Damages Flashcards
(21 cards)
Expectation damages
Robison v Harman = the goal of expectation damages is to put you where you would be had the contract been performed
Expectation damages
Pleasure
Fraley v Skinner = C purchased a house and made it clear that it was for the purpose to relax and asked the surveyor f there was noise, it was next to an airport, so C sued the surveyor, C won damages for non-pecuniary loss as peace and quiet was essential to them
- So, there can be compensation for the object of the contract
- Loss of amenity = Ruxley Electronics and Construction Ltd v Forsyth: a swimming pool was contracted to be deeper than it was actually built to be, the cost of cure would be too high as the pool would have to be ripped out and replaced, and as the land was still valuable and C could use it, then loss of amenity damages were awarded instead, the HoL awarded £2,500
- however, if C had specified that it be required for diving and D knew this, then based on Farley, cost of cure may be awarded
Expectation damages
Disgorgement
Disgorgement = damages for profits you have gained
= AG v Blake – traitor revealed official secrets in an autobiography, so the government sued for breach of contract and won profits made from the sale of the book in damages
Expectation damages
Cost of cure
how much will it cost to get you what you should have, and the market price can be more than your contract price, however, it must pass the mitigation test
= Martens v Home Freeholds: building project not finished, so damages in how much to complete/rectify
Expectation damages
Diminution of value
Diminution of value = how much less is the value of what you got, compare to what you should have got – usually in cases where the complainant’s interest is purely financial
= Tito v Wadell: Banaba Island’s case – the cost of cure from the mining of the island would be too high
Expectation damages
Negotiating damages
Negotiating damages = how much would the parties have negotiated to breach the contract – Morris-Garner v One Step Support
Expectation damages
Exceptions for non-recovery for non-financial losses
- Loss of amenity = Ruxley
- Object of pleasure = Farley + holidays [Jarvis v Swan’s Tours]
- Physical discomfort exception = Wattson v Morrow
Reliance loss
- Angelia Television Ltd v Reed = actor withdrew so the production company sought damages, but they could not quantify their loss of profits, so no expectation damages, so reliance loss claimed instead
- VS. CCC Films (London) Ltd v Impact Quadrant Films Ltd. = the court will not give reliance loss for bad bargains
Limiting Factors for damages
- Causation
- Remoteness
- Mitigation
Limiting Factors for damages
Causation
- Other causes can break the chain of causation = third parties’ actions [Stansbie v Troman], external events [Monarch Steamship Co], and the claimant’s actions
- So, there can be multiple causes
- Stansbie v Troman = decorator left the door open and the thief burgled the house, decorator was not the direct cause, but his actions led to it
- Vs. Lambert v Lewis = the owner’s negligence broke the chain of causation, so the retailer did not cause the fatal accident
- Monarch Steamship Co = ship delayed due to unseaworthiness, then an external event happened, but only because it was late was it caught in this external event, so causation
Limiting Factors for damages
Contributory negligence
Contributory negligence = all or nothing, you cannot reduce damages for C’s carelessness = Quinn v Burch Bros Builders: C was not provided with necessary equipment, so improvised, injury caused by the lack of equipment and improvisation, so damages could not be claimed
Limiting Factors for damages
Remoteness
- Hadley v Baxendale = reasonably foreseeable loss that was not unlikely to to result from the breach at the time that the contract was made + two stage test for remoteness =
1) losses that arise naturally or
2) losses that were reasonably contemplated by the parties - New Approach was taken in The Achilleas: Hoffmann and Hope took a new approach – the assumption of responsibility approach [‘the parties must have assumed to have contracted with each other on the basis that the charters were assuming responsibility for the consequences – Lord Hope], using the commercial context
- Overall, normally apply Hadley v Baxendale, but in special cases, apply The Achilleas, such as where the facts suggest that the parties were taking on liability for other reasons, which was confirmed in John Grimes v Gubbins
Limiting Factors for damages
Mitigation
- C is only held to act in a reasonable manner
- Avoidable loss rule = C cannot recover losses that could have been avoided
- British Westinghouse Electric v Underground Electric Railways = reasonable actions where money is spent will be taken into account
- Holden v Bostock & Co = reasonable costs will be compensated
- Bacon v Cooper = sometimes the replacement has to be better as there is no practical choice
- Pikington v Wood = C is not required to sue somebody as a part of mitigation as that is too onerous and not reasonable
- Clippens Oil v Edinburgh & District Water Trustees = the test is subjective, so D has to deal with C as C, not an objective party, and in this case, C was going insolvent, so could not mitigate
- Esso Petrolum v Mardon = C can recover losses from misrepresentation
Cases where the parties could have mitigated
- The Borag = using an overdraft instead of a loan was not reasonable, so they could not claim the loss
- The Soholt = the court held that the buyer should have offered to buy the ship at the original price from the contract-breaker, as ship prices rose between the breach, and C going elsewhere, so this puts the responsibility on C where reasonable steps may involve renegotiation with the contract-breaker
Agreed Damages
The Dunlop approach
1) what the parties the clause as, is not determinative
2) liquidated damages reflect a genuine agreed pre-estimation of damages
– Damages will only be a penalty when they are extravagant and out of proportion, to an estimate of what the loss would be
Agreed Damages
When are they not?
Euro London Appointment’s Ltd v Claessens Internatinal Ltd = The CoA held that it was not a penalty for breach, it was a pre-condition to getting the repayment, being that to qualify you should pay on time, so refunds only to those who pay on time was not a penalty
+ Secondary obligations to pay money = Alder v Moore – not covered by Dunlop as two alternatives given, not a penalty, as it gave the party two conditional alternatives = it was not covered by the penalty’s doctrine
Agreed Damages
Redefining the Dunlop test
Cavendish + Parking Eye = refines the Dunlop test: it applies to secondary obligations, not primary obligations – Neuberger + Sumption: if the interest is legitimate and whether the damages equate this, is what the court asks [punishing a party is not a legitimate interest]
Deposits
Howe v Smith = deposits may be retained by the payee if the payor does not perform
+ Workers Trust and Merchant Bank v Dojap Investments = deposits must be reasonable
vs. Dies v British International Mining Corp = a contract-breaker may claim restitution of advance payments
Specific remedies
- Specific remedies = actions for the agreed sum, specific performance, or an injunction
- Expectation damages are the default, but specific performance is also granted for unique goods [Falcke v Gray]: land, paintings, antiques, heirlooms
+ Sky Petroleum v VIP Petroleum = commercially unique goods – there was an oil shortage and oil could not be bough elsewhere, so the court ordered an injunction which required the party to supply to the other as money would be no use
Specific performance
- Beswick v Beswick = the court ordered specific performance in this case because the widow who was promised money was not privy to the contract between her husband and his nephew, so no expectation damages as there was no loss to the estate, as damages were not adequate in this case, specific performance was granted
- As this doctrine is equitable, so the courts have discretion, this requires the parties to have clean hands, otherwise the courts may refuse if unjust [Walters v Morgan]
When will the court refuse to grant specific performance?
- morally reprehensible/unjust [Walters v Morgan]
- when it is not clear what D will have to do [Wilson v Northampton and Banbury Junction Railway Co]
- where it will put hardship on D [Patel v Ali = serious illness]
- in contracts for service [Lumley v Wagner]
- in employment contracts [s.236 Trade Union and Labour Relations (Consolidation) Act 1992
+ Lumley v Wagner = unwilling singer problem: if specific performance was ordered, the performer could purposefully perform badly to rebel
+ Cooperative Insurance Society v Argyll Stores = the court will not enforce an insolvent shop to keep trading
