Remedies and damages

Question 1

What are the three types of remedies?

Answer 1

1. Legal remedies (common law remedies) - as of right to a victim
2. Equitable remedies - not as of right
3. Remedies under a specific statute

Question 2

what do you get for legal remedies?

Answer 2

Damages

Question 3

What do you get for equitable remedies?

Answer 3

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

Question 4

What are damages?

Answer 4

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

Question 5

Nominal damages:

Answer 5

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

Question 6

Staniforth v Lyall (1830)

Answer 6

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.

Question 7

Substantial damages (compensatory)

Answer 7

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

Question 8

Experience Hendrix LLC v PPX Enterprises

Answer 8

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

Question 9

Wrotham Park damages:

Answer 9

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

Question 10

Wrotham Park Estate Co. Ltd v Parkside Homes Ltd

Answer 10

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.

Question 11

Morris Garner v One Step Ltd:

Answer 11

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.

Question 12

4. Non Pecuniary Losses (Speculative damages)

Answer 12

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

Question 13

What are limitations on awarding damages:

Answer 13

Causation
Remoteness
Mitigation of Loss

Question 14

Causation (outline and case)

Answer 14

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)

Question 15

Quinn v Burch Brothers

Answer 15

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)

Question 16

Remoteness:

Answer 16

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

Question 17

Hadley v Baxendale:

Answer 17

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.

Question 18

Two Part Test for remoteness test: Hadley v Bacendale

Answer 18

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

Question 19

Victoria Laundry Ltd v Newman Industries Ltd

Answer 19

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

Question 20

Case showing what the courts considered as not too remote: H Parsons v Uttley Ingham

Answer 20

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

Question 21

Mitigation of loss:

Answer 21

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.

Question 22

Pilkington v Wood

Answer 22

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

Question 23

British Westinghouse Electric v Underground Electric Railways (1912)

Answer 23

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

Question 24

Categories of recoverable loss:

Answer 24

Loss of a bargain
Reliance loss
Expectation loss
Restitution

Question 25

Recoverable loss: Loss of a bargain

Answer 25

Places the claimant in the same financial position as if the contract had been properly performed
This can be seen in a number of ways:
- The difference in value of the goods and services in comparison to what they have actually got
- If there is a market, damages will be the difference between contract and market price
- loss of profit not just for the goods but the profit they could have made if they had the goods in time
- loss of a chance (speculative)

Question 26

recoverable loss: Reliance Loss

Answer 26

the expense incurred by a claimant who relied on a contract being performed.
Anglia Television Ltd v Reed:
Anglia TV spent lots on preparing for a film, Reed agreed to be the main actor but then pulled out. Couldn’t find a suitable replacement so the film wasn’t made. Anglia TV could not predict whats its profits would be on the film so the court awarded damages based on reliance loss
They had relied on the contract then lost this.
Can also claim for loss of amenity as seen in Farley v Skinner - claim loss and discomfort

Question 27

recoverable loss: Expectation loss

Answer 27

This is the usual means of damages for breach of contract. Refers to the innocent parties loss of bargain. Includes profit it would would have expected to receive had the contract been performed.
Aim of expectation loss is to the put the innocent party if the same position if the contract had been performed.
Difference to reliance loss:
Wasted Expenditure, Expenses incurred by the claimant in reliance of the contract being performed. If the contract had not been made. Can’t use both

Question 28

recoverable loss: Restitution

Answer 28

This is a repayment of any money or other benefits that were given to the defendant in advance of the contract that is breached.
It restores their money to them

Question 29

Liquidated damages:

Answer 29

the amount of damages are fixed by a term in contract. Courts will only accept this if it is an accurate representation of loss. If not, it is seen as a penalty and not enforceable. How to determine between gen liquidated and a penalty as seen in Dunlop:
- Extravagant sum will always be a penalty
- Large sum for failure to pay a small debt is probably a penalty
- Single Sum operating for many different breaches is probably a penalty
Must be able to show that the clause is to protect a legitimate interest and it is not unreasonable
Subjective

Question 30

Cavendish Square Holding BV v Talal El Makdessi

Answer 30

Involved the sale of a Middle Eastern media business. The contract stated that if the seller didn’t comply with the terms preventing him from completing with the buyer, then he would lose his rights in the future payments that would otherwise have been due to him and he would have to sell his shares to the buyer at a greatly reduced price. Courts held that the provisions contained in the agreements were there to protect the legitimate interests of the buyer

Liquidated damages

Question 31

Quantum Merit:

Answer 31

In a contract for services where no prices are stated
Where the cases shows that a fresh agreement can be implied in place of the original one
In a discharge case where it is discharged via breach or the party has been prevented from full performance.

Question 32

Equitable remedies:

Answer 32

These are not legal remedies, they are not ‘as of right’, used when damages are ‘inadequate’, not constrained by remoteness or causation. One equitable remedy is an injunction.

Specific performance:
type of equitable remedy, it orders one party to perform their contractual agreement. It is hard to grant specific performance.
Not be granted in personal services, cases of employment, impossibility.

Question 33

Specific Performance:

Answer 33

Specific performance:
type of equitable remedy, it orders one party to perform their contractual agreement. It is hard to grant specific performance.
Not be granted in personal services, cases of employment, impossibility.
1. a contract specifies an individual who is no longer available
2. contractual terms weren’t agreed with enough certainty to enable performance
3. contract will require ongoing supervision
4. the contract is an employment contract
5. the goods specified within the contract are no longer available
6. claimant no longer wishes for contract to be performed
7. the court cannot monitor contractual performance to ensure that it is completed adequately.
8. it is impossible to perform the obligations
9. the claimant has previously terminated the contract following a repudiation