Common Law remedies Flashcards
What is the common law remedy?
Right to damages
What is the purpose of a common law remedy?
To put the injured party into the financial position they would have been in had the contract been performed
Define remoteness of damage
The legal test of causation used to determine the types of loss caused by a breach of contract which may be compensated by damages
Which test is applied to determine remoteness ?
2-limb test of Hadley v Baxendale (1854)
In a breach of contract, which 2 categories must damages fall into, in order to be awarded?
- Damages arising naturally from the breach
(i. e. in the ordinary course of things) - Damages in the reasonable contemplation of the parties at the time of contracting
(i. e. knowledge of special circumstances outside the ordinary course of things, but that was communicated to the defendant/other party)
What are the 2 types of damages?
Define them
- Liquidated damages
= predetermined and agreed in the contract by the parties
(must be genuine estimate) - Unliquidated damages
= no predetermined amount to be paid in the event of something going wrong
-> quantum decided by judge
What are the 3 exceptions for liquidated damages?
- unenforceable if in terrorem
- penalty clauses
- unfair limitation clause
Explain ‘unenforceable if in terrorem’
= holding the other party in terror of breaching
e.g. “you will be liable to pay an extortionate amount of damages in the event of a breach”
What must penalty clauses reflect?
Must reflect the genuine estimated loss that would occur
e.g. building contract - if not completed, have to pay damages
Which Act governs unfair limitation clauses?
Unfair Contract Terms Act
How will the courts determine whether a party can rely on a liquidated damage clause or not?
Look at the bargaining powers of the parties and whether there was an abuse of power
Re unliquidated damages, what is it uncommon to get damages for?
Which case law example is an exception to this?
Briefly describe the case.
Inconvenience or emotional damage
Jarvis v Swan Tours Ltd. [1973]
15-day skiing holiday over Christmas, advertised as having house parties, variety of ski-runs, afternoon tea and a Yodler evening
Many of these activities didn’t go ahead or weren’t as described.
Jarvis claimed for breach of contract based on his disappointment.
Held:
Where a contract is entered for the purpose of enjoyment, damages may be awarded for the disappointment/upset caused by a breach in failing to provide the entertainment
What are nominal damages?
When are they awarded?
Why are these damages rare?
Only a couple of pounds.
After a breach of contract but neither party has been significantly affected
A claimant won’t bring a case to court unless they are going to receive damages
What does mitigation mean?
Give an example
You have a duty to take all reasonable steps to mitigate your losses
-> the injured party cannot allow losses to accumulate
If you are unfairly dismissed and claim for the loss of wages that you sustained, you must show that you tried to get another job in the meantime
Give a case law example for mitigation
Briefly describe the case
Brace v Calder [1895]
4 partners appointed the claimant as their office manager for on a 2 year contract
6 months later, the partnership was dissolved as 2 partners retired, but the other 2 partners continued business in the firm’s name
The claimant found out 2 months later.
The dissolution was a breach of his employment and technically he had been wrongfully dismissed.
The 2 partners agreed to honour the contract.
The claimant sued for breach.
Held:
A breach had occurred BUT the claimant should have mitigated his losses by accepting the offer of alternative employment.
= only entitled to nominal damages
