Midterm v2 - Limiting Principles Flashcards
What is the general rule regarding compensability of P’s losses?
Recover is limited to losses CAUSED by D’s breach -> onus on P (BoP) to show causal link using BUT FOR test -> no recovery for losses likely to have occurred absent breach
Are future losses compensable? Explain
Future losses CAN be recoverable subject to duty to MITIGATE -> depends on nature of P’s BUSINESS, EFFECT of breach, and CONTINGENCIES (Canlin)
Future losses are NOT recoverable if future lost profits are too speculative (Sunshine Vacation)
How is the quantum for future losses calculated?
(Houweling) - P receives FULL VALUE of future losses once proven (by proving amount of future losses within REASONABLE DEGREE OF CERTAINTY)
- Evidence considered includes: 1) PAST records, 2) COMPETITORS’ profits, 3) EXPERT opinion
(Sunshine Vacations; PreMD; Ticketnet) – where reasonable possibility of future lost profits, but speculative as to amount court will ESTIMATE lost profits on available evidence (Ticketnet), because evidence of lost profits justifies recovery (Houweling)
How do contingencies affect future losses? Explain
Contingencies are potential future events that might affect P’s profits
Contingencies must be factored in in determining QUANTUM of uncertain future losses
What happens when post-breach events duplicate harm (or exceed harm) from the first?
Damage assessment depends on whether harm is property damage or personal injury.
1) For Property damage where harm is DUPLICATED (Sunrise Co.)- damages have already crystalized at time of wrong so P’s recovery is NOT affected by post-breach event
2) For Property Damage with EXCESS loss (Performance Cars) – second D liable for excess loss
How does remoteness limit recovery?
Damages recovery limited to losses directly caused by D’s wrong
How does remoteness limit claims for breach of contract? What is the test? (Cite the case)
Damages only recoverable for losses that were WITHIN PARTIES’ REASONABLE CONTEMPLATION AT TIME THE K WAS FORMED (Hadley)
Rationale – allocation of risk, should only provide scope of protection P reasonably bargained for; the limitation is necessary for fairness (Matheson)
PRESUMPTION that D accepts normal risk associated w/ the type of K, subject to terms indicating otherwise
As a general rule, how does the court determine what losses are contemplated at the time of the K? (cite the cases)
PRESUMED that D accepts normal risk associated w/ type of K
It is an OBJECTIVE test; actual knowledge of D irrelevant (Purolator; Zial)
How does the court determine what losses are contemplated at the time of the K for UNUSUAL RISKS? What about where defendant has notice?
If D had KNOWLEDGE (constructive or actual), of the special circumstances, the losses will NOT be too remote -> D liable for those losses (Turczinski)
Where defendant has NOTICE of the purpose or importance of the subject matter of the contract (must have sufficient evidence to find notice given) losses from breach are REASONABLY FORESEEABLE and therefore NOT too remote (Cornwall Gravel)
What factors does the court consider in determining reasonable foreseeableness? (aside from knowledge of the specific circumstances)
The court will consider
1) parties’ reasonable expectations, ordinary risks inherent (Text)
2) D’s EXPERTISE and knowledge of P’s operations (Munroe)
3) Custom of the trade (eg if they know a certain industry has no room for error) (Transfield Shipping)
4) Proportionality of EXTENT OF RISK, D’s undertaking, and CONTRACT PRICE -> Higher fee = higher risk presumed (Kienzle)
What is the ratio in Parsons?
While foreseeability requires that D reasonably foreseeing the TYPE/KIND of loss, it is NOT necessary for D to foresee PRECISE MANNER of breach or EXTENT of loss -> sufficient simply to foresee TYPE/KIND of loss (Parsons)
Explain what is meant by the duty to mitigate
P must take REASONABLE STEPS to MINIMIZE their losses caused by D’s conduct -> AVOIDABLE losses are therefore NOT recoverable (British Westing House)
Who bears the onus for proving that losses could have been avoided?
D bears onus to show that P could have avoided some or all damages if they followed reasonable course of action
D must 1) ID STEPS P could have taken, 2) establish would have been REASONABLE for P to take those steps, 3) establish that steps would have REDUCED damages
What is reasonable conduct for avoiding losses?
What is reasonable conduct to avoid losses is a question of FACT, based on the circumstances and common sense. HOWEVER, can’t judge from perspective of HINDSIGHT (Banco)
(eg selling perishable goods at discount – Barber; finding alternate employment – Evans)
Who bears the cost of mitigation?
REASONABLY incurred costs to mitigate are COMPENSABLE (Ticketnet); it is IRRELEVANT if mitigation was successful, so long as it is REASONABLE
What is reasonable depends on – 1) CLOSE RELATIONSHIP btwn costs to mitigate and D’s wrong, 2) COST of mitigation relative to loss suffered, 3) long-term/short-term considerations re cost of mitigation relative to benefit (eg Banco – high short-term costs reasonable to avoid long-term damage)
