LAW103 EXAM prep (all 9 topics and cases

What is the expectation interest?

aims to place the claimant in the position they would have been in had the contract been properly performed

Leading case of expectation interest?

Robinson v Harman (1848)

What rule was established in Robinson v Harman?

Contract damages should place the claimant in the position they would have occupied if the contract had been performed

What is reliance loss?

compensates expenses or losses incurred in reliance on the contract - restore claimant to pre-contract position.

What is the difference between expectation and reliance interests?

Expectation interest:

• Puts claimant in position as if contract performed.

Reliance interest:

• Puts claimant in position as if contract had never been made.

What principle was established in Planché v Colburn?

A claimant may recover reasonable payment for work completed where the contract is terminated

Key term of reliance loss?

Quantum meruit

Quantum meruit definition in reliance loss

allows a party to recover the value of work or services provided when a contract has been performed in part or not fully executed

What is loss of chance?

Damages awarded for losing a real and substantial opportunity

Leading case of loss of chance?

Chaplin v Hicks [1911]

What rule was established in Chaplin v Hicks?

Courts can award damages where a defendant’s breach deprived the claimant of a genuine opportunity

What does Chaplin v Hicks recognise and highlight importance of?

• probabilistic damages

• recognises uncertain future outcomes

What is remoteness of damage?

A rule limiting recovery to losses sufficiently connected and foreseeable at the time of contracting

Purpose of remoteness of damage?

Prevent unfairly extensive liability

Leading case of remoteness of damage?

Hadley v Baxendale

What are the two limbs of Hadley v Baxendale?

Losses recoverable if they arise:

1. Naturally according to the ordinary course of things.

2. From special circumstances communicated to the defendant.

What is the first limb of Hadley v Baxendale?

The defendant is liable for ordinary losses arising naturally from the breach.

What is the second limb of Hadley v Baxendale?

The defendant is liable for unusual losses only if special circumstances were communicated before contracting.

What does the 2nd limb of Hadley v Baxendale require?

Special knowledge

How did Victoria Laundry v Newman Industries refine remoteness?

Only losses reasonably foreseeable at the time of contracting are recoverable

How does Victoria Laundry v Newman Industries refine remoteness with profits?

Ordinary business profits:

• Recoverable.

Extraordinary profits:

• Recoverable only if specifically communicated.

What principle was established in The Achilleas?

Foreseeability alone may not be enough.

Recovery depends on whether the defendant assumed responsibility for the loss.

What is the difference between Hadley and The Achilleas?

Hadley v Baxendale:

• Focuses on foreseeability.

The Achilleas:

• Focuses on assumption of responsibility.

What is mitigation of loss?

The claimant must take reasonable steps to reduce losses after breach.

Purpose of mitigation of loss?

Prevent avoidable economic waste.

What principle was established in Payzu v Saunders?

Claimants cannot recover losses that could reasonably have been avoided - duty to mitigate

Why does contract law require mitigation?

• Prevents economic waste.

• Promotes fairness.

• Encourages reasonable commercial behaviour.

• Limits defendant liability to actual loss caused.

What limitation on mitigation was established in Charter v Sullivan?

Claimants are not required to accept unreasonable alternatives.

What principle was established in Thompson v Robinson?

Reasonable replacement transactions may be recoverable in damages.

What is cost of cure?

Damages awarded to fix defective performance and achieve exact contractual performance.

What is loss of amenity?

Damages awarded for reduced enjoyment where exact repair costs would be disproportionate.

Leading case of loss of amenity?

Ruxley Electronics v Forsyth

What rule was established in Ruxley Electronics v Forsyth?

Cost of cure damages may be refused where disproportionate to the actual loss suffered

What key terms are associated with Ruxley?

• Cost of cure

• Loss of amenity

• Consumer surplus

• Proportionality

What are negotiating damages?

Damages based on the hypothetical fee that would reasonably have been paid to permit the breach

What are negotiating damages also called?

Wrotham Park damages

What principle was established in Wrotham Park Estate v Parkside Homes?

Courts may award damages based on a hypothetical release fee where ordinary damages are inadequate

How did One Step v Morris-Garner restrict negotiating damages?

Negotiating damages are exceptional and usually limited to:

• Property rights;

• Confidential information;

• Cases where financial loss difficult to measure.

What are restitutionary damages?

Damages requiring the defendant to surrender profits gained through breach

Purpose of restitutionary damages?

Strip wrongful gains

What principle was established in Attorney General v Blake?

In exceptional cases, courts may award an account of profits where ordinary damages are inadequate

Why is Attorney General v Blake exceptional?

Because contract law normally compensates claimants rather than stripping defendant profits

What are nominal damages?

Recognise breach without actual loss

What are substantial damages

Compensate proven financial loss

Relation of causation in nominal and substantial damages?

Actual loss must be caused by breach

What are certain losses?

Measurable and provable

What are speculative losses?

Hypothetical and uncertain

What is the relationship between proximity and reasonable contemplation?

More proximate losses are more likely within reasonable contemplation.

What is reasonable contemplation?

Focuses on foreseeability at time of contracting

What is proximity?

Focuses on closeness of connection between breach and loss.

What is the primary function of contract law?

• Enforce agreements;

• Protect expectations;

• Promote certainty;

• Facilitate commercial reliability.

What is a contractual remedy?

A legal response to breach of contract

Examples of contractual remedies?

• Damages;

• Specific performance;

• Injunctions.

How do remedies relate to the function of contract law?

Remedies enforce contractual obligations and protect the interests recognised by contract law

Expectation interest/damages…

protect promised performance

Reliance interest/damages…

protect wasted expenditure

Remoteness…

limits unfair liability

Mitigation…

promotes efficiency and fairness

Exam rule for expectation damages

The aim of damages is to place the claimant in the position they would have occupied had the contract been performed

Case for expectation damages

Robinson v Harman

Exam rule for remoteness

Losses are recoverable only if they were within the reasonable contemplation of the parties at the time of contracting

Case for remoteness

Hadley v Baxendale

Exam rule for mitigation

The claimant cannot recover losses that could reasonably have been avoided after breach.

Case for mitigation

Payzu v Saunders

Exam rule for negotiating damages

Damages may reflect the hypothetical fee that could reasonably have been negotiated for release from the contractual obligation

Case for negotiating damages

Wrotham Park

Exam rule for restitutionary damages

In exceptional circumstances, the court may require the defendant to account for profits arising from breach

Case for restitutionary damages

Attorney General v Blake

Robinson v Harman (1848) - summary

Facts: Defendant failed to grant a lease as promised.

Held: Claimant entitled to damages placing them in position as if contract performed.

Principle: Foundation of expectation damages.

Chaplin v Hicks [1911] - summary

Facts: Claimant wrongly prevented from attending final stage of acting competition.

Held: Damages awarded for loss of a genuine opportunity.

Principle: Loss of chance may be recoverable.

Hadley v Baxendale (1854) - summary

Facts: Delayed delivery of mill shaft caused business losses.

Held: Only foreseeable losses recoverable.

Principle: Created two-limb remoteness test.

Victoria Laundry v Newman Industries [1949] - summary

Facts: Laundry business lost profits due to delayed boiler delivery.

Held: Ordinary profits recoverable; extraordinary profits not recoverable unless communicated.

Principle: Reasonable foreseeability in commercial losses.

Payzu v Saunders [1919] - summary

Facts: Buyer refused reasonable alternative payment arrangement after breach.

Held: Claimant failed to mitigate losses.

Principle: Claimants must take reasonable steps to reduce loss.

Charter v Sullivan [1957] - summary

Facts: Buyer refused substitute transaction after breach.

Held: Claimant only required to act reasonably.

Principle: Mitigation does not require unreasonable conduct.

When are expectation damages preferred over reliance damages?

where:

• profits can be proven,

• expected benefit measurable.

When are reliance damages preferred over expectation damages?

where:

• profits uncertain,

• wasted expenditure easier to quantify.

When are negotiating damages available?

where:

• ordinary damages inadequate,

• rights difficult to value,

• property/confidential rights involved.

When will courts refuse cost of cure damages?

• rebuilding costs disproportionate,

• claimant suffers limited practical loss.

What is the court trying to achieve in remoteness doctrine?

• fair compensation,

• against excessive/unpredictable liability.

Why does contract law usually reject punitive damages?

contract law focuses on:

• compensation,

• economic expectations,
  not punishment.

What tension exists between Robinson v Harman and Ruxley?

• Robinson supports full expectation protection.

• Ruxley limits recovery where repair costs disproportionate.

Because of the tension of Robinson v Harman and Ruxley, what question does it raise?

Should contract law guarantee exact performance or reasonable compensation?

What tension exists between Hadley and The Achilleas?

• Hadley: broad foreseeability.

• The Achilleas: narrower assumption of responsibility - — certainty vs fairness to defendants.

Criticism of mitigation doctrine

May unfairly burden innocent claimants by forcing commercially reasonable behaviour after breach

Criticism of expectation damages

May overprotect economic expectations and ignore fairness between parties

Criticism of restitutionary damages

Blurs distinction between contract and unjust enrichment.

Economic view of contract damages

Damages encourage efficient allocation of resources and support efficient breach theory

Moral view of contract damages

Contract law should enforce promises because parties have moral obligations to perform agreements.

A manufacturer contracts to buy machinery that would generate ordinary business profits. Delivery is delayed and profits are lost

Expectation damages

A business loses an unusually profitable government contract because machinery was delivered late, but the supplier was never told about the contract.

No recovery for extraordinary profits

A supplier delays a boiler delivery, causing a laundry company to lose ordinary profits and a particularly lucrative dyeing contract.

Recover ordinary profits only

A claimant refuses a reasonable alternative arrangement after breach and suffers greater losses

Damages reduced for failure to mitigate

A buyer refuses an unreasonable substitute offered after breach.

Full damages still recoverable

A swimming pool is built slightly shallower than agreed. Rebuilding would cost £20,000 but practical loss is minor

Loss of amenity damages

A homeowner’s extension is built using cheaper materials than agreed, substantially reducing value and requiring replacement

Cost of cure damages

An author spends months writing a commissioned book chapter, but publisher cancels project before publication

Reliance damages / quantum meruit

A claimant cannot prove exact profits they would have earned but can show they lost a genuine commercial opportunity

Loss of chance damages

A developer breaches a restrictive covenant but claimant suffers no measurable financial loss.

Negotiating damages

An employee breaches confidentiality obligations and profits substantially from publication.

Account of profits - exceptional case where ordinary damages inadequate