Flashcards in Remedies Deck (25):
Bishop, Beale & Furmston posit the case of the taxi-driver booked to take Furmston to New York the following morning to negotiate a multi-million dollar deal. The taxi-driver oversleeps, so that Furmston misses his plane – and the deal. The taxi-driver cannot reasonably be made to stand the loss. If taxis are to be available for hire, and at reasonable prices, there has to be a rule that prevents that activity leading to inordinate liability.
The central issue within the area has been the test for remoteness, and whether there is a valid distinction between the rule as it operates in tort and within contract. The matter is not fully resolved
Damages are awarded to compensate the claimant for loss caused by the defendant’s breach of contract.
Sometimes this principle alone allows the quantification of loss, but some subrules.
An award of damages is compensatory; NO punitive or “exemplary” or “aggravated” damages
Perera v Vandiyar (1953)
Loss must be proven, if not nominal damages are awarded.
Difficulty in quantifying it isn't fatal.
Compensation for loss is the criterion - that de has coincidentally profited from breach not usually relevant
The Golden Victory 2007
Usual claim in breach of contract - performance interest/expectation loss/loss of a bargain -
loss of defs failures to perform according to contract's terms
Robinson v Harman 1848 per Parke B
Expectation loss - usually measured by diminution in value of what Cl received if contract were correctly performed.
Cl entitled to difference between the two.
If calculation discloses no loss (cl made a bad bargain) only nominal damages awarded
Expectation damages may cover the cost of procuring the benefit intended to be provided by the contract – the cost of cure
but only where the cost of cure is proportionate to the disadvantage produced by the breach. See Ruxley Electronics v Forsyth (1996).
Instead of claiming expectation loss, cl may choose to claim reliance loss.
Expenditure on performance of contract which was wasted because of Def's breach.
Anglia TV v Reed 1972
A reliance claim will not succeed if it would clearly improve the claimant’s position over what it would have been if the contract had been performed. In other words, it cannot be used to escape the consequences of a bad bargain.
C & P Haulage v Middleton (1983). A reliance claim is likely to appeal where the claimant’s expectation is difficult to prove
Claims for expectation and reliance loss can be combined, subject to the fundamental principle that the combination must not produce “double recovery”
I.e. here - profit and expenses incurred in earning it
Millar’s Machinery v David Way & Son (1935)
If only a chance has been lost, so that damages cannot be assessed with certainty, the defendant is still required to pay compensation quantified on the basis of good sense
Chaplin v Hicks (1911)
Damages for mental distress arising from breach of contract will not be awarded unless a major purpose of the contract was to provide pleasure and peace of mind.
Farley v Skinner (No 2) (2001).
Remoteness of Loss
Hadley v Baxendale (1854)
FACTSL Pl owned mill in Gloucester. Def was a carrier, engaged by him to delivery. Promised would happen next day but delayed for 5 days. During this time mill stopped. Pl sued def for damages of BoC and damages for loss of profits mill would have earned if active.
HELD: Court of Exchequer - lost profits not recoverable. Loss arose from unusual circumstance - mill ad one crank-shaft. While loss was a consequence of def's breach, didn't arise in ordinary course of things - most mills had a spare. Def didn't know about those circumstances either - if did would have had liability.
"Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach should be such as may fairly and reasonably be considered either arising naturally, ie. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it”.
McK on Hadley v Baxendale:
Rule focuses on parties state of mind at entering the contract. Court wants to gauge contractual allocation of risk - freedom of contract. Liability for unusual loss cannot be sprung on a def with no opportunity to bargain for protection.
Is knowledge enough to fix liability? or must they express agree for unusual circumstances.
Danzig thinks abnormal loss for a large firm is averaged out across thousands of contracts, and covered by insurance.
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd (1949)
FACTS: Pl wanted to expand biz, bought a new boiler. Defs knew they wanted to use it asap. Boiler was damaged upon delivery, finally delivered 5 months late. Pl claimed a) loss of profits during this period b) loss of profits on dyeing contracts which would have taken on.
CFI - no damages.
AC: loss had to be reasonably foreseeable to def at time of contracting. Claim for general profits allowed - would be obvious to a reasonable person that they wanted to operate it for profit. Special contracts refused - manufacturers wouldn't have known these.
Asquith LJ: “[i]n cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach”. The question of foreseeability depended upon the defendant’s knowledge, which consisted in what he actually knew, and what he would be deemed to have known as a reasonable person.
Koufos v Czarnikow Ltd (The Heron II) (1969)
FACTS: Pl chartered def's ship to load 3000 tons of sugar around world. Boc defs caused ship to deviate, arrived 9 days late at Basrah, during which time sugar price fell. Pl claimed price fall in damages. CFI -Def didn't know Pl's intention to sell sugar at Basrah, but knew there was a sugar market there. Loss too remote. AC reversed, HL approved.
Asquith in Vic Laundry criticised for confusing tortious phraseology. In Wagon Mound "Reasonably foreseeable" are events which are highly unlikely, but on which ordinary tortious principles deem it foreseeable.
Greater liklelihood of loss expected in contract than in tort. Prof Burrows - says nub of distinction -
slight possibility of loss enough for tor,
contract law requires risk to be serious.
H Parsons (Livestock) Ltd v Uttley Ingham & Co (1978)
FACTS: Pl ordered feed hopper from Defs for storing pig nuts, nuts went mouldy, continued to feed to pigs, they died. Pls sued for value of pigs - def argued too remote.
AC: loss was recoverable unanimous. But differed in reasoning.
Denning - propsed "contemplation of a serious possibility" from The Heron II appropriate in loss of profits. Tortious test of reasonable foreseeability in cases of physical damage whether brought in contract or tort.
Scarman and Orr LLj - said was per incuriam, instead argued loss must have a serious possibility even if manner of its occurrence was markedly less foreseeable.
Neither reconciliable with The Heron II, not Vic Laundry - both were unusual circumstances.
However test can produce results according to degree of specificity with which risk is stated. Why Civ L could distinguish between 2 types of profit. i.e
A container with off food to make animals sick?
Unventilated hopper to cause E Coli?
Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) (2008)
Charterers to re-deliver a ship by 2 May 2004. Delay apparent, shipowners reneged follow on charter, obliged to agree on reduction in hire to a significantly lower rate (market had fallen sharply). Admitted liability for difference between 2 May and 11, but shipowners clamed difference between 2 rates for entire duration of the follow-on fixture, 4 years. Charterers said was too remote.
Arbitrators -said full loos was Hadley v Baxendale. HL said too remote.
L Hoffmand and Hope - whether charteres had "assumed responsibility" for all loss arising from delayed start to follow-on fixture. To be decided by interpretation of the contract in its commercial context.
Rules designed to give effect to intention of parties, should be interpreted flexibly if necessary.
L Rodge and Baroness Hale - same analysis as Vic Laundry - distinguished between type of loss which had foreseeably arisen from delay, and further loss not within charterer's contemplation.
L Walker - purpose of H v B was to identify common
basis on which parties were contracting - denied charterers were undertaking liability for any loss whatsoever arising from situation beyond their knowledge or control.
Is it applying intention of contract, or default legal rule?
Hoffman says quantification of compensation for loss must be preceded by a principled decision re the kind of loss to be compensated. But can lead to uncertainty.
Also can be doubted on principle whether rules on consequential loss can be derived from parties agreement - seems to depend on whether they are seen as establishing how much loss can be recovered from the def, or whether they exist to protect def from inordinate loss as a matter of policy.
Frust more a matter of legal policy than parties fictitious intentions (Davis Contractors). Remoteness of loss similar - though rules can be displaced by express agreement as can Frust by contractual provisions.
Denning in The Eugenia - if contract allocated for risk great, but if not don't imbibe meaning of their "intentions".
Court orders def to carry out contractual obligation.
Damages are available as a right from proven breach, no defence to it. CL rmeedy.
Sp Perf only at discretion of the court. Equitable remedy. Traditionally withheld where damages adequate.
Where is Sp Perf withheld?
Usually granted for sale of land - land is unique, can't claim equivalent land in damages. Applies to other "unique" property
Where remedy causes disproportionate hardship to def
Where remedy wouldn't be granted to enforce Cl's perf (i.e. services in a failed relationship) or where court would have to supervise compliance over long time.
Where Cl not acted equitably
Restitution - based on assertion that def acquired a benefit which ought be returned to Cl. Seek to prevent unjust enrichment
More Q where def is enriched but not at expense of the Cl.
Enrichment by subtraction
Cl suffered loss by reliance, Def made a corresponding gain.
Maybe BoC or where contract fails - i.e. too uncertain to be enforced, defeated by illegality, terminated by frus.
Quantum meruit - where contract failed but Cl conferred valuable benefit on Def. I.e. if money given but nothing in return can be recovered on total failure of consideration. Re Frust - codified in Law Reform Frustrated Contracts Act 1943