EXAM NOTES - Remedies Flashcards
what is the general structure for a remedies question
- Terms
- Breach
- Condition/warranty/innominate term
- Valid liquidated damages clause?
- If not, unliquidated damages
- Limiting factors
what counts as a breach of condition?
a breach that goes to the root of the contract Poussard v Spiers
what is the rule for time clauses and conditions?
- not automatically a condition
- but if C has stressed their importance they’re more likely to be considered one
- Schuler v Wickman
how do courts decide if a breach is of warranty or condition?
- Hong Kong Fir v Kawasaki
- if courts are unwilling to classify as condition or warranty at outset
- may treat it as an innominate term
- breach of IT will have same effect as breach of condition
- if deprives innocent party of “substantially the whole benefit” of the contract
what is a liquidated damages clause
A sum set out in the contract that must be paid on breach.
- Not payable if the court holds it is a penalty clause instead
test for penalty clause?
Dunlop Pneumatic Tyre v New Garage
- Terminology is inconclusive
- Does it aim to intimidate the other party?
- Must be a “genuine pre-estimate of loss… set at the time of contracting”
how do courts determine a “genuine preestimate of loss”
o Is stipulated sum extravagantly greater than largest possible loss based on the breach?
o If breach is by non-payment of money, is the stipulated sum payable greater than the original sum owed?
o Is the same sum payable for a number of possible breaches, some of which are serious and others minor?
what situations are unlikely to be penalty clauses
if:
o Actual damage and LDC amount are similar – McAlpine v Tilebox
o An acceleration of payment clause is not a penalty clause – The Angelic Star
o Money paid as a deposit can usually be kept if the paying party breaches (Howe v Smith) even if it is far more than the loss resulting from the breach
—–though not if the size of the deposit is unreasonable Workers Trust v Dojap (25% deposit when 10% was normal)
what principle do the courts follow in finding unliquidated damages?
- Compensatory in nature – not aimed at punishment e.g. Robinson v Harman
how can unliquidated damages be calculated?
- expectation damages
- reliance interest
- restitution damages
how does expectation damages work generally?
- C should be placed in same situation as if the contract had been performed Robinson v Harman
- Work out with difference in value: position he would have been in minus position he is actually in
How does reliance interest work?
- Claim back any money spent before the breach; i.e. in reliance on the contract
- Works if expectation damages are too speculative to be calculated (McRae v Commonwealth Disposals)
- Treated relatively broadly – can claim back all costs wasted by D’s breach: Anglia TV v Reed
what determines whether C gets expectation or reliance interest damages?
- C has an “unfettered choice” between reliance and expectation loss – Anglia TV v Reed
how can C get restitution damages?
- Where there is no loss to V but D has enriched themselves through their wrongful behaviour; V can claim for D’s profits instead – AG v Blake
- But V must show exceptional circumstance to the case and:
o Legitimate interest in depriving D of his profits
o Other remedies are inadequate
what other kinds of damages can be claimed for
- mental distress if pleasure/relaxation/peace of mind are the whole purpose of the contract (Jarvis v Swan Tours) or a major purpose (Farley v Skinner), unless it is a commercial contract (Hayes v Dodd)
- loss of reputation – Malik v BCCI
- loss of chance – Chaplin v Hicks if V has lost something tangible
