Damages Flashcards

Question

2) Reliance Interest

Answer 1

o innocent party has relied to his detriment on D’s promise (entered into contract, incurred expense, etc.) ‐> damages should compensate to extent C has relied to his detriment on D’s promise, i.e. put him in as good a position as he was in before D made his promise • If relied on promise by breaching promise • You are put back before you entered into the reliance

Answer 2

o innocent party wants to deprive D of a gain D made at his expense • Gains made at the expense of the innocent party • Ex: royalties

Answer 3

* F built a swimming pool for R * Was not deep enough * Still safe * To rebuild would of cost lots of money * How much damages should be payable? * Full amount of taking out swimming pool and replacing it? * No * Held: * Damages for loss of amenity * Looked at the economic reality of the situation

Answer 4

Expectation Interest • Looked at the economic reality of the situation

Answer 5

* British gov’t granted mining lisince to mine fosfates on ocean island (settlement) * Management was put in the hand of a trust * Instruction was tat profits were to be put on trust for previous land owners * Issues about the meaning of a trust (not important here) * Right to recover additional royalties (important) * Whether there was an Obligation on the trust to replant the island after the mining has taken place * Held: * It would be uneconomic to replant the island because no one lived there * Looked at the cost of cure and economic benefits * No evidence that there was an intention to replant the island * Paid for actual damage suffered by the mine * In theory, island would have been planted, in reality it made no sense because no one had the intention to move back * When assessing damages, must look at actual expectation of the parties, not theoretical

Answer 6

Expectation Interest * Looked at the cost of cure and economic benefits * When assessing damages, must look at actual expectation of the parties, not theoretical

Answer 7

* Important for damages * Looking at exception of the general rule to privity * Exception that said when goods travelled by sea, the consigner could recover damages from the carrier even if the contract was between the consigner of goods and the carrier * The consignee did not have a contract with the carrier * Issue that 3rd party could no recover damages even if he is not part of the contract * When 3 parties, and contract is between A and B but it was C who suffered the loss, C can recover damages when there was expectation that C would recover the goods once the goods were loaded on the ship

Answer 8

Expectation Interest • When 3 parties, and contract is between A and B but it was C who suffered the loss, C can recover damages when there was expectation that C would recover the goods once the goods were loaded on the ship

Answer 9

* residential training college built with defects * C never actually intended to repair the defects * Held: * Cannot recover for damages for losses that you never intended to fix before they were sold * Expectation damages cannot be recovered

Answer 10

Expectation Interest * Cannot recover for damages for losses that you never intended to fix before they were sold * Expectation damages cannot be recovered

Answer 11

* Expectation damages * Issue of future evetns * G was a ship owner * Initial decision that G was not entitled to damages in regards to a ship chartered to N * N was allowed to cancel the charter because of the war in Iraq * When party repudiates a contract, can the party rely on outside events that would of rendered the contract worthless? * In this case, there was a provision that allowed the contract to be cancelled in these kinds of situations * They foresaw this * Held: * They were allowed to rely on the outbreak of war in Iraq * Look at the time of a breach * Time of assessment can be flexible

Answer 12

Expectation Interest • Time of assessment can be flexible

Answer 13

• A suffered losses when a water pipe bursts and flooded • T was at fault • Issue was the quantum of damages • A argued that if flooded did not happen, employees would not have been diverted • A should be entitled for value of activities that employees would have done • Held: • 3 point test (below as well) o 1) Must show all reasonable evidence to show that the staff was diverted from their normal duties o 2) Must establish that the diversion of staff caused interruption in the business o 3) If can establish both, courts will allow damages

Answer 14

Expectation Interest 3 point test (below as well)

Answer 15

o 1) Must show all reasonable evidence to show that the staff was diverted from their normal duties o 2) Must establish that the diversion of staff caused interruption in the business o 3) If can establish both, courts will allow damages

Answer 16

Reliance Interest * Court cannot claim reliance measure of damages just to get out of a bad deal * He would of suffered losses anyway because of a bad deal * Forced ot use expectation measure of damages

Answer 17

• A incurred expectation in preparing for filing a play • Expenses incurring before and after entering contract with R • R dropped out and they could not get a replacement • A sued for expenses of production £2700 • Held: o They could recover all of that o Even costs incurred before R signed the contract o R should have known that they would spend money of the production

Answer 18

Reliance interest o They could recover all of that o Even costs incurred before R signed the contract o R should have known that they would spend money of the production

Answer 19

* Mistake case as well * Case involves the tanker, * Salvage ship went out, but tanker never existed * Impossible to tell what they would have expected to recover * All they could claim was the money they spent in reliance of the contract

Answer 20

Reliance Interest • Impossible to tell what they would have expected to recover

Answer 21

o Son was apprentice to watch maker for 6 years o Watchmaker died after 1 year o Not allowed because son received some benefit (1 year) under the contract o Only claim restitution if there is TOTAL failure of consideration

Answer 22

Restitution Interest o Only claim restitution if there is TOTAL failure of consideration

Answer 23

o Person wrote a book and violated terms of the Official Secrets Act o Wrongdoing was so significant that restitution was appropriate o All of the profits had to be returned to AG

Answer 24

Restitution Interest D enriched himself by serious wrongdoing (very unusual)

Answer 25

o 1) D was enriched o 2) D was enriched at C’s expense o 3) Unjust for D to retain the benefit without compensating C

Answer 26

``` • P was supposed to write a book • Did all the research to prepare • Publisher cancelled it • Held: o Awarded money to P because he had done some work o Recover on a quantum meruit basis ```

Answer 27

Quantum Meruit o A claim on a quantum meruit (what the job is worth)does not usually arise if there is an existing contract between the parties to pay an agreed sum

Answer 28

* 1) • An express agreement to pay a reasonable sum * 2) • No price fixed by the contract * 3)  • A quasi‐contract  * 4) • Work outside a contract

Answer 29

* in addition in violating duties, he also made profits from the book * B had to return the profits to the AG * AG never expected to make profits of the book * Because it was from violation, AG could claim the profits

Answer 30

Account for profits Defendant ought not to gain an advantage for free, and should make some reasonable recompense for breaching his contract Because it was from violation, AG could claim the profits

Answer 31

* D had licensed recordings * Did not have authority from E, a beneficiary * P had benefitted from recordings * Profits by rights should go to E * E could recover

Answer 32

Account for profits Defendant ought not to gain an advantage for free, and should make some reasonable recompense for breaching his contract * P had benefitted from recordings * Profits by rights should go to E * E could recover

Answer 33

* Agreed that wrestling would become WWE, no longer WWF * Agreement made restriction on wrestling’s ability to use WWF * Wildlife made claims that wrestling violated the agreement * Issue: what damages should they be entitled to? * They are not competitors * Held: * They are not in the business of compensating charities for violations of this kind * Conduct of D was not relevant * Amount of damages should be limited to what can actually be proven * Ended up being little to no damages at all

Answer 34

Account for profits Defendant ought not to gain an advantage for free, and should make some reasonable recompense for breaching his contract * Conduct of D was not relevant * Amount of damages should be limited to what can actually be proven * Ended up being little to no damages at all

Answer 35

1) – Compensatory damages • compensating someone for a loss 2) – User damages  • Assessed with respect to what has been taken from C 3) – Exemplary damages • Designed to punish and deter • Do not have this in contract  4) – Restitutionary award • Damages in respect to the gain fo the wrongdoer rather than loss of innocent party • Ex; intellectual property use by another

Answer 36

1) • Notional “obligation” on claimant to mitigate his losses • cannot allow it to continue if C can fix it 2) • Losses not recoverable if “too remote” from the breach (≡ unforeseeable) • If not natural from the breach 3) • Causation requirements • loss must be caused by the breach 4) • Position with non‐financial losses: damages for pain and suffering, etc.

Answer 37

o 1) Causation o 2) Remoteness o 3) Mitigation

Answer 38

• involve accountancy firm • company was client of the firm • firm made a number of errors • company relied on the firms work, suffered significant trading losses • if firm did job correctly, would have stopped trading sooner • was this a casual affect to the trading losses • held: o not sufficient causation to establish the firm as liable for the losses o breach had to be affective/dominant cause of the loss o cannot be simply contributive

Answer 39

C cannot get damages for the loss he has suffered if he cannot show that it was D’s breach of contract which caused his loss breach had to be affective/dominant cause of the loss o cannot be simply contributive

Answer 40

Hadley v. Baxendale Test Remoteness * The extra gov’t contract in not something to expect * Cannot recover

Answer 41

* D was 20 weeks late to delivering a boiler * Delay made L lose a lot fo business * Also loss opportunity to take advantage of gov’t contractive * Would have brought in over £200 a week * Should of expected the ordinary business of the laundry * The extra gov’t contract in not something to expect * Cannot recover

Answer 42

* sale of sugar * ship was 9 days late * ship made deviation from routes * deviations were breaches of contract * during delay, market price of sugar fell * K tried to get damages for the price of sugar would have been * Were loss of profits damages? * Held: * Yes * It was foreseeable that the price of sugar was fluctuate * Must have been aware of the possibility * Does not need to be likely, simply reasonably foreseeable

Answer 43

Hadley v. Baxendale Test Remoteness * Must have been aware of the possibility * Does not need to be likely, simply reasonably foreseeable

Answer 44

* J was trading under the name of Samson (S) * Contracted to sell dog chews to another company , E * Chews were imported from Thailand * Payment was to be made by a letter of credit * Letter was opened at R * S was named as the beneficiary on the letter * Price was on packing list, included the mark up * E did not know how much S was making on the markup * This continued for a number of years * Different mark up on every transaction * 3 years in, R sent invoice directly to E instead of S * E saw the mark up was 19%, withdrew its business from S * S sued R * They breached their duty of trust and confidence * Held: * Could recover for the lost profits * Wrong to limit liability to 1 year * 4 years of profits was more appropriate * implied term of confidentiality by both parties

Answer 45

Hadley v. Baxendale Test Remoteness * Could recover for the lost profits * Wrong to limit liability to 1 year * 4 years of profits was more appropriate * implied term of confidentiality by both parties

Answer 46

• hire of a ship • clear that the ship was going to be returned late • owner had another booking for it • forced to renegotiate the price • owners tried to get losses back • argued that they should get damages for the whole length for original contract • Held: • Only recovery would be for the amount of time that was overlapped • Controversial • Lord Hoffman o Implied new standard o Had you assumed responsibility for loss in contract, new standard of breach o Must make provision in contract to claim loss for damages

Answer 47

Remoteness o Implied new standard o Had you assumed responsibility for loss in contract, new standard of breach o Must make provision in contract to claim loss for damages

Answer 48

• lawsuit about a leak • defective installation of a valve • sprinkler tank that filled perpetually • overflow drains were blocked, flooding • were the losses too remote? • Held: o No o Referred to Achilleas case o A case: provision must be made in order to claim losses in the contract • Said standard rule was still Hedley v Baxendale case • 2 prong test o A case happens in small minority of cases • Not the general rule • Circumstances still unsure

Answer 49

Hadley v. Baxendale Test Achilleas Test Remoteness o Referred to Achilleas case o A case: provision must be made in order to claim losses in the contract • Said standard rule was still Hedley v Baxendale case • 2 prong test

Answer 50

• Helps understand case • Charteres lost a sub charter because owners were negligent in maintaining holes in the ship • Tried to sublet to other person • Claim that they should be able to claim losses from sublet • Held: o Can claim damages o Not too remote o Achilleus case only applied in unusual cases • Complex cases

Answer 51

Remoteness o Can claim damages o Not too remote o Achilleus case only applied in unusual cases • Complex cases

Answer 52

* S sold surplus land to developer * Obtained covenant that it would be developed according to current plans * Developer had to apply for relaxation oft the covenant if wanted more houses * Developer finished the houses and built more without authority * S tried to sue for damages * Held: * S did not suffer financial damages * No problem with damages * No damages under expectation * Too remote

Answer 53

* S did not suffer financial damages * No problem with damages * No damages under expectation * Too remote

Answer 54

• 1) P cannot recover any losses if he could avoid by taking reasonable steps • 2) P cant recover for any losses actually avoided, even if took more steps than necessary • 3) P can recover for losses incurred in attempting to mitigate o for trying to mitigate o Even if don’t succeed

Answer 55

* D agreed to supply P with electricity turbines * Actually installed some that were less efficient than the expected ones * D accepted them and used them for a number of years * Replaced them with ones that are more efficient than those that were originally supposed to be installed * After replacement, P realized and claimed damages * P was under not duty to mitigate * Since he did, Court could take into account the advantages from new turbines * Held: * Saving from new ones were greater than costs of old ones, he could not recover

Answer 56

Mitigation C must take all reasonable steps to minimize his loss (but no more than reasonable steps) * P was under not duty to mitigate * Since he did, Court could take into account the advantages from new turbines

Answer 57

• shipping case • owners of ship let it to charterers • undertook that ship would be ready at July 1st • charterers had option to cancel the ship if was not ready by 20th • Charterer could not get ship by 17th, cancelled the contract • Ship was not ready until 23rd • Argument that ship was not ready on the first, charter should be able to avoid contract • Held: • • 3 issues o Issue 1: expected readiness of the ship • Condition or warranty? • Is so, can terminate • Held: • Condition • Charterers could terminate o Issue 2: if charterers repudiated the contracted by cancelling on the 17th, before the 20th • Held: • No o Issue 3: damage suffered by owners • Did not really suffer damages • Is obligation to mitigate • More lenient to innocent party

Answer 58

Mitigation Lord Denning: shipowners suffered no loss and should be entitled to no more than nominal damages

Answer 59

1) Breach o Date of breach? o Type? * Allows termination? * Allows damages? • Must establish different losses 3 points for each 1) Causation and whether it was too remote? • Hedley v Baxendale test • Achilleus case? 2) Type of interest that can be claimed? • A) Expectation • B) Reliance • C) Restitution 3) Mitigation? • What can we do to mitigate • What should be done • Which is the best method to pursue? •Allows equitable remedies?