Remedies

Question 1

Aim of contractual damages

Answer 1

Compensate for loss (put parties in position as if properly performed)

Question 2

3 measures of damages in contract

Answer 2

• Expectation Interst
• Reliance Loss
• Restitution Interest

Question 3

Types of expectation loss damages (5 types)

Answer 3

• Cost of cure: remedial works / replacement
• Loss of profit: expected - actual profit
• Diminution in value: between promise and that received
• Loss of amenity: non-economic loss of pleasure
• Loss of bargain: C lost opportunity to obtain money to permit breach

Question 4

When will court award damages for loss of amenity?

Answer 4

1. Cost of cure is out of all proportion to benefit to be obtained;
2. Dimininution in value is negligble; and
3. C lacks intention to carry out remedial works

Question 5

What is reliance interest measure and when is it appropriate?

Answer 5

Reliance loss: puts C inposition they woudl have been in had they never entered contract (refunds wasted expenses0

when?
- loss of profits are highly speculative
- no equivalent goods to buy
- contract would have enabled C to have recovered expenses (cannot recover expenditure which would have been wasted in any event)

Question 6

Types of Restitution interest

Answer 6

Account of profit: rare - no other suitable remedy and C had a legitimate interest in prevent D’s profit making activity

Claim in restitution: if total failure of consideration, restitution operates to reverse unjust enrichment

Question 7

Damages for:
- loss of reputation
- loss of chance
- mental distress

Answer 7

Loss of reputation: none
Loss of chance: available if:
1. loss is quantifiable in money terms
2. chance of benefit less than 50%; and
3. real and substantial chance opportunity might have happened

mental distress (loss of amneity): none unless contract whole or major purpose is provision of pleasure, relaxation, peace of mind

Question 8

When can damages be recovered?

Answer 8

Causation + not too remote (may be reduced if failed to mitigate)

Question 9

Causation test - contract

Answer 9

Factual: D’s breach is dominant (effective) cause of loss
Legal causation: no intervening event

Question 10

Remoteness test - contract

Answer 10

To be recoverable the loss must have either been:
1. In reasonable contemplation of parties at time entered contract (actual knowledge); or
2. arise naturally in usual course

Question 11

Mitigation - contract

Answer 11

C must take reasonable steps to mitigate loss (e.g. accept D’s offer of performance if remains best substitute performance)

D must show failed to take reasonable steps

Question 12

Difference between liquidated damages and penalty

Answer 12

Penalty: attempt to put pressure on a party to perform the contract because sum is disproportionate
Liquidated damages: genuine attempt to pre-estimate oss liekly to be caused by breach

Question 13

Test to determine whether penalty or liquidated damages

Answer 13

1. Penalty = exhorbitant alternative to ordinary damages
2. Penalty = detriment out of all proportion to innocent party’s legitimate interest
3. Penalty = single sum payable on a specific event which could cause serious or minor damage

Question 14

What is a guarantee and when is it enforceable?

Answer 14

Guarantee = 3rd party promises to discharge debt if debtor defaults (secondary obligation)

Must
1. signed writing by guarantor
2. before creditor seeks to enforce ontract

Question 15

What is an indemnity and when is it enforceable

Answer 15

Promise by contacting party to reimburse other if they suffer loss (primary obligation)

Oblgiation remains even if contract set aside
Loss must be known (otherwise warranty)