Compensatory Damages

Question 1

Types of damages available? 2

Answer 1

Liquidated, unliquidated

Question 2

What are damages?

Answer 2

Normally paid in cash form to put the injured party financially into the position they would have been if the contract was performed.

Question 3

When do liquidated damages operate?

Answer 3

When both parties to the contract have fixed an amount of damages in a clause that would be paid should there be a breach. - Tyre Co v New Garage and Motor

Question 4

When can the amount fixed be ignored by the court?

Answer 4

If it doesn’t represent a fair and proper assessment of any loss

Question 5

What happens if the amount is a proper reflection of the loss?

Answer 5

The courts will enforce the agreed amount of damages.

Question 6

When will the amount not be enforced?

Answer 6

If the amount is seen as a penalty, it will be unenforceable.