Damages 1 - Damages are to compensate for loss Flashcards
Damages as compensation
‘The rule of the common law is that where a party sustains 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.’ (I.E. given compensation/money for suffering a loss)– Parke B, Robinson v Harman
It follows that:
> They are not punitive (not to punish the breaching party) and the manner of the breach and intention are irrelevant
> Difficulty of assessment should be no bar in principle
Punitive Damages
The conduct of the breaching party is irrelevant (i.e. if the breach was accidental or deliberate, the loss and compensation given would remain the same) –> Addis v Gramophone Co Ltd
Damages for wrongful dismissal ONLY extend to financial loss, SO hurt feelings or damaged reputation arising from the manner of the dismissal are not
The correct remedy for damaged reputation resulting from breach is tortious – defamation
Lost Chances
A lost opportunity to make money is still a loss and the innocent party must therefore be compensated for it
Simpson v London and North Western Railway Company –> (lost opportunity to exhibit products at an agricultural show because the railway company failed to tell Simpsom the location of the agricultural show)
Chaplin v Hicks –> (lost opportunity to take part in finals of a beauty pageant which had a money prize –> so she ended up recieving 10% of the prize money as she had 10% chance of winning if she had took part )
Compensation for non-pecuniary / non-financial loss
In general only financial losses are recoverable
This is subject to the following exceptions:
1) Where there is physical inconvenience or discomfort arising from breach
2) Where an important purpose of the contract is to provide enjoyment or peace, or to prevent distress, and this is frustrated by the breach
3) Where there is a loss of reputation caused by the breach which gives rise to financial loss
Compensation for non-pecuniary loss - PHYSICAL INCONVENIENCE OR DISCOMFORT - 1
If substantial physical discomfort arises from the breach there may be an award of damages:
1) GODLEY V PERRY - small boy bought a catapult from shop and it broke and piece of it flew into his eye and he was blinded –> breach of contract through sales of good act so compensation was given
Damages for mental distress, anxiety, etc. are generally not recoverable because of problems of measurement, proof and subjectivity
Modest damages may be awarded where there is mental distress associated with physical discomfort arising from the breach:
1) (CALABAR PROPERTIES V STITCHER –> A couple sued their landlord for breach of contract because he was supposed to keep the flat in good condition however it was actually very damp and there was mould which led to physicaly discomfort and mental distress because it aggravated a lung condition which the husband had
Compensation for non-pecuniary loss - COMPENSATION FOR ‘LOST AMENITY’ (enjoyment / peace) - 2
Jarvis v Swans Tours Ltd [1973] QB 233
J booked a 15 day Christmas winter sports holiday at a hotel in Switzerland which described the holiday as a ‘house party’ and promised entertainments such as excellent skiing, a yodeller, a bar, etc.
In the 1st week there were only 13 other guests at the hotel & in the 2nd week he was the only guest and the entertainments were not as described in the brochure –> SO J was held entitled to compensation for his disappointment or lost enjoyment
This was because the purpose of the contract was not merely transactional in the commercial sense but done for the purpose of providing enjoyment
> Jarvis claimed lost income (£93.27) for taking two weeks off work –> SO the trial judge awarded half the cost of the holiday (£31.72)
> Court of Appeal increased the award to £125 as Jarvis had not just lost ‘half a holiday’ (as a result of breach) but had also lost enjoyment
> It is based on the underlying principle of putting the innocent party in the position he would have been had the contract been performed
An ‘important object’
Enjoyment or peace of mind, or the prevention of distress, does not have to be the sole purpose of the contract – just an ‘important’ one
Farley v Skinner [2001] UKHL 49
1) F wanted to buy a house where he could have peace and quiet; he employed a surveyor to report on the property and whether it would be affected by aircraft noise
2) Surveyor advised that this was unlikely and F bought the house
3) The house was near a navigation beacon for aircraft landing at Gatwick and very much affected by noise
4) F was compensated for the interference with his enjoyment of the property because he had made a specific request regarding noise (hence this was an important object of the contract, albeit not the main one)
Compensation for non-pecuniary loss - LOSS OF REPUTATION - 2
Damages are not recoverable for injury to reputation caused by the manner of the breach (Addis v Gramophone Co Ltd)
Malik v Bank of Credit & Commerce International SA
1) M made redundant following bank’s insolvency –> the Bank had been carrying on its business in a corrupt and dishonest manner –> AND EVEN THO M was innocent of any involvement he suffered stigma in the financial services sector and could not find employment elsewhere ––> SO sought compensation
REASONING IN MALIK:
1) In Malik, there had been a breach of an implied term in employment contracts that neither employer nor employee will act to damage relationship of trust and confidence between them
2) This term had been breached and the claimant had suffered a financial loss as a result (damage to reputation harming employment prospects)
3) It remains the case that damages for harmed reputation arising from a breach itself are not recoverable in contract – must be claimed in tort
SUMMARY
Damages are to compensate the innocent party by putting them in the position they would have been in if the contract had been performed
This includes compensation for lost chances, physical discomfort, and so on, but not for distress, anxiety and so on
It includes lost enjoyment or peace of mind if its an ‘important object’ of the contract
It does not include compensation for the manner of the breach but may include compensation for financial losses arising from damaged reputation as a result of a breach
