Damages for breach of contract Flashcards
What are three remedies available for breach of contract?
1) Debt Recovery
2) Damages
3) Cancellation
What are damages?
Damages are money paid by the breaching party to compensate the other party for the breach.
What is the idea behind damages?
What we try to do with damages is to put the innocent party in the position they would have been in had the contract been fulfilled.
What are two circumstances where a party to a contract cannot claim damages?
1) The loss is too remote
2) When the loss has not been mitigated
What should a party to a contract do if the other party breaches the contract and there is likely to be loss?
The principle of mitigation tells us that a party to a contract which has been breached should not stand by and allow their loss to grow. Rather, they should take reasonable steps to reduce (mitigate) the loss.
Describe the findings in Brace v Calder.
Brace was employed by four people in a partnership for a period of two years. When the partnership disbanded 5 months later, Brace lost his job but was offered a job with the same terms by two of the original partners. Because he turned this down he could not sue for damages as he failed to mitigate his loss.
What are the four types of damages that can be awarded?
1) Special Damages
2) General Damages
3) Nominal Damages
4) Exemplary Damages
What are Special damages?
The loss here is a quantifiable monetary loss.
Special damages are where there is an identified loss which has a monetary value. For example the breach of contract where a party is required to pay $100 more for the product than they would have needed to under the contract. This is an identifiable monetary loss of $100.
What are General damages?
These damages cannot be precisely estimated in monetary terms.
General damages are awarded where there is a loss that can not be easily valued by money. This may be where there is a loss of reputation as a result of another parties breach.
What are Nominal damages?
These are small sums awarded to recognise that a breach has occurred, even though no loss has been suffered. These are sometimes call contemptuous damages.
What is the test for remoteness?
The test for remoteness is as follows:
Damages which ordinarily flow from that type of breach are assumed to be reasonably foreseeable and can be claimed.
Damages which don’t ordinary flow from that type of breach are not assumed to be reasonably foreseeable. These can only be claimed if the defendant actually knew of them.
