Breach and damages Flashcards
(12 cards)
Robinson v Harman [1848] - breach/damages
Established the compensatory principle
“the rule of common law is that where a party sustains a loss by breach of contract… so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed”
Adv-Gen v Blake [2001] - damages
AG v Blake the HL ruled that where damages were not a sufficient remedy, the court would be able to ‘exceptionally’ be able to ‘grant the discretionary remedy of requiring a defendant to account to the claimant for benefits derived from this breach of contract’ (account of profits).
- Should be noted that Blake involved extreme facts whereby the typical compensatory damages that usually suffice (injunctions or criminal confiscation) weren’t available
- The court ruled that Blake had to surrender his profits, as the Crown had a “legitimate interest” in preventing his unjust enrichment.
Experience Hendrix v PPX Enterprises Inc [2003] - damages
Denied account of profits remedy as it was held that damages was an adequate remedy.
Restitution of profits for breach of contract is unavailable in the ordinary commercial context where public policy factors do not apply
Addis v Gramophone [1909] - damages
Non-pecuniary loss - The general principle is that there is no recovery for injured feelings, can only recover for economic (pecuniary) loss
* There are exceptions to this principle
Facts: a company wrongfully dismissed it’s manager in a way that was ‘harsh and humiliating’, he recovered damages for loss of salary and commission but not for injury to his feelings.
Watts v Morrow [1991]
Established an exeption to the general rule that there is no recovery for injured feelings - If a contract promises enjoyment, comfort, or peace of mind—and fails to deliver (or even makes things worse)—the injured party can claim damages.
Farley v Skinner [2001] - damages
Non-pecunary loss:
Established that damages were recoverable where the ‘major or important’ object of the contract was ‘peace of mind’ - prior to this case Watts v Morrow had held that peace of mind had to be ‘the very object’ of the contract
Facts: C had asked a serveyor whether the property he intended to purchase would be affected by aircraft noise, serveyor said it was unlikely, but in fact the property was affected by aircraft noise. Damages were recoverable as C had specifically asked and thus it became a ‘major or important’ object of the contract.
Chaplin v Hicks (1911) - damages
Loss of chance:
Established that lost opportunities can be compensable in contract law, even if damages are imprecise.
Facts: C applied for a beauty contest with the chance of winning a paid acting opportunituy, H excluded her from the competition because he failed to notify her on time. C awarded £100 (which was a substansial sum at the time)
Hadley v Baxendale (1854) - damages
Established the remoteness test: Losses can only be recovered if they were within the reasonable contemplation of the parties at the time of making the contract as the probable result of a breach
Facts: C’s mill was brought to a standstill due to a broken mill shaft. C contracted with D to carry the broken shaft across to another city to act as a mould for the new mill shaft. D took several days to deliver, instead of just one, resulting in a loss of profits for C. Court held that C couldn’t be awarded damages as the loss was too remote because D did not know there was no spare shaft at the mill and thus didn’t foresee that C would lose profit.
Victoria Laundry v Newman [1949] - damages
Remoteness:
Showed the difference between ‘ordinary loss’, which is easily recoverable as it is foreseeable that such loss would occur naturally as a result of such a breach; as opposed to ‘abnormal loss’, which D will not be liable for unless such losses were within the contemplation of both parties at the time they made the contract - for this D must have knowledge of the special facts giving rise to the loss.
Facts: C had a laundry business and purchased a boiler for dyeing fabrics from D and told D that it would be put into immediate use. D delivered late in breach of contract. Court held that ordinary loss of profits were recoverable but exceptional losses weren’t - so C could not reover loss of profits on some lucrative government contract as it was too remote as Ds didn’t know about the lucrative contracts
The Achilleas [2008] - damages
Remoteness:
Lord Hoffmann’s judgement within the case seems to suggest that the ‘reasonable contemplation’ test is not the only remoteness test and there can be an ‘assumption of responsibility’ test that is both inclusionary and exclusionary, but Burrows suggests that the name ‘assumption of responsibility’ may be misleading as it is likely based on external policy considerations of fairness and reasonable risk allocation
Facts: Charterer (D) redelivered the ship late (11 May instead of 2 May). Owner (C) had a follow-on charter starting 8 May at a higher rate, but due to the delay, had to renegotiate at a lower market rate. C claimed $1.3m (difference over the entire follow-on charter period). D admitted liability only for the overrun period (3–11 May) = $158,000.
Majority (Lords Hoffmann, Rodger, Walker):
D did not assume responsibility for losses beyond the overrun period.
Minority (Lord Rodger & Baroness Hale):
Loss beyond the overrun was not reasonably foreseeable under Hadley v Baxendale.
Result: Only $158,000 awarded (damages limited to the overrun period).
The New Flamenco [2017] - damages
Mitigation:
Facts: Charterers (D) redelivered the vessel to the owners (C) two years before the charterparty was to end, C accepted the repudiation. C sold the ship for substantialy higher value than it would have sold for if at the end of the additional 2 years of the charterparty. C sued for breach of contract for loss of profits for the remaining 2 years of the Charterparty. SC held that substansial damages should be awarded to C as it did not see the sale of the ship as an act of mitigation which lessened the loss caused by the charterers breach.
Makdessi v Cavendish Square Holdings [2015] - damages
Penalty clauses:
Penalty clauses are unenforceable, but commercially justified clauses (protecting legitimate interests) are valid, especially between sophisticated parties.
Facts: Makdessi (founder) sold his shares in an advertising business to Cavendish. Shareholders’ agreement included a non-compete covenant (Makdessi could not set up a rival business). If Makdessi breached:
* Clause 5.1: Forfeiture of final two instalments of the sale price.
* Clause 5.6: Cavendish could buy his remaining shares at a price excluding goodwill.
Makdessi breached the covenant. He argued Clauses 5.1 and 5.6 were unenforceable penalties. SC held that the Clauses not penalties – Cavendish had a legitimate interest in protecting the business.
