Compensatory Damages for Torts and Breach of Contract Flashcards

Flashcards covering the compensatory principle, remoteness, scope of duty, mitigation, agreed remedies, equitable compensation, and statutory limitation periods based on key case law and the Limitation Act 1980.

What is the compensatory principle for breach of contract established in Robinson v Harman (1849)?

A party who sustains loss due to a breach is, so far as money can do it, to be placed in the same situation as if the contract had been performed.

How does the compensatory principle differ in tort according to Livingstone v Rawyards Coal (1879-80)?

In tort, money is intended to put the injured party in the same position as if the wrong had not occurred.

What are the two limbs of remoteness established in Hadley v Baxendale (1854)?

Limb 1: Damages arising naturally as a consequence of the breach. Limb 2: Damages resulting from special circumstances that were specifically communicated and contemplated by the parties at the time of contracting.

What test did Lord Hoffmann propose in The Achilleas [2008] regarding remoteness?

Foreseeability rules are presumptions about the parties' intentions that can be rebutted if circumstances show a party would not reasonably have assumed responsibility for such a loss.

What is the primary rule for remoteness in tort established in The Wagon Mound [1961]?

A defendant is only liable for damages that are reasonably foreseeable, overturning the 'direct consequences' test from Re Polemis.

According to SAAMCO [1997], what is the scope of a valuer's duty?

A valuer is responsible only for the consequences of the information provided being wrong, not for all losses flowing from the decision to transact (such as those caused by a general market crash).

When are 'cost of cure' damages awarded instead of 'difference in value' according to Ruxley Electronics v Forsyth [1996]?

Cost of cure is the usual measure but will be denied if it is wholly disproportionate to the benefit (subject to reasonableness); in such cases, 'loss of amenity' may be awarded.

What rule regarding sub-sales was established in Rodocanachi Sons & Co v Milburn Bros (1887)?

Damages for lost or undelivered goods are calculated as the difference between the contract price and market value at the time and destination of delivery, regardless of any sub-sale arranged by the plaintiff.

What is the holding in AIB Group (UK) Plc v Mark Redler & Co [2014] regarding equitable compensation for breach of trust?

In a commercial context, liability is limited to the actual loss caused by the breach, applying common law causation principles rather than a strict duty to reconstitute the fund regardless of outcome.

What constitutes an unenforceable penalty clause under the test in Makdessi v Cavendish [2015]?

A secondary obligation that imposes a detriment all out of proportion to the innocent party's legitimate interest in enforcing the primary obligation.

What was the ruling in Attorney-General v Blake [2001] regarding gain-based remedies for breach of contract?

An account of profits is exceptionally available where compensatory damages are inadequate and the claimant has a legitimate interest in preventing the defendant from profiting from the breach.

What are 'negotiating damages' as defined in Morris-Garner v One Step (Support) Ltd [2018]?

Compensatory damages available when a breach causes the loss of a proprietary or 'asset-like' right, where the defendant 'takes something for nothing' for which the owner was entitled to require payment.

What is the 'user principle' in trespass established in cases like Inverugie Investments Ltd v Hackett [1995]?

Damages for wrongful occupation are measured by the benefit gained (market rental rate) regardless of whether the owner suffered a loss or the defendant made a profit.

What does the Hong Kong Fir v Kawasaki [1962] case define as an 'innominate term'?

A term that is neither a condition nor a warranty, where the right to terminate for breach depends on whether the breach deprived the innocent party of substantially the whole benefit of the contract.

Under the Limitation Act 1980, what is the standard time limit for an action founded on simple contract (Section 5) or tort (Section 2)?

$6$ years from the date on which the cause of action accrued.

What is the 'starting date' for the $3$-year limitation period under Section 14A of the Limitation Act 1980 for latent damage?

The earliest date the plaintiff had both the knowledge required for bringing an action (of the material facts of damage, its cause, and the defendant's identity) and a right to bring the action.

How does Section 21(1) of the Limitation Act 1980 affect fraudulent breaches of trust?

No period of limitation applies to an action by a beneficiary against a trustee for any fraud or fraudulent breach of trust to which the trustee was a party or privy.

What is the 'elective theory' of termination established in Societe Generale v Geys [2012]?

A repudiatory breach does not automatically terminate a contract; it only terminates if and when the innocent party elects to accept the repudiation.

What did the court hold in Co-operative Insurance Soc Ltd v Argyll Stores (Holdings) Ltd [1998] regarding specific performance?

Specific performance was refused because the court will not generally make orders compelling a party to carry on a business, due to difficulties in constant supervision and the potential for wasteful litigation.

What 'legitimate interest' limit was suggested in White & Carter (Councils) Ltd v McGregor [1962]?

If it can be shown that a person has no legitimate interest (financial or otherwise) in performing the contract rather than claiming damages, they may not be allowed to saddle the other party with an additional burden with no benefit to themselves.

In cases of conversion, how are 'user damages' assessed according to Kuwait Airlines Corp v Iraqi Airways Co?

While primary damages compensate for loss, if goods are returned, user damages may be awarded based on the benefit obtained by the wrongdoer's use of the property.

What is the 'narrow ground' in Alfred McAlpine v Panatown [2001] regarding third-party losses?

An exception to avoid a 'legal black hole' where a contracting party can recover damages for a third party's loss, though it did not apply in Panatown because the third party had a direct deed of care.