Midterm v2 - Reliance Damages

Question 1

What is the purpose of reliance damages?

Answer 1

Purpose is to restore P to same position absent D’s conduct

Primary remedy for Torts; Secondary remedy for Contract

Question 2

What is the basis of reliance damages?

Answer 2

Legal rationale is to encourage careful conduct to avoid interfering with legally protected interests of others  and to compensate P

Question 3

What is included in Reliance damages for breach of contract?

Answer 3

P’s WASTED expenses – must be incurred in reliance on contract AND wasted DUE TO the breach

CAN also include opportunity cost where P could have made profit elsewhere BUT FOR the breach (restricted to negligent misrep?)

Question 4

When are reliance damages available?

Answer 4

1) As an ALTERNATIVE to expectation damages (Sunshine; McRae; May; Cassels & Adjin-Tettey)
2) Where there is CONCURRENT liability in Tort and Contract, P can choose to frame claim in tort (generally for negligent misrep), eg Rainbow Caterers

Question 5

Summarize the ratio of Sunshine Vacation

Answer 5

Sunshine Vacation – plaintiff has REBUTTABLE PRESUMPTION that they would have at least BROKE EVEN in a K + plaintiff can elect for reliance where expectation damages are uncertain or too speculative

Question 6

Summarize the ratio of McRae

Answer 6

McRae – can only claim reliance damages for WASTED expenses

Question 7

Summarize the ratio of May

Answer 7

May – appropriate to award reliance where D’s conduct renders impossible to determine expectation

Question 8

What can be claimed under reliance damages for breach of K?

Answer 8

CAN claim: 1) expenses incurred in RELIANCE on and WASTED due to breach, 2) incidental expenses in contemplation of parties, 3) POST-breach expenses REASOANBLY INCURRED for MITIGATION (Ticketnet), 4) Pre-contract expenses (if in parties’ reasonable expectations that it would likely be wasted in event of breach) (Angila TV)

Can also claim CONSEQUENTIAL or INCREASED losses due to breach (Bowlay; Pacific Playground)

Question 9

What CAN’T be claimed under reliance damages for breach of K?

Answer 9

CAN’T claim expenses that would have been incurred or wasted EVEN ABSENT BREACH (PreMD; McRae)

Can’t claim expenses that were NOT WASTED (McRae)

Question 10

What damages are available for negligent misrepresentation?

Answer 10

Damages (if any) are limited to RELIANCE damages and CONSEQUENTIAL losses (Beaver Lumbar)

However, the damages must be due to the breach and not too remote  it is PRESUMED that the negligent misrep induced P to enter into K and P would have otherwise avoided the losses (Rainbow Caterers)

Question 11

Are expectation damages possible for lost profits in negligent misrep? Explain

Answer 11

Expectation damages are possible when the misrepresentation constituted a CONTRACTUAL GUARANTEE that INDUCED P to enter into the K (Goldstar Management)  Normally, need to start claim in Tort to get expectation damages (Rainbow Caterers)

Question 12

What are the principles for claiming lost profits for negligent misrepresentation? Why can they be claimed even when bringing a claim under reliance damages?

Answer 12

It is PRESUMED that P would have earned SIMILAR profits elsewhere but for the misrepresentation  however, it is rebuttable

Even where P is seeking RELIANCE damages, court can still give lost profits where equitable – Equity seems to have been the driving factor in this case

Question 13

What is the basis for a claim for negligent performance of contractual services?

Answer 13

P paid for and relied upon service, D negligently a) caused defect, b) failed to cure defect, c) gave bad advice, or d) failed to notice defect.

Therefore, both negligence and breach of contractual services

Question 14

What is the first step in determining appropriate damages for negligent performance of contractual services? What two categories are there?

Answer 14

First step is determining nature and consequences of D’s wrongdoing…2 categories:

1) D’s negligence CAUSED the defect, or was RETAINED to cure and failed to cure defect
2) D gave BAD ADVICE, or FAILED TO NOTICE defect

Question 15

What is the measure of damages available where D failed to cure defect or caused the defect due to their negligence?

Answer 15

Kienzel - Measure is:

1) value P would have received BUT FOR D’s negligence (expectation), plus
2) CONSEQUENTIAL loss (which was foreseeable and reasonable) including 1) losses directly caused by negligence, 2) costs of curing defect in title

Question 16

What is the measure of damages where D gave bad advice or failed to notice defect?

Answer 16

Measure is: difference between PURCHASER price and FAIR MARKET VALUE of property AT TIME OF PURCHASE plus CONSEQUENTIAL loss  P not entitled to expected gain (Toronto Industrial; Messino v Beale; Text)

Messino = case where only recovered overpayment b/c no other losses caused by D’s conduct

Yi = CANNOT use past dealings to speculate how P and seller would have dealt with defect  P entitled to FULL cost of curing missed defect

Question 17

What point in time is the assessment of P’s damages in a claim for negligent performance of contractual services (where there was bad advice or failure to notice the defect) based on?

Answer 17

General rule – market value AT TIME OF CONTRACT

EXCEPTION – where subsequent decline in property value is CAUSED BY D’s negligence, FUTURE decline in value is factored in