Damages, Equitable Remedies and Other Remedies Flashcards
What is the general rule when considering the damages to be provided for a breach of contract?
It should aim to put the claimant in the position they would have been should the contract have been properly performed.
Reason for this is that the breach would have deprived them of benefits they expected to obtain from D under the contract.
Therefore, it’s necessary to look at C’s position as it is, and compare it to the position they would have been in if contract was properly performed.
Define a claim for reliance loss.
Where C just claims for expenses incurred because of reliance on the contract being performed. In a reliance loss claim they do not claim for loss of profits.
Define a claim for expectation loss/ loss of bargain.
A claim where the claimant compares the position they are in, to the position they would have been in had the contract been properly performed. Eg this could include a claim for loss of profits for selling the goods on, and/or having to buy more expensive goods/ materials elsewhere.
Define pecuniary losses.
Losses which are easily quantifiable (ie those which are easy to put right with an award for damages). This may include damage to property, or the fixed amount of lost profit arising from the breach of contract.
Why would a claimant claim for reliance loss and not expectation loss?
Where the profits they were to receive had the contract been properly performed, would have been too speculative and therefore not a strong enough claim.
Define non-pecuniary loss.
Arises in very limited circumstances as it relates to some sort of physical pain or suffering.
Good example is disappointment or distress caused from a breach of a holiday or wedding contract.
Explain the test for remoteness of loss (ie to determine whether loss is too remote to be claimed).
1) If loss is seen as inevitable or natural consequence of breach, damages are recoverable.
2) If loss is not seen as inevitable or natural consequence of breach, the loss will be deemed too remote unless it can be seen D knew of any special circumstances at the time of the contract which Mae the loss a likely consequence of breach.
What is the general position in relation to remoteness of loss?
General rule is it depends on whether particular type of loss would have been in reasonable contemplation of the parties at the time of the contract as a likely consequence of a breach.
Define what is meant by C having a duty to mitigate their loss.
C cannot just sit back and watch losses add up following a breach by D.
They must be seen to take steps to mitigate their loss (ie prevent it from getting any worse in ways they can control).
Eg if someone is sacked wrongfully and in breach of contract, they should actively seek new employment. If someone has not delivered goods, the buyer should seek to find replacement goods elsewhere.
Explain the burdens of proof in relation to assessing whether claimant has taken steps to mitigate their loss.
1) Burden is on D to prove C failed to mitigate their loss (this may be tricky for D);
2) C’s who have acted reasonably can claim for their losses even if their reasonable attempts to mitigate loss do not reduce their loss (or even if their steps make it worse). What counts as reasonable is a matter for the court on a case by case basis.
Explain the difference between a specified damages clause (which is permitted) and a penalty clause (which is not permitted).
Specified damages clause is defined as a genuine attempt to pre-estimate the loss likely to be caused by the breach. Such a clause would be binding and sum specified is the amount that will be paid regardless of actual damage suffered.
Penalty clause would be an attempt to put pressure on a party to perform the contract because the sum stipulated for breach is disproportionately high. Penalty clauses are not enforceable.
Explain the decision in Ruxley Electronics (quantification of damages).
Ruxley built a swimming pool for C that was slightly less deep than requested. Would have costed 21k to resolve the issue.
Normal measure for defective work is for D to pay for it to be restored to what was agreed. However HOL decided they would not award damages as the benefit to be obtained from rectifying this was unreasonable in the circumstances.
What is the test to determine whether cause is a penalty clause?
1) Circumstances must be considered. The provision would not be a penalty unless it provided an ‘exorbitant alternative to ordinary damages.
2) Was the means by which the contracting party’s conduct was to be influenced, unconscionable or extravagant?
Explain the remedy action for an agreed sum.
- Sometimes called actions for debt.
- It is simply suing for a fixed amount of money that is owed (usually price of goods or services supplied under the contract).
- Much more direct than a claim for damages.
- Money has to be owed and the date for payment must have fallen due in order to be able to make such a claim. Once claimant can establish their right to money, they can claim it plus any accrued interest for late payment.
Explain the equitable remedy of specific performance.
- This is an order which would require the defendant to perform their obligations under the contract.
- Usually only available if damages alone are not an adequate remedy.
- Usually applicable to contracts for the sale of land, and generally cannot be used for contracts for the sale of goods.
- Also not usually granted for contracts involving services such as employment contracts.
- It is ultimately a discretionary remedy available at the direction of the court. Will be awarded where equitable to do so, and court will also look at whether the order would be disproportionately harsh to D.
