Remedies

Question 1

Poussard v Spiers

Answer 1

A term is a condition if it goes to the root of the matter. This allows the claimant to withhold the contract price

Question 2

Bettini v Gye

Answer 2

A term is a warranty if it does not change the contract in substance

Question 3

Hong Kong Fir v Kawasaki

Answer 3

An innominate term is where the breach of a term is judged to be a condition or warranty dependent on the outcome. If the contract deprives the claimant of the full benefit of the contract then it is a condition.

Question 4

Schuler v Wickman

Answer 4

The importance placed upon the term will affect whether it is a condition or warranty

Question 5

I.C.U.R

Answer 5

Incorporation - Term incorporated into contract and aware of term
Construction - Liquidated or penalty
UCTA 1977 - Exclusion clause
UTCCR 1999 - Consumer contracts only (Business to consumer)

Question 6

Dunlop v New Garage; Test for valid liquidated damages - Lord Dunedin

Answer 6

1. Not dependent on how parties label terms
2. Designed to scare the contractor into compliance (in terrorem)
3. Dependent on the knowledge at the time of contracting
4. If sum is extravagantly greater than possible loss then it is a penalty
5. Greater sum payable for late payment
6. Sum at a certain level regardless of nature of the breach

Question 7

McAlpine v Tilebox

Answer 7

Pre-estimate of loss does not have to exactly co-incide with actual loss, as long as it was a genuine pre-estimate

Question 8

Parker v SE

Answer 8

For term to be incorporated the parties must be aware of the term.

Question 9

L’Estrange v Graucob

Answer 9

Incorporation by signature

Question 10

Robinson v Harman

Answer 10

Expectation interest - Puts the parties in the position they would have been in had the contract been properly performed

Question 11

Ruxley v Forsyth

Answer 11

Establishes the 3 levels of restitution;
Difference in value
Cost of cure
Loss of amenity
* these need only be considered if there would be a difference between them

Question 12

Anglia TV v Reed

Answer 12

Reliance interest - This puts the parties in the position as if they had not contracted.
Anglia TV v Reed states that there is an unfettered choice between a reliance and expectation interest
Can claim for pre-contractual losses

Question 13

Regus v Epcot

Answer 13

Loss of amenity rarely awarded in commercial contracts

Question 14

McGlinn v Waltham Contractors

Answer 14

Cannot create the loss you are claiming for

Question 15

McRae v Common Wealth Disposals

Answer 15

Court will not award expectation damages which are too speculative

Question 16

C + P Haulage v Middleton

Answer 16

Reliance claim not possible if losses would possibly not be recovered anyway.

Question 17

AG v Blake

Answer 17

Restitution interest - This is where profits can be claimed even where there is no loss
Criteria;
Exceptional circumstances
Legitimate interest in the deprivation of profit
Other remedies inadequate

Question 18

Sine Nomine

Answer 18

Where it is an efficient breach; compensatory damages would suffice and there is no legitimate interest in the profits, then there is no claim for restitution

Question 19

Esso v Niad

Answer 19

High watermark case, restitution allowed even though damages not exceptional

Question 20

WWF v WWF

Answer 20

Affirms that restitution only possible with exceptional damages

Question 21

Addis v Gramophone

Answer 21

General rule that there is no remedy for mental distress

Question 22

Jarvis v Swans

Answer 22

Mental distress can be claimed if the contract is purely for enjoyment

Question 23

Malik v BCCI

Answer 23

Can claim for loss of reputation

Question 24

Chaplin v Hicks

Answer 24

A claim can be made for loss of chance

Question 25

Galoo v Bright Graham Murray

Answer 25

• Causation found if the breach is the dominant and effective cause of loss
• Court takes a common sense approach to causation

Question 26

Lambert v Lewis

Answer 26

Breach not dominant and effective cause where claimant had knowledge of breach and continued into contract

Question 27

Hadley v Baxendale

Answer 27

Test for remoteness in relation to a contractual remedy;

1. If the loss arises ‘in the usual course of things’, then there is judged to be imputed knowledge of the loss and it is claimable
2. If an abnormal loss is ‘in contemplation of both parties’, then the loss is claimable as the parties are judged to have specific knowledge of the abnormal loss

Question 28

Jackson v Royal Bank

Answer 28

Remoteness test is based on knowledge at the time of contracting

Question 29

Victoria Laundry v Newman

Answer 29

Court of appeal interpretation of the remoteness test. Defendant had knowledge of the loss from breach, and the loss was not abnormal so imputed knowledge would suffice anyway. No knowledge of abnormal loss, so not claimable

Question 30

The Heron II

Answer 30

HoL interpretation of remoteness test. Claim for lost profit from late delivery was allowed as though there was not actual knowledge it was judged that the loss was not ‘unlikely to occur’ so this constituted imputed knowledge for the purpose of the Hadley v Baxendale test (1st limb)

Question 31

Balfour Beatty v Scottish Power

Answer 31

• Loss was not ‘in usual course of things’ therefore required that the loss be ‘in contemplation of both parties’, which it was not as scottish power had no knowledge of particular specific loss which was possible
• For the loss to be ‘in contemplation’ it must have had a ‘‘very substantial degree of probability of occurring’.

Question 32

The Achilleas

Answer 32

Unexpected drop in charter rates meant that loss incurred. Not ‘in normal course of events’ so imputed knowledge not sufficient. No actual knowledge, which was necessary as loss judged to be unexpected so abnormal loss.

Question 33

Mitigation

Answer 33

No obligation to mitigate but cannot claim the losses which you do not try and mitigate

Question 34

British Westinghouse v Underground

Answer 34

Only required to take reasonable steps to mitigate

If loss completely mitigate then there is no claim

Question 35

Pilkington v Wood

Answer 35

Not expected to litigate to mitigate. (e.g. liquidated damages clause which you are claiming as loss, no need to challenge this, as no obligation to litigate)

Question 36

Payzu v Saunders

Answer 36

If more expensive to contract elsewhere then obligated to accept breach

Question 37

Banco de Portugal v Waterlow

Answer 37

Do not have to mitigate perfectly

Question 38

Vesta v Butcher

Answer 38

Contributory negligence only available where the breach of contract is also a tort (negligent)

Question 39

What is the mnemonic for the structure of a remedies question?

Answer 39

I (Introduction)
Party (Parties and contract)
Tonight (Terms)
But (Breach - Condition/warranty)
Later (Liquidated damages?)
Can't (Compensation)
Ovulate (Other claims)
Lost (Limiting factors)
Consciousness (Conclusion)

Question 40

Hayes v Dodds

Answer 40

No mental distress damages in a commercial contract

Question 41

Farley v Skinner

Answer 41

• Widens mental distress damages to include a ‘major object of the contract’ as enjoyment

Question 42

What measure of loss to apply?

Answer 42

• Unfettered choice
• Is there any reliance?
• Is the Expectatino greater than the reliance?
• Is the expectation too speculative (McRae v Commonwealth Disposals)

Question 43

Nominal damages

Answer 43

Awarded where LOA would be awarded but cannot be as it is a commercial contract (Regus v Epcot)

Question 44

Girozentrale v Country

Answer 44

The cause can still be the dominant and effective cause, even if it is not the only cause of even the most potent. Wide interpretation.

Question 45

Sumpter v Hedges

Answer 45

Quantum Meruit awarded

Question 46

Birse v Eastern Telegraph

Answer 46

• The cost of cure is the prima facie measure of compensation in construction works. However will not be awarded if disparity between that and diminution in value.

Question 47

McGlinn v Waltham

Answer 47

If money were to be awarded and it would not be used to remedy defect then it will not be awarded as LOA will be awarded instead

Question 48

Interfoto v Stiletto

Answer 48

Courts will strike out a penalty clause and impose a reasonable sum