Damages

what is the main type of remedy for a breach

expectation damages

compensatory damages

the person who breaches the contract has to pay compensation (expectation damages)

why is compensation forward looking?

to protect the performance interest by putting you in the situation you would have been if the contract has been performed

nominal damages

occurs when there is a breach of contract but there is no loss

example of a situation where there would be nominal damages

if a contract promises a green bike but a blue bike of the same value is given

Ruxley Electronics v Forsyth

there is an assumption that each contracting party's interest was purely commercial however in this case, the courts awarded £2500 for a loss of amenity a non pecuniary loss

Addis v Gramophone Company

Facts: an individual was brutally fired and sued for his wages and compensation for the damage the firing did to his reputation

Decision: could only receive damages for lost wages as there was no compensation for injured feelings - damages for breach are in the nature of compensation not punishment

Whitten v Pilot Insurance Co

Facts: A family's house burned down and an insurance company invented arson claims. A jury awarded loss plus a punitive damage 3x the sum

Decision: punitive damages could be awarded in exceptional cases for malicious conduct

disgorgement (not used in the UK)

if you profit from breaching a contract you have to give up your profits as damages

AG v Blake

Facts: a British spy wrote a book exposing official secrets, breaching his contract

Decision: disgorgement could be allowed in exceptional cases

the measure of compensatory damages

When claiming a loss of profits, C must prove the net profit they would have earned by deducting expected expenses

what are the two expectations in a contract

1. receiving performance

2. The use you intended to make of what you received

Parsons Livestock Ltd v Uttley Ingham & Co Ltd

Facts: A ventilator in a food storage was broken killing 254 pigs. The farmer sued for the value of the lost pigs plus the loss of the expected profit from selling the pigs

Decision: court allowed his claim, you can receive compensation for the money lost and the money you would have earned

diminution of value

how much worse off you are due to the breach

cost of cure

how much it would cost to cure the breach

when is cost of cure typically used

Merentens v Home Freeholds - in building cases

Radford v De Froberville

Facts: C sold land beside his house and rented the house out. The buyer covenanted to build a wall but did not and C sued for breach of contract

Decision: C wanted a wall and genuinely intends to build one so cost of cure damage should be used

negotiating damages

Sometimes damages are calculated as the price C would demand to release D from an obligation in hypothetical negotiations

Wrotham Park Estate Co Ltd v Parkside Homes Ltd

Facts: Wrotham sold an estate to Parkside with a restrictive covenant that they could not build on the land without consent. Parkside built 14 houses

Decision: negotiation damages were used and the court awarded Wrotham 5% of the profit from the breach as a licence fee they would have reasonably charged

One Step (Support) Ltd v Morris-Garner

negotiating damages are only used in exceptional cases where the claimant's loss is appropriately measured by the economic value of the right infringed

Non pecuniary loss

no money is loss, you cannot receive compensation

what are the 3 exceptions to the rule that you cannot recover non pecuniary losses

1. loss of amenity (Ruxley)

2. when the object of the contract is to provide pleasure, relaxation etc

3. physical inconvenience and discomfort caused or mental suffering

Jarvis v Swan Tours Ltd

Facts: C bought a holiday at a house party centre and did not enjoy it

Decision: since the contract was created for a holiday, damages could be given for a breach in contract

Watts v Morrow

Facts: C bought a holiday house and the surveyors' report did not disclose any defects, C had to do inconvenient repairs and sued for diminution in value

Decision: no damages could be awarded for inconvenience where the loss does not fall under the exception of a holiday, a surveyor's contract is not designed to provide peace of mind from distress

Johnson v Gore Wood & Co

Facts: a solicitor's incompetence led to costly litigation and delay, C's company received compensation but C also sued for non-pecuniary losses

Decision: C could not receive damages for mental distress/non-pecuniary losses

Farley v Skinner

Facts: C bought a country house specifically to relax and the surveyors report assured him he would not be disturbed by aircraft noise despite being near an airport. Airplanes circled overhead constantly

Decision: the courts allowed damages for non-pecuniary losses and held that pleasure does not have to be the only purpose of the contract, only an important one

reliance losses

Occurs when someone has wasted expenditure due to the reliance on the performance of a contract

when can you not sue for reliance losses

when you would have lost the money anyway

Anglia Television Ltd v Reed

Facts: Reed was an actor and withdrew from a television production. C could not quantify the lost profits as they did not know how much they would have made from the movie. C claimed wasted expenditure before and after the contraction was signed

Decision: Wasted expenditure can be recovered when it is wasted because of the defendant's breach. C can only claim loss of profits or wasted expenditure not both

C & P Haulage v Middleton

Facts: D was a mechanic and rented a workshop from C on a 6-month rolling licence. D did lots of work to improve the premises and C wrongfully repudiated the licence. D claimed for wasted expenditure

Decision: claim rejected as you cannot wasted expenditure for money you would have lost anyway

CCC Films v Impact Quadrant Films

Facts: C paid D for a licence to distribute films and D lost the tapes in the post

Decision: C can either sue for reliance or expectation damages

restitution

Recovering advance payments or value of goods supplied or work done where there is total failure of consideration

double recovery

getting your money back plus damages calculated as if you paid that money

specific performance

A legal action to compel a party to carry out the terms of a contract.