remedies for breach of contract

Question 1

if an innocent party want to claim damages for breach of contract, what must be proved?

Answer 1

loss has been suffered as a result of breach, loss/damage not too remote

Question 2

what is the normal aim of assessing damages?

Answer 2

Robinson v Haman- the party who sustains loss shall be compensated so they will be in the same position as if the contract has been performed

Question 3

how are damages measured?

Answer 3

expectation of loss, reliance loss

Question 4

how is expectation of loss measured?

Answer 4

e.g. fake items, goods not delivered, defective court may award the differed in value or cost of cure e.g. difference between actual value of goods and value of goods would have been if they had not been defective

Question 5

how can loss of expectation be remedied for contracts of services?

Answer 5

amount of damages awarded will be cost of putting work right (cost of cure) but Ruxley Electornics v Forsyth created new award where there was difference in value between what he got and what he wanted, but due to loss of amenity/consumer surplus he was awarded damages (but not as much as cost of cure to rectify the problem)

Question 6

how is reliance loss measured?

Answer 6

C will normally ask for damages to compensate for benefit C would have gained if contract had been performed incl loss of profits but this may be too speculative so may claim for expenses incurred in reliance on the contract

Question 7

what can be covered when claiming for loss of reliance?

Answer 7

Anglia Television v Reed- all wated expenditure including expenditure incurred before they entered into contract with D

Question 8

types of loss or damage for which damages may be awarded?

Answer 8

lost opportunity, mental distress/disappointment

Question 9

when can damages for mental distress and disappointment be awarded?

Answer 9

very limited situation such as if it is a key part of the contract Farley v Skinner

Question 10

what is the remoteness rule?

Answer 10

a party will not be awarded damages for loss which is too remote a consequence of the breach- Hadley v Baxendale says it must be within the reasonable contemplation of the parties at the time of the contract as being a probable result of the breach

Question 11

what are the 2 limbs of the Hadley v Baxendale rule of remoteness in contracts?

Answer 11

1) loss which arises naturally from the breach will normally be within the parties’ reasonable contemplation 2) unusual loss will be within the parties reasonable contemplation only if the special circumstances which give rise to the loss are known to both parties at the time the contract is made i.e. the other party should be told about the special circumstances before the contract is finalised

Question 12

what was the subsequent rule of the Hadley v Baxendale remoteness rule?

Answer 12

Victoria Laundry v Newman Industries- party could recover for loss which at the time of the contract was reasonably foreseeable as liable to result from the breach

Question 13

what did Asquit say about the Ds knwoeldge at teh time the contract was formed?

Answer 13

imputed knowledge- everyone as a reasonable person is required to possess- if d has this, limb 1 of Hadley test is satisfied and it is not too remote

actual knowledge- if the D has this knowledge of social circumstances, even if the loss is unusual it may satisfy limb 2 of Hadley test so is not too remote

Question 14

what is the relationship between the remoteness rules in contract vs tort?

Answer 14

Parsons v Uttley Ingham- if a particular type of loss is within the parties’ contemplation as a serious possibility then all loss of that type is recoverable even if more serious than could be contemplated

Question 15

what is the general rule of remoteness

Answer 15

loss will not be too remote a consequence of breach if it is of a kind which would have been within reasonable contemplation of the parties at the same time the contract was made as being not unlikely to result

Question 16

what is the mitigation rule?

Answer 16

Westinghouse v Underground railway- C should take reasonable steps to ensure that losses are kept to a minimum- burden of proof is on on the party in breach to show that the C should have mitigated but they didn’t do so

Question 17

what is contributory negligence?

Answer 17

Cs damages may be reduced due to the Cs own actions contributing to the loss suffered

Question 18

what is the general rule for the time for assessment of damage?

Answer 18

they are assessed by reference to the time of breach but not always e.g. Golden Strait Corporation v Nippon Yusen- HoL said that reflecting the loss more important than assessing at date of breach

Question 19

what are specified/liquidated/agreed damage clauses?

Answer 19

pre estimate of the loss which is likely to be caused by the breach-this clause is binding regardless of actual loss suffered- usual rules of measure of damages, remoteness and mitigation do not apply

Question 20

what is a penalty clause?

Answer 20

attempt to put pressure on party to perform the contract but is unenforceable- court is free to assess damages in the usual way and the usual principle apply

Question 21

when might an innocent party want to argue that an agreed clause is actually a penalty clause?

Answer 21

when the Cs actual loss is greater than the sum in stated in the agreed clause

Question 22

how can the court decide whether a clause is an agreed clause or a penalty clause?

Answer 22

Dunlop guidelines- see notes but general test says that it can be determined whether the means by which the contracting party’s conduct was to be influenced where unconscionable or extravagant e.g. whether the clause imposed a detriment on to the contract breaker which is out of proportion to any egitimate interest of the innocent party