Remedies and damages Flashcards
what are the 3 types of damages?
legal damages - as of right
equitable damages - not as of right
statute damages - i.e. misrep, consumer rights act
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
what are nominal damages?
No actual financial loss but still have to recognise that there has been a breach, nothing to reimburse and there are no profits that will be lost. Something of value but not compensation.
Staniforth v Lyall
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.
what are compensatory damages?
No actual financial loss but still have to recognise that there has been a breach, nothing to reimburse and there are no profits that will be lost. Something of value but not compensation.
Experience Hendrix v PPX Enterprise
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
what is expectation loss?
Expectation – loss of bargain, what was expected from the contract – should start with this loss, has to be one or the other. Calculated what is expected to be lost due to the breach – Robinson v Harman
(they do not get the money spent in preparation for the contract too because these would’ve been necessary if the contract had taken place)
what is the formula for expectation loss?
loss of profits + any additional costs incurred due to the breach – costs saved by not performing = expectation loss.
what is reliance loss?
Reliance loss – compensation for expenses incurred due to reliance on the contract, hard to quantify profits or loss. Used when it’s hard to calculate profit or the contract is invalid or unenforceable. - Anglia Television v Reed
Anglia TV 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
what is the formula for reliance loss?
Wasted expenditure incurred in reliance of the contract – any benefits gained
what are liquidated damages?
Amount of damages are fixed by a term in the 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 the difference between genuine liquidated damages and a penalty are seen in Dunlop Pneumatic tyre:
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
what are the limitations on awarding damages?
causation
remoteness
mitigation of loss
what is causation and the key case?
Causation – losses must have been caused by the breach of contract, but for test!
Key case: Quinn v Burch Brothers
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.
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)
what is the two part test for remoteness set out by Hadley v Baxendale
Remoteness – Hadley v Baxendale – objective test, reasonably foreseeable
Two-part test:
Limb 1: ordinary loss, arise in the usual course of events. A reasonable person would expect this to happen if the contract was breached.
e.g. late delivery causing minor inconvenience
Limb 2: unusual loss, a loss arriving from special circumstances. Losses are not reasonably foreseeable, made known to the defendant before the contract. The defendant must have actual knowledge of the special circumstances.
e.g. a hotel informs a supplier that late delivery of furniture will cause them to lose significant revenue
Victoria Laundry v Newman:
Test further developed:
Just about businesses
Recoverable loss should be measured against a test of reasonable foreseeability
Foreseeability of loss is dependent on knowledge at the time of the contract
H Parson v Uttley Ingham - not too remote
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
what is mitigation of loss?
Claimants have to try and mitigate their loss, cannot sit back and watch their losses grow. Pilkington v Wood: reasonable steps not to spend frivolously
Just need to take reasonable action, subjective – white and carter v McGregor
British Westinghouse electric v underground electric railway = the court will balance the loss against gain when calculating the amount of damages
what are equitable remedies?
Not as of right, not to achieve justice
Used when damage is inadequate, not constrained by remoteness or causation.
Restitution - equitable remedy
his is a repayment of any money or other benefits that were given to the defendant in advance, restores their money (rescission is just concerned with the contract)
Quantum merit
Discharge through performance
In a contract for services where no price is stated
Where the case 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
what is specific performance?
Type of equitable remedy
It orders a party to perform their contractual obligations, it is hard to grant specific performance.
When will specific performance not be granted
It will not be granted in the following circumstances:
It will not be granted in personal services, cases of employment, impossibility
An individual who is no longer available
The contractual terms werent agreed on with enough certainty to enable performance
Will require ongoing supervision
Contract is an employment contract
Goods specified within the contract are no longer available
Claimant no longer wishes for the contract to be performed
Court cannot monitor contractual performance to ensure that it is completed adequately
Impossible to perform the obligations
If the claimant has previously terminated the contract following a repudiation
Personal services
Checklist for damages
Suffered any loss?
Actionable?
Breach of contract causes loss?
Reasonably foreseeable?
Mitigate the loss?
Contribute to the loss?
