Damages (cases and principles)

Robinson v Harman

compensatory principle: a party is entitled to be put in the position they would have been in had the contract been performed. entitled to recover damages for the loss sustained by the nonperformance of the contract

delivery of lease documents

The Golden Victory

Gulf war broke out after breach in period when the charterparty would have been ongoing apart from the breach

Breach-party not responsible for compensating for independent events. Flexibility in date of assessment for contract.

Overriding goal of contract damages is ensuring that the parties are properly compensated for their actual lost benefits.

Bunge SSA v Nidera

sale of corn that was interrupted by Russian embargo

the difference between contract price and market price is measured at the time they ought to have been delivered unless the buyer should have mitigated into a substituted contract earlier (in which case assessed by the earlier date) - any subsequent change in market value irrelevant

Hadley v Baxendale

delivery of spare part for a machine without knowledge that there wasn’t a replacement ie the delay would cause a loss

loss must arrive naturally in the usual course or in the reasonable contemplation of both parties to not be too remote to recover

Victory Laundry v Newman Industries

delivery of boiler delayed which prevented a lucrative government contract

extent of the loss must be within the reasonable contemplation of the parties

The Heron II

contract has a higher threshold than tort for remoteness as there is an opportunity to raise concerns in negotiations

delivery of sugar to a port was delayed - the ship owner should have contemplated that it would be sold at the destination because there was a sugar market there

Parsons v Uttley Ingham

sale of pig food - breach of contract meant that the pigs got sick and died.

applies to physical losses.

focuses on the type of loss being within the reasonable contemplation of the parties rather than the extent of the loss.

The Achilleas

Lord Hoffman assumption of responsibility test

ship returned 9 days late which meant that subsequent charterparty had to be renegotiated at a lower price.

the breaching-party had only assumed responsibility for the 9 days late

Supershield v Siemens Building Technology

uses the assumption of responsibility test to create liability.

2 safety mechanisms designed to prevent flooding, but flooding still occurred. It was not within the reasonable contemplation that the defendant installers that they would be liable for a flood because there was another safety mechanism, but the fact that they had installed one meant that.

Wellesley Partners Ltd v Withers LLP

solicitors negligent in drafting of withdrawal clause for investor in consultancy firm.

where there is a concurrent duty in tort and contract, the contractual test of remoteness should apply.

A-G of the Virgin Islands v Global Water

government breached the first contract with Global Water, which frustrated their second contract.

objective test of reasonable contemplation

British Westinghouse Electric v Underground Electric Railways

defective wind-turbines replaced by ones that were more efficient than the originals would have been.

mitigation should reduce the amount of loss that the defendant has to pay.

The New Flamenco

owners able to sell their ship sooner because the charterer repudiated the contract by returning it early.

benefit must be caused by the breach in order to reduce the sum of damages that the party in breach owes - collateral benefits that stem from the opportunity created by the breach are not taken into consideration

Barclays v Fairclough 1

failed to supervise roof repairs and the repairer breached the strict contractual duties re asbestos management

contributory negligence does not apply to strict contractual obligations where a party promises to achieve a particular result but does apply for duties which mirror tort.

a party who contracts for a particular result is entitled to full contractual performance and compensation if that is not achieved.

allowing contributory negligence would undermine the purpose of the contract and allocation of risk.

no usual parallel duty to prevent the other party from committing a breach.

Addis v Gramophone Co

General rule that there is no award of damages for mental distress or loss of reputation

Jarvis v Swan’s Tours

Swiss package holiday which fell short of advertised expectations

emotional damages award for breach of contract where the purpose of the contract was enjoyment

Watts v Morrow

surveyor failed to notice problems with the house which caused distress to the Watts

damages for mental distress can be awarded if the mental distress is the result of physical inconvenience caused by breach of contract

Ruxley v Forsyth

depth of pool was shorter than contracted for in order to be used for diving

where cost of cure is unreasonable diminution in value will be used. this was sufficient to compensate the mental distress caused.

Farley v Skinner

survey on specifically whether a house was under a flight path and likely to be affected by aircraft noise. surveyor negligently failed to report that this was the case.

awarded damages for mental distress because of the importance placed on it stressed by the specific request. not restricted to physical discomfort - enough to show that the question of amenity was part of the contract.

Chaplin v Hicks

failed to post the letter in time for Chaplin to attend the beauty contest in London

for loss of chance not entitled full damages - portion at the courts discretion. requires a real and substantial chance but not necessarily greater than 50%.

Anglia TV v Reed

Reed failed to perform as the lead actor in Anglia TV’s show

when it is too difficult to ascertain uncertain profits so performance measure cannot be used, reliance measure can be used as an alternative.

cannot claim both loss of profits and wasted expenditure.

includes all wasted expenditure that was in the reasonable contemplation of the parties that would be wasted if the contract were breached

The Mamola Challenger

the owners of a vessel failed to perform costly modifications to their vessel which led the charterers to consider the contract terminated. the market rate of hire was higher than the charterparty had been therefore the owner had profited from the breach.

classifies reliance damages as a type of expectation damages.

no reliance interest can be awarded where a party more than recuperates their lost expenditure.

A-G v Blake

breach of confidentially in publishing memoir about time as spy.

the government suffered no identifiable loss.

the payment was emphasised as compensation rather than an account of profits - arguably this was an exception made due to the circumstances of the case.

Experience Hendrix LLC v PPX Enterprises Inc

licence to exploit certain records but used more than was listed

demonstrates that circumstances must be truly exceptional to grant account of profits (not awarded here)

instead awarded negotiating damages because the value of negotiating damages was equal to the means in which the defendant had deprived the claimant

One Step dv Morris - Garner

breached competition clause and created and sold rival company at a profit

damages here should be the actual financial loss

notional release fee damages threshold (Lord Sumption):

• claimant had an interest which extends beyond financial reparation

• entitled to specific enforcement of right and notional fee is price of non-enforcement

• use as evidential technique to estimate loss

Beswick v Beswick

uncle transferred coal company to nephew on the basis that uncle would remain employed as a consultant and nephew agreed to pay aunt for the rest of her life after uncle’s death (she was not a party to the agreement). failed to pay. aunt brought action on uncle’s estate and for her own specific performance.

granted order of specific performance as an administrator but could not claim in a person capacity

Jackson v Horizon Holidays

Denning: a party can recover for the distress of third parties he contracted to benefit (rejected later cases)

holiday package purchased from defendant, granted damages for mental distress including that of the claimant’s family.

Woodar v Wimpey

sale of land interrupted by compulsory purchase by local authorities

a contracting party is entitled to only nominal damages where he has personally suffered no loss

limits Jackson v Horizon Holidays to its specific fact pattern

Lord Scarman: enforcement for benefit of a third party would be open to parliament

Dunlop v New Garage

penalty clauses are void and unenforceable

here the set sum upon breach was not considered as a breach

establishes tests which help it easier to decide:

• if extravagant in comparison with the greatest loss that could conceivably be proved

• additional fee greater than the loss as a consequence

  • still possible to be a genuine pre-estimate of damages even if impossible to estimate precissely

Makdessi/ParkingEye

dismisses appeal in ParkinEye - had a legitimate interest and the sum of £85 was not out of proportion

Makdessi (marketting and advertisement company - competition restrictions and compulsory shares sales if covenants breached). appeal allowed ie not considered as penalties. courts could not assess the value of goodwill so it is reasonable that the parties pre-determined this.

Lord Neuberger: the penalty rule ‘has not weathered well’ but lack of alternative regulation.

regulates only contractual remedy for breach and not the fairness of the primary obligations.