Remedies - expectation interest

Question 1

What are the three possible measures of expectation interest?

Answer 1

Cost of cure, loss of profit, difference in value

Question 2

Give an example of loss of profit

Answer 2

Adam is a builder who enters into an agreement with Tony to do some plumbing work for houses he is building for £5000. once Tony deducts travel expenses and tax he’d be left with £3000 profit. one day before work is due to begin Adam says he no longer needs Tony. Tony can sue for the £3000 which is his expecation loss

Question 3

Give an example of cost of cure

Answer 3

kitchen fitter fits kitchen poorly. you will need to spend money to cure the defects so your expectation loss can be framed as the cost of cure.

Question 4

Give an example of difference in value

Answer 4

you bought a chain you believed was 18ct gold worth £500 but it was actually 12ct gold worth £200. your expectation loss can be framed as the difference in value (£300)

Question 5

What possibility may arise concerning cost of cure and difference in value?

Answer 5

The possibility to claim either the cost of cure or the difference in value.

Question 6

What principle emerged from Radford v DeFroberville?

Answer 6

The court will allow the cost of cure when the claimant:
a) has actually had the work done
b) undertakes the work done
c) shows a sufficient intention to have the work done if he is granted the damages.
it must be reasonable for the claimant to carry out such work.

Question 7

Give the facts of Radford v DeFroberville

Answer 7

Radford had some houses on some land and the rest was undeveloped. he sold part of the land to DF. it was a term of the contract that DF would build a wall between their land and R’s land. they didn’t so R sued saying it would cost £3,400 to build the wall and it was difference in value. the court said it was cost of cure and awarded it.

Question 8

When will the court generally refuse to award the cost of cure?

Answer 8

When the cost of remedying the defect would be disproportionate to the benefit that would arise from curing the defect.

Question 9

Give the facts of Harrison v Shepherd Homes

Answer 9

SH built homes negligently. the foundations were improperly laid causing cracks in the walls and the houses to move. this had no safety impact but was unsightly and made the houses difficult to mortgage. H had bought one of the houses and tried to sue for cost of cure (ripping down the house and rebuilding)

Question 10

What was the decision of the court in Harrison v Shepherd Homes

Answer 10

The court said it would be unreasonable for such work to be carried out and instead awarded the difference in value

Question 11

What if both the cost of cure and difference in value measures don’t seem to fit the breach?

Answer 11

Then Ruxley electronics v Forsyth will be applied

Question 12

Give the facts of Ruxley Electronics v Forsyth

Answer 12

F wanted a 7’6” pool built by RE. but it was built 6ft deep. the cost of cure (rebuilding the pool) would be £21,000 but there was no difference in value of the pool that could be claimed.

Question 13

Give the decision of the court in Ruxley v Forsyth

Answer 13

The court said it would be disproportionate to award the cost of cure. the judge decided to award damages on the basis of loss of pleasurable amenity and awarded £2,500 to reflect this loss.

Question 14

What did Lord Mustill explore in Ruxley?

Answer 14

The idea of consumer surplus

Question 15

Which example can be used to illustrate the idea of consumer surplus?

Answer 15

The avocado bathroom suite

Question 16

What does the consumer surplus argument acknowledge?

Answer 16

that even if most people wouldn’t choose what you want, that shouldn’t stop you from recovering some damages for not getting what you wanted from the contract.