REMEDIES; LIQUIDATED

Question 1

What are liquidated damages? (1)

Answer 1

Where the amount of damages has ben fixed by a term in the contact.

Question 2

When will courts accept liquidated damages?(1)

Answer 2

The courts will only accept the sum specified as the award of damages if the sum identified in the contract represents an accurate and proper estimate of the of loss, if not it is seen as a penalty and will not be enforceable.

Question 3

In what case did the courts determine the difference between genuine damages and a penalty? (1)

Answer 3

Dunlop pneumatic tyre co v new garage and motor co (1914)

Question 4

What did the courts decide under the Dunlop case? (5)

Answer 4

-an extravagant sum will always be a penalty
-payment of a large sum for failure to settle a debt is probably a penalty
-a single sum operating in respect of a variety of different breaches is likely to be a penalty
-the wording used by the parties is not necessarily conclusive
-it is no bar to recovering a liquidated sum that actual assessment of the loss was impossible before the contract.

Question 5

In what case did the Supreme Court create a new rule providing the difference between genuine between penalties and liquidated damages?(2)

Answer 5

Cavendish square holding BV v Tallahassee El makdessi (2015)
Parkingeye ltd v Beavis (2015)

Question 6

What occurred in the case of Cavendish square holding BV v tall el makdessi and when was it? (3)

Answer 6

The court held that the provisions contained in the agreements were there to protect the legitimate interests of the buyer, therefore if he did not pay his share he would have to reduce the price of his own shares greatly. (2015)

Question 7

What occurred in the case of parking eye Ltd v Beavis and when was it? (3)

Answer 7

The defendant argued that the ticket given as a result of his overstaying in a car par was a penalty and therefore unenforceable. (2015)

Question 8

What did the Supreme Court state in parking eye Ltd v Beavis (2015)? (2)

Answer 8

‘The correct test for a penalty is whether the sum or remedy stipulated as a consequence of a breach of contract is exorbitant or unconscionable when regard is had o the innocent party’s interest in the performance of the contract’ - lord hodge

Question 9

What principles will apply under the new test t determine whether the damages are a penalty or genuine? (10)
ONE

Answer 9

The amount no longer has to be a genuine pre-estimate of loss.

Question 10

What principles will apply under the new test to determine whether the damages are a penalty or genuine? (10)
TWO

Answer 10

This rule applies to commercial and consumer cases

Question 11

What principles will apply under the new test t determine whether the damages are a penalty or genuine? (10)
THREE

Answer 11

The party seeking to rely on the term des not have to have suffered loss.

Question 12

What principles will apply under the new test t determine whether the damages are a penalty or genuine? (10)
FOUR

Answer 12

The purpose of the term can be to actas a deterrent against a specific breach of contract.

Question 13

What principles will apply under the new test t determine whether the damages are a penalty or genuine? (10)
FIVE

Answer 13

The recompense under the term does not have to be financial.

Question 14

What principles will apply under the new test t determine whether the damages are a penalty or genuine? (10)
SIX

Answer 14

He term can only apply to a breach of a primary obligation, not a secondary one, such as paying a contractual penalty.

Question 15

What principles will apply under the new test t determine whether the damages are a penalty or genuine? (10)
SEVEN

Answer 15

The traditional test in Dunlop are useful for cases concerning standard damages lauses but do not work in complex cases. The tests are not fixed rules of general application to all situations.

Question 16

What principles will apply under the new test t determine whether the damages are a penalty or genuine? (10)
EIGHT

Answer 16

In more complex cases, a broader approach,which focuses on the nature and extent of the innocent partys interest in the performance of the relevant obligation is suitable.

Question 17

What principles will apply under the new test t determine whether the damages are a penalty or genuine? (10)
NINE

Answer 17

A term with respect to damages may be justified by some consideration apart from the desire to recover compensation for a breach (commercial justification approach)

Question 18

What principles will apply under the new test t determine whether the damages are a penalty or genuine? (10)
TEN

Answer 18

The old penalty rule is an interference of the freedom of contact.

Question 19

What does quantum merit mean? (1)

Answer 19

Recovery of an unqualified sum for services already rendered.

Question 20

Hat are the circumstances in which quantum merit award is given? (3)
ONE

Answer 20

In a contract for services where no price is stated as in Upton rural district council v Powell (1942); A retained fireman provided services with no fixed agreement as to wages - the court awarded a reasonable amount.

Question 21

What are the circumstances for which quantum merit will be awarded? (3)
TWO

Answer 21

Where the circumstances of the case show that a fresh agreement. Can be implied in the place of the original one as in Steven v Bromley (1919); Steven had agreed to carry steel at a specified rate. When steel was delivered it contained extra goods, Steven was able to Liam’s extra for additional items.

Question 22

In what circumstances can quantum merit be awarded? (3)
THREE

Answer 22

Where a party has elected to consider the contract discharged by the others breach, or where a party has been prevented from performing by the others breach party; in other case they might claim for work thy have already done as in De barnady v Harding (1853); a principal wrongly evoked his agents authority to act on his behalf. The agent was then entitled t claim for the work h had already done and for expenses incurred.