remedies

Damages

purpose of damages in contract law is to compensate C for the losses suffered.

Liquidated Damages

The contract has a term stating the amount of damages awarded if the contract is breached. This will then be used by the judge.

Dunlop v New Garage & Motor

These have to be a genuine or reasonable pre-estimate of the loss likely to be caused by the breach

ParkingEye v Beavis

‘secondary obligation which impose a detriment on the contract-breaker out of all proportion…” penalty clauses are not always enforceable

Unliquidated damages

where the contract does not include a term stating the amount of compensation.

1. Causation in fact – was the breach the reason for the loss?

2. Causation in law – remoteness of damage test.

Hadley v Baxendale

Held: The defendant was unaware that the mill would have to be closed during the delay and therefore the loss of profit was too remote

The Heron II

The court held that damages are not too remote if: they arise naturally from the breach of contract, so there is a ‘serious possibility’ that the loss would occur

ways to assess awards of damages in contract claims

1. Loss of a bargain

2. Loss of an opportunity

3. Reliance loss

1. Loss of a bargain

the difference in value between the goods or services required and those actually provided (Ruxley Electronics v Forsyth).

• the difference between the contract price and the market price

• loss of profit that could have been made if the contract had not been breached (Victoria Laundry v Newman)

2. Loss of an opportunity

The court is asked to place a value on the hypothetical outcome that would have materialised if the contract had not been breached

Chaplin v Hicks

3. Reliance loss

expenses incurred by a claimant who relied on the contract being performed e.g. a company built a structure for an event at an arena and then the celebrity cancelled the event.

Anglia TV v Reed

4. Nominal damages

a small amount is awarded in recognition of the wrongdoing, where the claimant suffered no actual loss.

British Westinghouse Co v Underground Electric Railway Co

they cannot claim for anything made worse by their behaviour

B. Equitable remedies

1. Specific performance

2. Rescission

3. Restitution

4. Injunction - a court order which tells a party to do or not to do something. It can be permanent or temporary in its effect.

Specific performance

the court orders one party to perform their contractual obligation, granted where ‘appropriate and just’ to do so following Beswick v Beswick .

Rescission

the contract is set aside and both parties are restored to the position of never having entered the contract. remedy for fraudulent/negligent misrepresentation or economic duress.

Restitution

restored to the position they were in before the contract was made. The claimant is repaid money or other benefits that were passed to the defendant. remedy for economic duress.

Aravici v Fallon

A prohibitory injunction in contract law is a court order telling a party not to breach a term of the contract.