Remedies and damages Flashcards
What are the three types of remedies?
- Legal remedies (common law remedies) - as of right to a victim
- Equitable remedies - not as of right
- Remedies under a specific statute
what do you get for legal remedies?
Damages
What do you get for equitable remedies?
Injunctions
Specific Performance
Rescission - Rescission is a legal term that refers to the cancellation of a contract and treating it as though it never existed. The purpose of rescission is to bring the parties back to the position they were in before they entered into the contract
What are damages?
The concept of damages is to put the claimant into the position they would have been in if the contract had not been breached.
they are a legal remedy because they are ‘as of right’, if the contract has been breached.
they can either award:
- pecuniary losses (financial)
- non-pecuniary losses (mental distress)
Damages are subjective
Nominal damages:
If there has been nothing actually lost from the breach of contract (and therefore nothing to compensate) the claimant is still ‘as of right’ allowed to claim for nominal damages
Staniforth v Lyall
Staniforth v Lyall (1830)
Lyall was under a duty to load his cargo onto the claimant’s boat by a certain date. S hired his boat out immediately to another party for a greater profit that he would have made from L. he succeeded in his breach and therefore the contract was terminated (repudiated) but having suffered no loss, was awarded a nominal sum only.
Substantial damages (compensatory)
Sometimes these damages have been awarded where normally it would have been more appropriate to award nominal damages, they are meant to be used when there has been no actual loss.
Experience Hendrix LLC v PPX Enterprises
Experience Hendrix LLC v PPX Enterprises
After the death Jimi Hendrix, D had been granting licenses to exploit master recordings containing works featuring Hendrix, which breached a settlement they had in 1973. No evidence that showed a financial loss had been suffered but the courts held that a reasonable payment should be paid
No financial loss but nominal damages
Wrotham Park damages:
This is rather than compensatory damages, they try to quantify the sum which might reasonably be negotiated between the parties.
- land
- non-competition clauses
- intellectual property
can be used where the claimant would have very real problems in establishing financial loss
Wrotham Park Estate Co. Ltd v Parkside Homes Ltd
Facts
The owner of an estate sold a parcel of land to a developer, with a covenant that the developer did not build on the land without the approval of the owner of the estate. The covenant was registered as a charge on the land under the Land Charges Act 1925, as a Class D charge. The developer built on the land around it but left an area undeveloped before the patch of land was sold to a local authority in 1955 and sold on again in 1971 with approved planning permission. The plaintiff issued an injunction to prevent the construction upon the land and the defendant proceeded to build on the land.
Issue
The court was required to establish two key points. The first was whether the restrictive covenant had passed with the land and was therefore enforceable by the plaintiff. The second was if the covenant was enforceable, whether damages could be claimed by the plaintiff as a result of the land being built upon. It was important for the court to consider the nature of the prohibition on the land and whether the benefit of the covenant could be identified.
Decision/Outcome
The covenant could be enforced as it was sufficiently defined and registered with the land. However, it would be difficult and unjust to demolish the roads and houses that had already been developed. Therefore, the court ordered that damages should be granted. In terms of measuring damages, the court held that the sum should equate to an amount that would have been able to reasonably relax the covenant.
Morris Garner v One Step Ltd:
Negotiating damages are only available where the contractual right that was breached can be properly viewed as an asset
Negotiating damages are compensatory and not restitutionary in nature
Non-compete and non-solicitation covenants are not ‘assets’ and thus their breach cannot be compensated by negotiating damages
Facts
The Morris-Garners, who were former shareholders (Ds) of One Step (Support) Limited (C), entered into restrictive covenants not to compete with C and not to solicit its clients (these covenants are known as ‘non-compete’ and ‘non-solicitation’ covenants)
However, in breach of the covenants, Ds started a similar business that competed with C, that led to loss of profits for C
C sued for breach of the restrictive covenants and were awarded damages amounting the hypothetical fee it would have reasonably accepted to release Ds from the covenants (known as ‘negotiating damages’)
The trial judge awarded such damages on the basis that financial loss was difficult to quantify
The Court of Appeal upheld that award on the basis that such damages are available whenever it would be just to award them in the circumstances, such as when loss is difficult to quantify and when the breach is deliberate
Held (Supreme Court)
Negotiating damages are not available, compensatory damages based on the financial loss suffered should be awarded instead.
- Non Pecuniary Losses (Speculative damages)
The general rule is that damages wont be awarded for a non pecuniary matter such as mental distress (Addis v Gramophone)
However the exception to the rule is that damages can be awarded if the sole purpose of the contract was non-pecuniary.
Jarvis v Swan tours - disappointment awarded because the contract was entered into for the specific provision of enjoyment and entertainment therefore could get damages for being disappointed.
Chaplin v Hicks - loss of chance
What are limitations on awarding damages:
Causation
Remoteness
Mitigation of Loss
Causation (outline and case)
the losses must have been caused by the breach of contract. It is the ‘but for’ test, But for the breach of contract would the claimant have suffered the loss claimed.
Must prove the loss was from the breach which prevents damages
Quinn v Burch Brothers - They breached the contract by not providing C with a step ladder as per their contract, C therefore used a trestle table instead and fell and injured himself. Tried to claim from D damages, however the courts held that the breach provided the opportunity for the injury but was not the cause. (they did not make him use the trestle table)
Quinn v Burch Brothers
Quinn v Burch Brothers - They breached the contract by not providing C with a step ladder as per their contract, C therefore used a trestle table instead and fell and injured himself. Tried to claim from D damages, however the courts held that the breach provided the opportunity for the injury but was not the cause. (they did not make him use the trestle table)
Remoteness:
D will only be liable for losses that were reasonably foreseeable as arising from the breach
Hadley v Baxendale- A mill owner made a contract with a carrier to deliver a crankshaft for his mill, the mill had to be closed whilst waiting for this part, the carrier did not know this. He said it would take one day but delayed and it took 7. C tried to claim for loss of profits. The courts held that he could not claim because it was too remote - the D did not know that C would have to close.
Remoteness is a two part test
Hadley v Baxendale:
Hadley v Baxendale- A mill owner made a contract with a carrier to deliver a crankshaft for his mill, the mill had to be closed whilst waiting for this part, the carrier did not know this. He said it would take one day but delayed and it took 7. C tried to claim for loss of profits. The courts held that he could not claim because it was too remote - the D did not know that C would have to close.
Two Part Test for remoteness test: Hadley v Bacendale
The first part is objective - what loss is a natural consequence of the breach i.e. late delivery (fairly and reasonable be considered arising naturally from the breach)
The second part is subjective - based on specific knowledge of potential losses in the minds of both parties when the contract is formed
later developed from Victoria Laundry v Newman
Victoria Laundry Ltd v Newman Industries Ltd
Contract to deliver a boiler to the laundry company but was not delivered until 5 months after the contract. Laundry successfully sued for loss of its usual profits from the date of breach. It was a natural consequence loss. Laundry also claimed for additional lost profits from a special contract that it had been unable to take up without the boiler. Claim failed as the special contract was unknown to the D at the time the contract was made.
Recoverable loss should be measured against a test of reasonable foresee ability.
Foresee-ability of loss is dependent on knowledge at the time the contract was made.
Knowledge is two types: common knowledge and actual knowledge of the D
Case showing what the courts considered as not too remote: H Parsons v Uttley Ingham
The Claimant pig farmers purchased a food storage hopper from the defendant for the storage of pig feed. The hopper was installed negligently and lack of ventilation caused the pig feed to go mouldy. As a result, many of the pigs contracted e-coli and died. The Claimant claimed over £36k in respect of the loss of profit, vet bills and other costs relating to the death of the pigs. The Defendant contended this damage was too remote as it was not in the contemplation of the parties that the poor ventilation would cause e-coli and death of the pigs.
It was not remote
Mitigation of loss:
Claimants have to try and mitigate their loss, they cannot sit back and watch their losses grow, they must try to minimise them.
Pilkinton v Wood:
The claimant purchased a house which turned out to have a defective title. Shortly after the purchase he, obtained employment elsewhere and needed to relocate. He had difficulty in selling the house due to the defect in title He brought an action against his solicitor for his negligence in failing to notice the defect.
Held:
The solicitor was liable for the difference in value between what it was worth without the defect and what it was worth with the defect. However, he was not liable for the added loss caused by the need to move as it was not in the reasonable contemplation of the parties that he would move so soon after sale.
On the issue of mitigation:
The claimant was entitled to sue the vendor, although the court held there was no duty to sue the vendor in order to mitigate their loss arising from the defendant’s negligence.
Pilkington v Wood
The claimant purchased a house which turned out to have a defective title. Shortly after the purchase he, obtained employment elsewhere and needed to relocate. He had difficulty in selling the house due to the defect in title He brought an action against his solicitor for his negligence in failing to notice the defect.
Held:
The solicitor was liable for the difference in value between what it was worth without the defect and what it was worth with the defect. However, he was not liable for the added loss caused by the need to move as it was not in the reasonable contemplation of the parties that he would move so soon after sale.
On the issue of mitigation:
The claimant was entitled to sue the vendor, although the court held there was no duty to sue the vendor in order to mitigate their loss arising from the defendant’s negligence.
The claimant does not need to go to extreme lengths to mitigate their loss only need to what is reasonable
British Westinghouse Electric v Underground Electric Railways (1912)
Facts
Underground Electric Railways (UER) purchased turbines from British Westinghouse Electric Co (BWEC). The turbines were faulty in that they were deficient in power. UER used the defective turbines for a time and then purchased new turbines which were more efficient than the defective ones would have been even if they had not been faulty. UER brought an action for breach of contract.
Issues
UER claimed the cost of the replacement turbines. They asserted the purchase was reasonable and prudent and, therefore, the cost of purchasing them should be recoverable as a direct consequence of the breach. Additional profits made from purchasing the new turbines was not a matter for consideration when assessing damages. BWEC contended that even if the turbines had not been defective, the more efficient turbines would have been purchased in any event and, therefore, UER had not suffered a material loss because of the defect. Damages awarded are to place the innocent party in the position he would have been had there been no breach. Even if the new turbines were purchased because of the breach, account should be taken of the increased profits made with the installation of the more energy efficient turbines.
The court will balance out the loss against gain when calculating the amount of damages
Categories of recoverable loss:
Loss of a bargain
Reliance loss
Expectation loss
Restitution
