RESTRICTIONS: CONT + MITIGATION

British Westinghouse v. Underground Electric Railways [1912]

FACTS

C purchased defective turbines from D. C used the turbines and then purchased new turbines that were even more effective than D’s would have been even if they were in perfect condition. C claimed the cost of the replacements (as mitigation). D contended that, even if the turbines were not defective, the more efficient turbines would have been purchased anyway, so the cost of them was not a loss flowing from breach and account should be taken of C’s increased profits from the new turbines

OUTCOME

C could not claim for the cost of the new turbines. In assessing damages, the loss sustained had to be balanced against any gain to them arising out of mitigation. C was not bound to buy the new machines, but as they did so, their consequential gain in profits had to be considered. The savings exceeded the cost of the machines. If the mitigation means the plaintiff does not actually suffer damage from the breach, they cannot recover. To say otherwise would be to divert from the compensatory principle. 

• Mitigation “imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps”. 

This is only an obligation to take steps which a “reasonable and prudent man” would “ordinarily take in the course of business”.

Globalia Business Travel v Fulton Shipping Inc [2017]

FACTS

D breached the contract by redelivering the vessel two years before the end of the charterparty. The chartering market upon redelivery was poor, so C sold the vessel for $23m. C claimed damages for loss of profits for the remainder of the two years. If C had sold the vessel when the charterparty was supposed to be redelivered, they would have lost $16m. D argued that credit should be given for the difference in value to offset the damages they would have to pay - as the credit was more than the damages claim, D would have to pay nothing.

OUTCOME

The vessel’s fall in value was irrelevant because it was not proven that “the benefit to be brought into account” was “caused either by the breach of the charterparty or by a successful act of mitigation”. There is no causal link here as the ship’s sale was not a “successful act of mitigation”, but an exercise of proprietary rights enjoyed “independent of the charterparty and independent of its termination”.

• There was nothing about the premature termination of the charterparty that made it necessary to sell the vessel.
  
  

• What would be successful mitigation?: Something that mitigated the loss of the income stream, through acquiring an alternative income stream - this was not the case here.

BARLCAYS V FAIRCLOUGH

FACTS

C employed D to clean a roof. D did not take safety precautions but the roof was contaminated with asbestos, which then spread to the rest of the building and required costs to repair. C claimed the cost of repair from D’s breach of contract. D argued C contributed to the negligence by not supervising D. Could the contract between the parties extend into tort law? If so, D would be able to raise the defence of contributory negligence which would limit liability for contaminating the building during cleaning.

OUTCOME

need to do

FACTS

OUTCOME