
What are equitable remedies?
These are remedies that are available at the courts discretion.
- Recisson
- Injunction
- Specific performance
What is recisson?
This is an equitable remedy that can be used for misrepresentation.
Puts the parties back to their pre-contract position.
