Limitations to remedies-FS

Question 1

What are the three key limitations that can reduce or eliminate recoverable damages in contract law?

Answer 1

(1) Causation
(2) Remoteness
(3) Mitigation of loss.

Question 2

What must a claimant establish to prove factual causation in a breach of contract claim?

Answer 2

That the defendant’s breach was the dominant or effective cause of the loss.

Question 3

Can factual causation still be established if other contributing factors played a role in the loss?

Answer 3

Yes — as long as the breach was an effective cause, factual causation can still be proven.

Question 4

What is legal causation in the context of contract damages?

Answer 4

It asks whether the loss is sufficiently connected to the breach in law, even if factual causation is established.

Question 5

What is a novus actus interveniens and its effect on legal causation?

Answer 5

It is an intervening act that breaks the chain of causation, potentially releasing the defendant from liability.

Question 6

When is an intervening act unlikely to break the chain of legal causation?

Answer 6

When it is an act that was objectively foreseeable or likely to happen in the circumstances.

Question 7

What is the impact on liability if factual causation is proven but legal causation is not?

Answer 7

The claim for damages fails because both factual and legal causation must be satisfied.

Question 8

What role does the claimant’s own conduct play in assessing causation?

Answer 8

The claimant’s actions may contribute to the loss but do not negate factual causation if the breach remains an effective cause.

Question 9

Under what condition will a claimant be unable to recover damages due to a defendant’s breach?

Answer 9

If there is an intervening act that is unforeseeable and breaks the chain of legal causation.

Question 10

Why is it important to distinguish between factual and legal causation in breach of contract claims?

Answer 10

Because proving factual causation alone is insufficient—legal causation must also be satisfied to recover damages.

Question 11

After establishing causation in a contract claim, what must a claimant also prove for damages to be recoverable?

Answer 11

That the loss is not too remote from the breach and is foreseeable.

Question 12

Which case established the legal test for remoteness of damages in contract law?

Answer 12

Hadley v Baxendale.

It determined whether the claimant’s loss is foreseeable and recoverable in a breach of contract claim.

Question 13

What are the two limbs of the Hadley v Baxendale test?

Answer 13

(1) Loss that arises naturally in the ordinary course of things;
(2) Loss that was reasonably contemplated by both parties at the time of contracting.

Question 14

What type of loss falls under the first limb of the Hadley v Baxendale test?

Answer 14

Normal loss — loss that arises naturally and is generally expected in the usual course of events following a breach.

Question 15

How does the court determine whether loss is foreseeable under the first limb of Hadley v Baxendale?

Answer 15

It is inferred that both parties knew such a loss would occur because it is a natural consequence of the breach.

Question 16

Is it necessary to prove actual knowledge of the loss for it to fall under the first limb of Hadley v Baxendale?

Answer 16

: No — the loss is foreseeable by inference, as it arises naturally from the breach.

Question 17

What type of breach would typically give rise to a normal loss under the first limb?

Answer 17

A failure that interrupts a standard business operation, causing predictable financial harm.

Question 18

What does the second limb of the Hadley v Baxendale test concern?

Answer 18

It concerns abnormal losses that are recoverable only if they were reasonably within the contemplation of both parties at the time of contracting.

Question 19

When is a loss considered abnormal under the Hadley v Baxendale test?

Answer 19

When it does not arise in the ordinary course of things and depends on special circumstances known to both parties.

Question 20

What must be proven for an abnormal loss to be recoverable under the second limb?

Answer 20

That the parties had actual knowledge of the relevant special circumstances at the time of contract formation.

Question 21

What happens if a party fails to communicate special circumstances that affect potential losses?

Answer 21

The uncommunicated loss will likely be considered too remote and not recoverable.

Question 22

Why is communication of special circumstances crucial under the second limb?

Answer 22

Because foreseeability under this limb depends on what was reasonably contemplated by both parties, not just one.

Question 23

How did the case of Victoria Laundry limit the scope of recoverable losses?

Answer 23

It held that ordinary lost profits were recoverable but losses from specific contracts, unknown to the defendant, were too remote.

Question 24

What determines whether abnormal loss is recoverable in a breach of contract claim?

Answer 24

Whether the loss was foreseeable due to the parties’ shared knowledge of special circumstances at the time of the contract.

Question 25

What is the general rule regarding the claimant’s duty to mitigate in contract law?

Answer 25

The claimant must take reasonable steps to reduce or avoid further losses caused by the defendant’s breach. Losses that could have been mitigated are not legally recoverable.

Question 26

What determines whether the steps taken to mitigate loss are reasonable?

Answer 26

Reasonableness is assessed contextually, based on the facts of each case. Claimants are not required to take extreme or burdensome actions, such as initiating complex litigation.

Question 27

What is the legal consequence if a claimant fails to mitigate their loss?

Answer 27

The court may reduce the amount of compensatory damages awarded to the claimant to reflect their failure to act reasonably.

Question 28

Does the duty to mitigate require the claimant to take on significant legal or financial burdens?

Answer 28

No. Claimants are not expected to engage in costly, burdensome, or speculative actions—only steps that are objectively reasonable.

Question 29

Can the claimant recover costs incurred from taking reasonable steps to mitigate loss?

Answer 29

Yes. If the claimant takes reasonable and proportionate action to avoid loss (e.g., securing alternative services at a higher price), those costs are recoverable.

Question 30

How does the duty to mitigate relate to the awarding of compensatory damages?

Answer 30

Courts will only award damages for losses that the claimant could not reasonably avoid. Reasonably incurred expenses to mitigate can be included in the damages awarded.

Question 31

How does the duty to mitigate interact with causation and remoteness

Answer 31

Even where causation and remoteness are satisfied, the claimant’s failure to mitigate loss can limit or reduce the amount of recoverable damages.

Question 32

In what situation would a claimant be denied damages even if a breach occurred?

Answer 32

If the claimant knowingly fails to take reasonable steps that would have minimized the loss, courts may find part of the loss avoidable and thus not compensable.