Remedies - causation of losses

Question 1

What must be established between the breach of the contract and the loss the claimant has suffered?

Answer 1

a causal link

Question 2

When can it be difficult to establish a causal link?

Answer 2

When the claimants own negligence contributes to the loss

Question 3

Which case illustrates when a claimants negligence contributed to their loss?

Answer 3

Weld Blundell v Stevens

Question 4

Give the facts of Weld Blundell v Stevens

Answer 4

S was an accountant for WB. WB wrote a letter to S defaming a company. S left the letter in a clients office who made the company aware of the defamatory letter. they sued and received damages for the defamation so WB sued S for damages because he breached his contracts clause of confidentiality and as a result WB had suffered loss.

Question 5

Give the courts decision in Weld Blundell v Stevens

Answer 5

the court said there was no causal link between the breach of confidentiality and the loss because the loss was caused by him writing the defamatory letter in the first place.

Question 6

What must the claimant prove the loss is not?

Answer 6

Too remote from the breach of contract.

Question 7

Which case sets out the general rule regarding remoteness?

Answer 7

Hadley v Baxendale

Question 8

Give the facts of Hadley v Baxendale

Answer 8

H ran a mill but the crank shaft broke. he ordered a new ne witha term of the contract being that the new shaft would be delivered within two days. it took 7. the mill could not run without this part so the mill was closed for 5 days longer than anticipated.H claimed for the loss of profits over those 5 days.

Question 9

What was the decision of the court in Hadley v Baxendale?

Answer 9

the court said the loss was too remote because it was not within the couriers reasonable contemplation that the mill would be unable to run without the part. If they had told him as much then it would have been within his reasonable contemplation.

Question 10

What is the general rule established in Hadley v Baxendale?

Answer 10

That it must be within the reasonable contemplation of both parties’ that the breach may cause a loss.

Question 11

How did the Heron II case interpret Hadley v Baxendale?

Answer 11

They asked whether the reasonable person, knowing what the defendant knew, have realised that the loss being claimed by the claimant was quite likely to result from the defendant’s breach of contract?

Question 12

How did Jackson v Royal Bank of Scotland expand upon Hadley v Baxendale?

Answer 12

Said what matters is the defendants knowledge at the time the contract is formed.

Question 13

What is imputed knowledge?

Answer 13

the defendant will be held to have in their contemplation losses that are quite likely to occur in the ordinary course of events.

Question 14

What is actual knowledge?

Answer 14

If the defendant knows of special circumstances these may enable the claimant to recover an extraordinary loss if the contract is breached.

Question 15

As time went by, what happened to the Hadley v Baxendale case?

Answer 15

There became uncertainty about its application in certain cases.

Question 16

What question did the uncertainty in Hadley v Baxendale amount to?

Answer 16

Did the defendant have to have the type of loss or the extent of loss in their reasonable contemplation.

Question 17

Has their been an answer to the question raised by Hadley v Baxendale?

Answer 17

NO

Question 18

What did the Achilleas come up with?

Answer 18

A new rule

Question 19

Who came up with the new rule in the Achilleas?

Answer 19

Lord Hoffman and Lord Hope.

Question 20

What was the new rule established in the Achilleas?

Answer 20

The defendant would be liable for loss arising from a breach if they had accepted or assumed responsibility for that loss under the contract.

Question 21

Which case occured since the Achilleas?

Answer 21

Sylvia Shipping v Progress Bulk Carriers.

Question 22

What did Sylvia Shipping say about the Achilleas case?

Answer 22

That the decision in the Achilleas is an amalgam of the orthodox approach and the broader approach.

Question 23

which test is used in the majority of cases?

Answer 23

The orthodox test established in Hadley v Baxondale.

Question 24

In what type of cases will the Achilleas be used?

Answer 24

In rare cases where the application of the general test leads to an unquantifiable, unpredictable, uncontrollable or disproportionate liability.

Question 25

Give the facts of Victoria Laundry v Newman Industries;

Answer 25

Contract for the supply of a boiler. delivery delayed for 5 months. C sued for loss of profit over that time, split into two categories of lost profit a) loss of £16 a week from general laundering business. b) loss of £262 per week from a government contract which the defendant didn’t know about.

Question 26

What was the decision of the court in Victoria Laundry v Newman Industries.

Answer 26

The first set of losses were recoverable but the second were too remote because they were unknown to the defendant and could not have been foreseen by the defendant.

Question 27

give the facts of the Achilleas

Answer 27

a ship was to be returned by charterers by 2 May. the shipowners had already contracted to hire it to someone else from 8th May for 191 days at $39,500 per day. The charterers did not return the ship until 11 May. the new charterers agreed to still take the ship but for a new rate of $31,500 per day due to the market falling. the shipowners wanted to sue the original charterers $1,300,000 for the difference between what they should have gotten from the second contract and what they actually got. the charterers said they were only liable to pay for the use of the ship for the number of days they were late - 9 days and £151,300.

Question 28

Give the decision of the court in the Achilleas

Answer 28

the house of lords said they had assumed responsibility for the 9 days but not the losses thereafter.