The Assessment of Damages Flashcards
What is the primary purpose of contract damages?
a) To punish the breaching party
b) To restore the innocent party to their pre-contractual position
c) To compensate the innocent party by putting them in the position they would have been in had the contract been performed
d) To provide a windfall to the claimant
c) To compensate the innocent party by putting them in the position they would have been in had the contract been performed
Explanation:
The leading case, Robinson v Harman (1848), established that damages in contract law aim to protect the claimant’s expectation interest rather than punish the breaching party.
What type of damages are awarded when no financial loss has occurred?
a) Reliance damages
b) Nominal damages
c) Expectation damages
d) Liquidated damages
b) Nominal damages
Explanation:
Nominal damages (e.g., £1) are awarded when a breach has occurred, but no actual financial loss has been suffered.
Which method of calculating damages involves the cost of remedying defective performance?
a) Diminution in value
b) Cost of cure
c) Loss of amenity
d) Liquidated damages
b) Cost of cure
Explanation:
The cost of cure represents the cost of fixing or replacing defective work (Ruxley Electronics v Forsyth (1996)).
In what circumstances will a court refuse to award cost of cure damages?
a) If the claimant lacks standing
b) If the breach was unintentional
c) If the cost of cure is disproportionate to the benefit gained
d) If the contract does not specify damages
c) If the cost of cure is disproportionate to the benefit gained
Explanation:
In Ruxley v Forsyth, the cost of rebuilding a swimming pool was out of proportion to the benefit gained, so the court did not award cost of cure damages.
Which case established the principle that loss of amenity damages may be awarded?
a) Hadley v Baxendale (1854)
b) Anglia TV v Reed (1972)
c) Ruxley Electronics v Forsyth (1996)
d) British Westinghouse v Underground Electric (1912)
c) Ruxley Electronics v Forsyth (1996)
Explanation:
The House of Lords introduced loss of amenity damages in Ruxley v Forsyth, awarding £2,500 for the inconvenience of not getting the expected pool depth.
A builder installs a wooden staircase instead of a metal one as specified in the contract. The wooden staircase is functional and safe, but the client wanted metal. Which damages measure is most appropriate?
a) Cost of cure
b) Diminution in value
c) Loss of amenity
d) Nominal damages
c) Loss of amenity
Explanation:
If the difference in value is negligible but the client lost a non-financial benefit, Ruxley v Forsyth suggests loss of amenity damages may be appropriate.
A factory orders a custom-built machine for £200,000. The supplier fails to deliver, and the factory buys an identical machine elsewhere for £210,000. What damages can the factory claim?
a) £10,000 cost of cure
b) £210,000 total cost of replacement
c) £200,000 refund only
d) Nominal damages
a) £10,000 cost of cure
Explanation:
Expectation damages aim to cover the extra cost of obtaining substitute performance, so the claimant can recover the additional £10,000 paid.
A bride books a luxury wedding venue, but it cancels last minute, forcing her to use a less prestigious hall. What is the best measure of damages?
a) Cost of cure
b) Diminution in value
c) Loss of amenity
d) Nominal damages
c) Loss of amenity
Explanation:
If the economic loss is small but the claimant lost an important experience, Ruxley v Forsyth suggests loss of amenity damages may be awarded.
What is the primary limitation on recovering expectation damages?
a) The claimant must show actual financial loss
b) The loss must not be speculative
c) The defendant must have acted fraudulently
d) The contract must be in writing
b) The loss must not be speculative
Explanation:
Expectation damages must be provable. If profits are too speculative, courts will limit damages to reliance losses (Anglia TV v Reed).
Which case established that only foreseeable losses can be recovered?
a) Ruxley v Forsyth (1996)
b) Hadley v Baxendale (1854)
c) British Westinghouse v Underground Electric (1912)
d) Anglia TV v Reed (1972)
b) Hadley v Baxendale (1854)
Explanation:
Hadley established the remoteness of damage rule, stating that only foreseeable losses at the time of contracting can be recovered.
If a claimant fails to mitigate their losses, what happens?
a) Their claim is void
b) Damages are reduced
c) They can still recover full losses
d) They can sue for negligence
b) Damages are reduced
Explanation:
Claimants must take reasonable steps to minimize their loss (British Westinghouse v Underground Electric (1912)).
A company orders 500 computers but receives 450. The missing 50 computers cause operational delays. Which damages apply?
a) Cost of cure – replacement cost for 50 computers
b) Diminution in value – reduced value of the contract
c) Loss of amenity – inconvenience of delayed performance
d) Reliance damages – wasted expenditure
a) Cost of cure – replacement cost for 50 computers
Explanation:
The claimant is entitled to buy the missing goods elsewhere and claim the cost of replacement.
A supplier breaches a contract to deliver custom furniture. The buyer, instead of sourcing new furniture, cancels their entire office renovation. Can they recover full costs?
a) Yes, for all costs
b) No, unless mitigation was impossible
c) Only if the supplier agrees
d) No, because office renovations were unrelated
b) No, unless mitigation was impossible
Explanation:
The claimant must attempt to mitigate losses where possible (British Westinghouse v Underground Electric (1912)).
A client hires a contractor for £100,000 but breaches before work starts. The contractor was expecting £20,000 profit. What damages can they recover?
a) £20,000 expectation damages
b) £100,000 total contract price
c) £0 – no work was done
d) Only reliance damages
a) £20,000 expectation damages
Explanation:
Expectation damages include lost profits that the contractor would have made.
A publisher hires an author to write a book, but the author breaches. The publisher spent £5,000 on marketing. What damages apply?
a) Expectation – lost profits from book sales
b) Reliance – wasted marketing costs
c) Nominal damages
d) Liquidated damages
b) Reliance – wasted marketing costs
Explanation:
If expected profits are too speculative, courts award reliance damages for wasted expenses (Anglia TV v Reed).
