Legal remedies

• Purpose of damages is to put the victim in the position they would have been in if the contract had been properly completed and performed by the defendant
• The court is therefore looking at what should have happened and the consequences of non - or part performance =
• Damages are normally awarded for expectation loss (loss of a bargain) or reliance loss (wasted expenditure)
• Damages are compensatory, they will not include losses that are too remote to be awarded. Compensatory damages are the main type of damages. We need to consider

  • Loss of a bargain
  • reliance loss
  • restituition
• Loss of bargain (expectation loss)

  To place the claimant in the same financial position as if the contract had been properly performed. Can be seen in a number of ways.
• Loss of bargain (expectation loss)

  • Difference in the value between the goods or services required in the contract and those actually provided (Bence Graphics)
• Loss of bargain (expectation loss)

  • Where there is a market, damages will be the difference between the contract price and the price in the market. If the claimant's profit remains, there is no loss (Charter v Sullivan)
• Loss of bargain (expectation loss)

  • Loss of profit not just for goods, but also in other contracts (Victoria laundry)
• Loss of bargain (expectation loss)

  • Loss of a chance - general a speculative loss is not recoverable in contract, and most cases are based in negligence rather than contract (Chaplin v Hicks)
• Reliance loss

  This is the expense incurred by a claimant who relied on a contract being performed. A claimant may also recover expenses he or she has had to spend in advance of a contract that has been breached (Anglia Television)
• Distinction between expectation loss and reliance loss

  Expectation loss

  This is the normal measure of damages for breach of contract. It refers to the innocent party's loss of bargain. Includes the profits that it would have expected to receive had the contract been performed, taking into account the costs it would have incurred to earn that profit.
• Distinction between expectation loss and reliance loss

  Expectation loss

  Aim of expectation loss damages is to put the innocent party in the same position as if the contract had been performed.
• Distinction between expectation loss and reliance loss

  This is wasted expenditure. It refers to the expenses incurred by the claimant in reliance of the contract being performed.

  Aim of damages for reliance loss is to put the claimant in the position he or she would have been in had the contract never been made.
• Distinction between expectation loss and reliance loss

  Expectation loss and reliance loss are mutually exclusive to prevent double recovery of damages.
• Restitution

  Restitution is a repayment of any money or other benefits passed to the defendant in advance of the contract that is breached
• Special situations

  There are some situations that do not fit the normal pattern.
• Special situation

  Nominal damages

  • If no loss is actually suffered but there is breach, the court may award 'nominal damages'.
  • Known as negotiating damages. Can be awarded for breach of contract where the loss suffered by the claimant is measured for its economic value
  • Defendant has taken something for nothing, for which the claimant is entitled to require payment
• Special situations

  The courts have been careful to avoid granting speculative damages.
• Damages for loss of amenity (Ruxley Electronics)

  Have been allowed where the sole purpose of the contract was to provide the pleasurable amenity.
• Causation and remoteness of damage

  Compensatory damages are relevant once it has been established which losses are to be compensated
• Causation and remoteness of damage

  Causation - Losses may have been foreseeable of the time of making the contract, but they will only be recoverable if those losses were caused by the breach of contract

  Therefore, the claimant must prove that the breach caused the loss, not just provided the opportunity for loss

  This is the but for test - Would the claimant of suffered the loss claimed?
• Causation and remoteness of damage

  Remoteness of damage - This does not establish how much compensation will be payable (damages) but merely which losses can be the subject of compensation (damage)

  (Hadley v Baxendale)
• Causation and remoteness of damage

  The remoteness test is in two parts:

  1. The objective test: What loss is a natural consequence of the breach? In this case, the loss was late delivery
  2. The subjective test: this is based on specific knowledge of potential losses in the minds of both parties when the contract is formed. Did the carrier know that the mill could not operate without the crankshift?
• Causation and remoteness of damage

  The remoteness test

  The test has been developed in subsequent decisions (Victoria laundry)
• Causation and remoteness of damage

  (Victoria laundry)

  The remoteness test is:

  • Recoverable loss should be measured against a test of reasonable foreseeability
  • Foreseeability of loss depends on knowledge at the time the contract was made
  • There are two types of knowledge: Common knowledge and actual knowledge of the defendant as in (Hadley v Baxendale)
• Causation and remoteness of damage

  The remoteness test

  Knowledge can be implied on the basis on what a reasonable man may have contemplated in the circumstances in the circumstances.
• Causation and remoteness of damage

  Once the tests of causation and remoteness have established that there is liability for the loss claimed, the court then has to determine how much the claimant can recover
• Mitigation of loss

  The injured party must take reasonable steps to minimise the effects of the breach. This is known as mitigation of loss.
• Mitigation of loss - The injured party must take reasonable steps to minimise the effects of the breach
• Damages - purpose

  The purpose of damages is to put the victim in the position he or she would have been in if the contract had been properly completed and performed by the defendant
• Mitigation of loss

  However, a claimant is not bound to go to extraordinary, lengths to mitigate the loss, the only to do what is reasonable in the circumstances.

  In an anticipatory breach, they are not bound to sue immediately they know of the possibility of the breach, may continue until the breach is an actual breach
• Liquidated damages

  Where the amount of damages has been fixed by a term in the contract
• Liquidated damages

  Liquidated damages are where the amount of damages have been fixed by a term in the contract. The courts will only accept this sum as the award of damages if the sum identified in the contract represents an accurate and proper assessment of loss.
• Limitations on awards of damages

  1. Causation
  2. Remoteness
  3. Mitigation
• Liquidated damages

  Enforceable if: contract is an accurate and proper assessment of loss

  parties will not need to show actual loss
• Quantum meruit - Reasonable amount

  • Where the contract is silent on issue of remuneration
  • Where a fresh agreement can be implied in place of an original (something extra done that needed to be done)
  • Prevention of completion by other party
• • Types of Damages
  • Grounds for damages
  • Limitation on Damages