Remedies II Flashcards
What is the problem with Causation?
Where some event intervenes (some other cause of loss) which means that it cannot be said that the D’s breach caused the loss.
All you need to show is that a matter of ‘common sense’ that D’s breach caused the loss - Reg Glass v Rivers
Reg Glass v Rivers
P got robbed by burglars. D agreed to provide burglar proof door. The burglar proof door was faulty. The burglar’s got in and stole P’s dog.
Held: D’s were responsible because if the door was reasonably ‘fit for purpose’ then burglars would not have gained entry. P could recover
What is the situation where the loss is a result partly because of D’s conduct and partly of some other factor?
Courts say where there are concurrent causes (more than one cause) and the D’s is A CAUSE (doesn’t need to be main or sole cause), then D is liable. - Alexander v Cambridge Credit Corporation
Alexander v Cambridge Credit Corporation
Auditors of cambridge credit corporation failed to carry out job properly.
Accounts flaw and auditors signed when they shouldn’t have. Had the accounts the auditor signed off on been done properly, it would be evidence that the company would be serious financial problems. This happened in 1971.
Company continued trading, racking up more losses until a receiver was appointed in 1974.
Held: Majority say it was enough to be ‘a case’ of the loss. It was said failure to audit books properly, which in a common sense way, cause the damage. Since had that failure not occurred, the company would have ceased trading.
What is break in the chain of causation?
D can argue that whilst they had breached the contract, the losses were caused by an act of the Plaintiff rather than the breach. English case: Lexmead v Lewis.
Lexmead v Lewis
D supplied a towing hinge that was defective, there was an accident.
The thing became detached and caused the accident, injuring a third party. P was liable to third party.
P argued accident was by fault of the towing hinge.
Held: D on the facts, was not liable because P had become aware or ought to have been aware that the cupping mechanism was damaged and P had failed to repair or check it or replace it. In other words, the act of the P failing to repair, broke the chain of causation from the breach to the loss.
What is the concept or Remoteness?
You can’t recover every conceivable loss that flows from the breach. Haxley v Baxendale.
Hadley v Baxendale
The general rule is that damages for breach of contract are too remote unless they:
1. Arise naturally i.e. as a result of the usual course of things OR
The Heron II
Wenham v Ella
2. Even if they don’t arise naturally, they were within the reasonable contemplation of both parties at the time they made the contract, as the probable result of the breach.
Victoria Laundry v Newman Industries
The Herron II - What does arise naturally mean?
P contract to get ship to carry something from D.
Ship deviated so sugar was late. By the time shipment arrived, market in sugar had fallen, P got less for sugar than if the ship arrived on time.
Were they liable in different between market had the ship arrived on time and when the ship actually arrived?
HOL Held: the ship must be presumed to know that prices in commodity markets fluctuate and the loss could be set to rise naturally or as a result of the usual course of things
Wenham v Ella
Concerned property development.
P attempting to have existing land transferred to D for property development.
P made some payments, but land was never transferred, hence interests in land were not transferred.
The loss was such that it would be in the natural course of things that if the agreement was not performed, the investor would lose.
Even if losses don’t arise in the natural course of things, if they’re within reasonable contemplation of the parties at time of contract, they can recovered. What’s the authority for this?
Victoria Laundry v Newman Industries - P was a dryer and launderer wishing to expand business. They contract with D for new boiler. Boiler supposed to be delivered on 5th June. D dropped it and was damaged and took some time to repair. Only delivered in November. P lost profits that they could have enjoyed had the boiler been delivered on time. Profits came under two categories: 1. From contracts with people 2. From contracts with government. Could launderer recover costs?
Held: Normal loss of profits (rather than lucrative ones) were certainly within the reasonable contemplation of the parties. D knew that P needed boiler immediately and they were in the same industry themselves.
P could not recover for losses under ministry of supply contracts because those were not within reasonable contemplation by D at time of entering into contract.
Is reasonable contemplation enough or is there an extra hurdle?
Hoffman in Transfield Shipping v Mercator Shipping said that D has to assume responsibility for damages.
This case: Ship was chartered for redelivery on 2 may 2000.
In april, in anticipation of shipping redelivered, shippers agreed to recharter the ship to another company. They had to have ship back by 8th of May, or they could cancel. Ship was delayed and it was obvious it wouldn’t be available for new charterers. Market had fallen at the time, therefore chartered less than 39,000 it could only be chartered for 31,000 a day.
Could P recover difference between price of delivery on 8th May and lower market price caused by late delivery?
Held: Charterer isn’t responsible for difference in value because they knew nothing about the lucrative charter that was to follow on from their own and therefore couldn’t be liable. D not liable.
Commonwealth v Amann - reasonable person
There are different types of knowledge:
1. where everyone as a reasonable person is taken to know the ordinary course of things and as a result are liable for those.
Extends the rule that where damages were within reasonable contemplation even if in the ordinary course of things they wouldn’t have arisen, they can be recovered.
What is the issue with mitigation?
P is free to act as they wish. Nevertheless if they fail to mitigate their losses they will be unable to recover that portion of the loss which is attributable to the failure to mitigate.
There are two situations where P has failed to mitigate:
1. Reasonable inaction by P reduces the losses P can recover. In other words, P must take reasonable steps to minimise their loss - Burns v MAN Automotive
- P must not unreasonably incur expense subsequent to the breach. - Banco v Waterlow
- The plaintiff obtains a benefit by the breach - British Westinghouse case
Banco v Waterlow
D contract to print bank notes for P bank.
Breach of contract, newly printed notes got into hands of criminals.
So there was problem of illegal notes circulating.
On discovering this, Bank withdrew all notes from circulation and undertook to exchange notes that had been illegally circulated for ones that were valid. This was very expensive to do.
D argued they should only be liable for printing new notes, not for the ones swapping illegal for new ones.
Held by HOL: The bank had acted reasonably. The fact P can suggest alternative ways which are les burdensome to him, is irrelevant. It wasn’t for D to dictate, you look at P’s conduct from the view of public.
