Damages Flashcards
(32 cards)
Damages in contract vs tort
Tort: the position the party would have been in if not for the tort.
Contract: the position the party expected to be in if not for the breach of contract.
Hickey v HSE
Finlay Geoghegan J quoting Parke B in Robinson v Harman:
The rule of the common law is that where a party sustains a loss by reason of a breach of contract, he is, 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.
Cassels
No area of the law allows judges such discretion with so little statutory guidance. Therefore the ‘richest entry point into the study of the nature of judge-made law.’
Law Reform Commission
To intefere with judge-made law in this area would risk imposing a scheme of ‘undue rigidity’.
Case referred to by Willes J in the British Colombia Saw-Mill case
Damages awarded to a man who was late for his wedding as his blacksmith was so unskilful that his horse was lamed. His heiress to be had married another man by the time he arrived.
Today: would not be successful due to remoteness.
Hadley v Baxendale
Where there was a breach in contract, you could recover if the loss either flowed naturally form the breach, or was in the contemplation of both parties at the they made the contract.
Facts: Defendant made a late delivery of an engine shaft to a mill in Gloucester. Was meant to take a day, but took a week, keeping them out of business.
Alderson B: not reasonable to hold defendant liable for the lost profits. The plaintiffs had not communicated that the mill would close if delivered late, and no contingency plan was in place.
Application of the rule in Hadley in Ireland
Lennon v Talbot (Keane J).
McDermott’s breakdown of the Rule in Hadley
(i) damages such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such breach of contract; or
(ii) damages such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it; or
(iii) damages ordinarily arising from special circumstances communicated by the plaintiffs to the defendants.
Parsons v Uttley
Plaintiff pig-farmers ordered a storage hopper for pig nuts. The nuts decayed due to negligent installation. 254 pigs died.
Held: Enough for the plaintiffs to establish that the illness arose from the breach. Remoteness a matter of proximity in causation, not the size of the loss.
Kemp v Instasun
There must be some degree of formality in the communication made at the time of the contract’s formation for the rule in Hadley to apply.
Thomas Cook holiday. Made no entry in special requests. Grotty hotel, asthma attack due to dust. She only mentioned her husband’s asthma in a casual conversation in Thomas Cook.
Held: damage too remote in relation to the asthma attack, appeal successful there.
The Achilleas
2 May redeliver ship, did not do so until 11 May. Had planned to charter to another company on 8 May. New charterers were able to renegotiate and avail of a fall in rates, amounting to a 1.36 million difference across the whole period of the follow-on charter.
Defendants accepted liability for the ‘overrun period’ from 2-11 May, but that the further losses were too remote.
The H Lords agreed, but through different reasoning. Problematic–hard to find ratio.
Other judges: conventional remoteness test.
Hoffman and Hope LJJ recognised that Hadley is till good law, but it may be displaced if an examination of the contract and commercial background reveals that the loss at issue was outside the scope of the contractual duty.
They reasoned that it was custom for charterers to only accept liability for overrun periods and that they had had accepted liability for losses from further charters.
Assumption of responsibility approach.
Three heads of loss
(i) expectation loss
(ii) reliance loss
(iii) restitutionary loss
Anglia Television v Reed
The defendant US actor pulled out of a contract in order to be free to make a TV movie at the last minute.
Lord Denning MR in the Court of Appeal allowed the plaintiff to claim for all wasted expenditure, even that claimed before the contract with Reed was created.
Bowlay Logging case
If a plaintiff would have lost money but for the breach of the contract, then it cannot recover damages to compensate in respect of expenditure incurred in reliance on the contract.
The plaintiff would have made an even greater loss had the defendant provided sufficient trucks, given that the sawmill was no a profitable organisation. Reliance had not led to any loss.
The onus of proving that the defendant would have made a loss lay with the defendant.
Chaplin v Hicks
First case to allow damages for loss of a chance.
Defendant failed to notify the plaintiff that she was the finalist for the actress competition, and she missed her interview as a result.
Hawkins v Rodgers
Plaintiff bought a top horse which had been entered for three upcoming classic races. Before sale, the defendant removed the horse from its engagements to avoid becoming liable for forfeits. P argued loss of a chance for prize money and for the increased value of the horse.
Dixon J (Irish case) placed a monetary value on the lost chance. Relied on Chaplin v Hicks to wards £750 in damages.
Hobbs v London Railway
Train diverted from the sheduled route, causing the plaintff to walk 3 miles home with their children on a wet night.
Held: Mellor J awarded damages for breachn of contract, but refused damages for emotional distress, that being ‘purely sentimental’.
Jarvis v Swan Tours
Plaintff solicitor went on a two week ski holiday that turned out to be a disaster, contrary to what he was promised.
On appeal, Lord Denning considered Hobbs to be ‘out of date’. Held that where the purpose of the contract is to provide entertainment or enjoyment, damages can be awarded for emotional distress.
Irish Times reported 1995 case
Judge Kelly: damages awarded against defendant company for organising a wedding terribly.
Dinnegan v Ryan
Murray J awarded damages to the plaintiffs who, in breach of contract, refused entry to his pub to the newlywed plaintiffs and their wedding guests.
Contract was intended to create happiness and enjoyment and instead plunged the plaintiffs into the depths of humilitation.
O’Keeffe v Ryanair
Kelly J cited Jarvis v Swan Tours in awarding damages for disappointment, frustration and upset arising out of the failure of the defendant to allocate her seats on the particular flight in question.
Moreover, damages awarded from the date of the breach and her entitlement into the future, calculated at €67,500.
Dunlop test
Lord Dunedin:
(i) The sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach.
(ii) If the breach consists only in paying a sum of money greater than the sum which ought to have been paid.
(iii) Presumption arises when a single lump sum is payable on the occurrence of one or more or all of several events, the events occasioning varying degrees of loss.
(iv) If the consequences of breach are difficult to estimate in financial terms this, far from being an obstacle to the validity of the clause, will point in favour of upholding it, the courts taking the view that it is better for the parties themselves to estimate the damages that will result.
On this basis upheld that £5 was a genuine estimate of damages for selling tyres other than at an agreed price or to blacklisted persons.
Durkan New Homes
Charleton J applied the Dunlop test. Focused on the construction of the contract and the context at the time of contracting.
Parties cannot ‘considerably overload the party in breach’, with a payment that is ‘unrelated’ to genuine losses.
Ford v Armstrong
Just becuase you call something a liquidated damages clause does not make it one. Here the defendant retailer agreed not to (i) sell cars below a listed price (ii) to other retailers and (iii) not to exhibit without Ford’s consent.
The sum was substantial and arbitrary and applied to a number of different breaches.
