Contract: Remedies Flashcards
(102 cards)
1
Q
What is the aim of an award of damages for breach of contract?
A
To compensate the claimant for the damage, loss or injury suffered due to the defendant’s breach.
2
Q
What does the court’s expectation measure of damages aim to achieve?
A
To put the defendant in the position they would have been in had the contract been performed.
3
Q
List the types of loss with special rules in contract law.
A
- Loss of reputation
- Loss of chance
- Mental distress
4
Q
True or False: Damages for mental distress are generally recoverable in contract law.
A
False
5
Q
What is the general rule regarding damages for loss of reputation?
A
Damages will not be awarded for loss of reputation.
6
Q
What case established that damages for mental distress are generally not recoverable?
A
Addis v Gramophone Co Ltd [1909] AC 488
7
Q
Under what circumstances can damages for mental distress be awarded?
A
- When the contract’s whole purpose is to provide pleasure, relaxation, and peace of mind
- When a major object of the contract is to provide such benefits
8
Q
What are the conditions for recovering damages for loss of chance?
A
The lost chance must be quantifiable in monetary terms and there must be a real and substantial chance that the opportunity might have come to fruition.
9
Q
In Chaplin v Hicks, what was the claimant compensated for?
A
The loss of the chance to win a competition.
10
Q
What is the general rule regarding damages on behalf of another party?
A
Damages cannot be recovered on behalf of another party for losses suffered by another party.
11
Q
What is the purpose of an award of damages in contract law?
A
To compensate the claimant for the damage, loss, or injury suffered due to the breach.
12
Q
What are nominal damages?
A
A token amount awarded to acknowledge a breach of contract when no other remedy is available.
13
Q
What does compensating the innocent party mean?
A
Putting the innocent party in the same position post-breach as they would have been had the contract been performed.
14
Q
What is the expectation interest?
A
The position the claimant expected to be in had the contract been performed.
15
Q
What are the three mechanisms for calculating the expectation interest?
A
- Cost of cure
- Diminution in value
- Loss of amenity
16
Q
In Ruxley Electronics v Forsyth, what was the cost of cure?
A
The cost to rebuild the pool to the contracted depth, which was £21,560.
17
Q
What did the court decide in Ruxley regarding the cost of cure?
A
The court refused to award the cost of cure due to its disproportionate expense compared to the benefit.
18
Q
What is loss of amenity?
A
Non-economic loss of pleasure suffered by the claimant due to not receiving the contracted benefit.
19
Q
How much was awarded for loss of amenity in Ruxley?
A
£2,500
20
Q
What is the standard for assessing damages in a case where loss of chance is involved?
A
The claimant must demonstrate the loss of chance is real and substantial and falls below 50 percent.
21
Q
What happens if the chance of obtaining a benefit is 50% or greater?
A
The claimant should seek to recover their expectation loss in full.
22
Q
What was the claimant’s expected profit in the example involving Evans Productions?
A
£30,000
23
Q
What was the actual profit in the example involving Evans Productions?
A
-£10,000
24
Q
Calculate the expectation damages based on the difference between expected profit and actual profit.
A
Expectation damages = £40,000
25
What are expectation damages?
Expectation damages aim to put the claimant into the position they expected to have been in if the contract had been performed.
## Footnote
This is calculated as the difference between expected profit and actual profit.
26
What is the measure of damages in the given example?
The measure of damages is £40,000, calculated as the difference between expected profit (£30,000) and actual profit (-£10,000).
27
What is the reliance interest?
The reliance interest allows the claimant to recover expenses incurred in preparation for or part performance of the contract that were rendered pointless by the breach.
## Footnote
It is a more cautious, backward-looking measure compared to expectation damages.
28
Fill in the blank: The reliance measure aims to put the claimant in the position they would have been in had they _______.
never contracted.
29
What are reliance losses?
Reliance losses are expenses incurred prior to breach, not those incurred as a consequence of breach.
30
What was the key case regarding reliance interest?
Anglia Television Ltd v Reed [1972] 1 QB 60.
31
What was the outcome of Anglia Television Ltd v Reed?
The claimants were entitled to damages for £2,750 in wasted expenses due to the defendant's breach of contract.
32
True or False: Reliance interest allows recovery of all expenditure incurred in a contract.
False.
33
In the example provided, how much did EP spend on production before the breach?
EP spent £10,000 on production before the breach.
34
What is the calculation for reliance damages in the second example?
The reliance damages are £10,000, which is the amount incurred by EP.
35
What is the normal measure for damages in breach of contract cases?
The normal measure is the expectation interest.
36
List the three ways the expectation interest can be calculated.
* The cost of curing the defective performance
* The difference in value between the performance received and that promised
* The loss in amenity
37
What is the primary aim of awarding damages for breach of contract?
To compensate the claimant, not to punish the defendant.
38
Fill in the blank: The reliance interest is ______ looking.
backward.
39
What happens if the defendant proves that the expenditure would have been wasted in any event?
In that case, recovery of reliance damages will not be allowed.
40
What is the Consumer Rights Act 2015?
A piece of legislation regulating contracts between businesses and consumers.
41
What are the three remedies available to consumers for non-conforming goods?
* The short term right to reject
* The right to repair or replacement
* The right to a price reduction or the final right to reject.
42
What is the short term right to reject?
Available for 30 days after ownership passes, and goods are delivered.
43
Under what conditions can a consumer exercise the right to repair or replacement?
Unless repair or replacement is impossible or disproportionate.
44
What must happen for a consumer to exercise the right to a price reduction or final right to reject?
* One repair or replacement has failed
* Repair or replacement is impossible or disproportionate
* Trader has breached the requirement to repair/replacement.
45
What is the general rule for refunds when exercising the final right to reject within 6 months?
A full refund with no deduction for use, except for motor vehicles or specified goods.
46
What remedies are available for non-conforming digital content?
* The right to repair or replacement
* The right to price reduction.
47
What does section 42(9) state regarding digital content that does not conform?
It must be considered non-conforming at the time it was supplied if the issue arises within six months.
48
What is the right to a refund for digital content?
Consumers are entitled to a refund if the trader had no right to supply the digital content.
49
What happens if non-compliant digital content causes damage to a device?
The consumer is entitled to repair or compensatory payment.
50
What are the remedies available for non-conforming services?
* The right to require repeat performance
* The right to a price reduction.
51
What is the right to require repeat performance?
The supplier must provide it within a reasonable time and without significant inconvenience.
52
When can the right to a price reduction be exercised for services?
When repeat performance is impossible or not provided within a reasonable time.
53
What is a guarantee?
A promise by a party to ensure another party fulfills its obligations or to fulfill them if the other party does not.
54
What is an indemnity?
A promise to reimburse someone for a stated loss.
55
What is the key difference between a guarantee and an indemnity?
A guarantee is dependent on another's obligation, while an indemnity is a primary obligation independent of that.
56
What happens to a guarantee if the original obligation ceases?
The guarantee also ceases since it is dependent on the original obligation.
57
What formalities are required for a guarantee?
It must be in writing and signed by the guarantor.
58
Can indemnities exist in a two-party scenario?
Yes, indemnities can exist in a two-party scenario.
59
What is required for the right to repair or replacement of digital content?
The trader must repair or replace within a reasonable time and without significant inconvenience.
60
Fill in the blank: The Consumer Rights Act 2015 implies terms into certain contracts and regulates _______.
unfair terms.
61
True or False: A consumer can pursue both a price reduction and a final right to reject.
False.
62
What is an indemnity?
A promise to reimburse someone in the event that they suffer a stated loss.
## Footnote
For example, the failure by A to pay money owed to B.
63
Can indemnities exist in a two-party scenario?
Yes, indemnities can exist in a two-party scenario.
## Footnote
For example, A agrees to indemnify B for losses due to late delivery.
64
What is a guarantee?
A promise by C to ensure that A carries out its obligations, or a promise to fulfill those obligations itself if A does not do so.
65
What happens to C's obligation if A's obligation ceases?
C's obligation also ceases.
66
What is the effect of a change to the contract between A and B on a guarantee?
The guarantee will almost always be discharged.
67
What must a guarantee be in order to be valid?
In writing and signed by the guarantor.
68
What is the main difference between a guarantee and an indemnity regarding A's obligations ceasing?
If A's obligation ceases, C's obligation remains in place for an indemnity.
69
What are specific performance and prohibitory injunctions?
Remedies other than damages potentially available in the case of breach of contract.
70
What is a positive term in a contract?
A term which requires a party to do something.
71
What is a negative term in a contract?
A term which requires a party not to do something.
72
What does an order for specific performance require?
It requires the defendant to carry out its obligations under a positive term of the contract.
73
What is a prohibitory injunction?
A court order restraining a party from breaching a negative term.
74
Can breaches of specific performance and prohibitory injunctions be punished?
Yes, breaches can be punished as contempt of court.
75
When will an order for specific performance or a prohibitory injunction not be granted?
If damages are an appropriate and adequate remedy.
76
What must be proved for specific performance to be appropriate?
That the subject matter of the contract is unique or irreplaceable.
77
What is the nature of specific performance and prohibitory injunctions as remedies?
They are discretionary and equitable remedies.
78
What principle applies to the conduct of the claimant in equitable remedies?
He who comes to equity must come with clean hands.
79
What is a liquidated damages clause?
A clause which stipulates a certain sum payable on a particular breach of contract.
80
Why have a liquidated damages clause?
It fixes the amount due for breach as a debt, avoiding uncertainty in proving damages.
81
What is a penalty clause?
A liquidated damages clause requiring the party in breach to pay an excessive sum, thus not upheld.
82
What test determines if a clause is a valid liquidated damages clause or a penalty?
Whether it serves a legitimate business interest and if the detriment is extravagant, exorbitant, or unconscionable.
83
What is the burden of proof regarding penalty clauses?
On the person alleging that the clause is a penalty.
84
What is the starting point of contract law?
To support parties' agreements on as many matters as possible.
85
What happens if a clause is regarded as a penalty?
It will be struck out by the court, and the claimant will only be entitled to unliquidated damages.
86
What is the burden of proof in relation to penalty clauses?
The burden of proof is on the person alleging that the clause is a penalty to prove this.
87
What does the law on penalties interfere with?
The law on penalties is a clear interference with freedom of contract.
88
What is the significance of Criteria 2 in the penalty test?
It explains the test for deciding whether the damages stipulated in the clause are excessive.
89
What legitimate interest may a party have in enforcing performance beyond compensation for losses?
A party can have a legitimate interest in enforcing performance that goes beyond simply being compensated for losses.
90
What was Mr. Makdessi's agreement with Cavendish Square Holdings?
Mr. Makdessi agreed to sell a substantial stake in his advertising company but retained a 20% shareholding.
91
What was the consequence of Mr. Makdessi competing against Cavendish?
Cavendish sought to enforce default clauses that would deprive him of deferred consideration of $44m.
92
How did the court classify the clauses in Mr. Makdessi's case?
The court held that the clauses were primary obligations, not penal.
93
What was the outcome of the Makdessi case regarding the default clauses?
The Supreme Court determined that the default clauses were not penal.
94
What was the central issue in ParkingEye Limited v Beavis?
Whether the £85 charge for exceeding the parking time limit was a penalty.
95
What was the court's decision regarding the £85 charge in ParkingEye Limited v Beavis?
The court concluded that the £85 charge was not a penalty.
96
What legitimate interest did ParkingEye have in imposing the £85 charge?
ParkingEye had a legitimate interest in managing the car park effectively.
97
What defines a penalty clause?
A liquidated damages clause that requires payment of an excessive sum, becoming a penalty.
98
How does the Makdessi approach determine if a clause is a penalty?
By assessing if the clause is a primary or secondary obligation and the proportionality of the detriment.
99
What should be identified to assess if a secondary obligation is a penalty?
Identify the legitimate business interest and consider whether the detriment is extravagant, exorbitant, or unconscionable.
100
Fill in the blank: A penalty clause requires the party in breach to pay an excessive sum, such that it becomes a _______.
penalty.
101
What is the potential impact of careful drafting of contract provisions?
It can reduce the chances of a party falling foul of the law on penalties.
102
What is one way to frame provisions to avoid them being viewed as secondary obligations?
Redraft the obligation so that it is a primary obligation intended to set the price.
