Term
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Definition
| Damages are a financial remedy that aims to compensate the injured party for the consequences of the breach of contract. In general, the injured party should be put into position, as far as is possible, that they would have been if the contract had been carried out. |
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Term
| Contractual damages are restorative not punitive. See: |
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Definition
| Addis v Gramophone Co Ltd |
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Term
| Name the three limitations on the availability of damages: |
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Definition
1. Causation
2. Remoteness
3. Mitigation of loss |
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Term
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Definition
| A claimant can only recover damages if the breach of contract caused his loss. An intervening act that occurs between the breach of contract and the loss, may break the chain of causation. |
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Term
Causation-
Even if the victim's conduct contributed to the loss, as long as the breach can be shown to have caused the loss, an action will be effective. See: |
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Definition
| County Ltd v Girozentrale Securities |
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Term
| Non-pecuniary loss- If a claimant has not suffered any loss, he cannot claim damages. However, it is possible to recover damages for injury to the innocent party's feelings or sense of disappointment. See:(3 cases) |
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Definition
| Jarvis v Swan Tours Diesen v Sampson Heywood v Wellers |
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Term
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Definition
| The defendant will only be liable for losses that arise from the consequences of the breach and which can be said to be within the contemplation of the parties at the time of contracting, other losses being regarded as 'too remote'. |
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Term
| Name the case that created the two-pronged test for remoteness: |
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Definition
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Term
| State the test for remoteness, verbatim: |
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Definition
1st limb: Loss arising naturally, according to the usual course of things, from such breach of contract itself. OR
2nd limb: Loss such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. |
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Term
| Test for remoteness was refined in two cases, state their names and legal principles: (case 1) |
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Definition
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd--
Plaintiffs bought a boiler from the defendants. Boiler was late which caused Ps to lose business for the 22 weeks and lose out on a lucrative government contract. In applying the test plaintiffs recovered damage for the 22 week loss in profit as it arose naturally (1st limb). They were unsuccessful with the 2nd limb and the recovery of the loss of gov contract as it was not in the contemplation of both parties at the time of contract.
Asquith LJ set the standard for the 1st limb as 'reasonably foreseeable' This was refined in The Heron II. |
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Term
| Test for remoteness was refined in two cases, state their names and legal principles: (case 2) |
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Definition
The Heron II--
The claimant chartered the Heron II to transport sugar on a journey which should have taken 20 days but instead took 29. In that time the price of sugar dropped significantly.The claimant had not told the D that he intended to sell sugar at the destination, but the D was aware he was carrying sugar and that the destination was a popular place to sell sugar. The court held that it should have been within the D's contemplation that the P wanted to sell the sugar and so P was successful in his action in the 2nd limb of the test.
Also the court refined the term reasonable foreseeability and changed it to 'not unlikely'. |
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Term
Mitigation-
The duty to mitigate means: |
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Definition
| The innocent party who has suffered a breach, has a duty to take reasonable steps to minimize their loss arising from the breach. |
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Term
| Name two cases where claims failed as a result of the injured party not taking steps to mitigate their losses: |
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Definition
Brace v Calder
Pilkington v Wood |
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Term
Calculation of damages-
There are two methods of determining the extent of the damages that will be awarded: |
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Definition
1. Loss of Bargain: places the innocent party in the position they would have been in if the contract had been performed.
2. Reliance Loss: places the innocent party in the position they would have been in if the contract had never been made. |
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Term
Loss of Bargain-
Name the two possible situations with regard to contract performance: |
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Definition
No performance of contract
Partial performance of contract |
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Term
Loss of Bargain-
Where there is no performance of contract, damages for a substitute product or service may be: 1.The actual price of a contract if a sub can be found at that price, or 2. The fair market value of a sub (which may be higher). Name two cases where this is shown: |
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Definition
Charter v Sullivan--actual price of contract
WL Thompson Ltd v Robinson Gunmakers Ltd--substitute at market value |
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Term
Loss of Bargain-
Where there is partial performance of a contract, damages will cover the cost of either: |
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Definition
| 1. restoring goods to expected quality (cost of cure). or 2. Cover the gap in price between goods expected, and those received (difference in value). |
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Term
Loss of Bargain-
Deciding whether actual value or market value damages should be awarded has been difficult. See: |
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Definition
| Ruxley Electronics and Construction Ltd v Forsythe |
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Term
| In situations where it is difficult or impossible to calculate damages on the basis of the position that the defendant would have been in if the contract had been performed, Reliance loss is used. See: |
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Definition
| Anglia Television Ltd v Reed |
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