Documente Academic
Documente Profesional
Documente Cultură
In the event of a breach of contract the 3 categories of remedies available to an innocent party
1.Common law remedies- damage 2.Equitable remedies- SP, injunctions 3. Remedies agreed by parties
General rule-innocent party is entitled to damages that put him in the position he would have been if the contract was performed
Type of loss
1. pecuniary loss damages for financial loss includes physical harm to claimants / to his property /injury to economic position Contract damages usually aim to compensate for pecuniary loss 2. non pecuniary loss mental distress such as disappointment, hurt feelings or humiliation Traditionally not available for this type of loss Such damages available under common law Main policy consideration reduce unnecessary litigation- Hayes v Dodd
Important cases
Whole purpose
Javis v Swans Tours Ltd ( solicitor- booked holidayhouse party) Jackson v Horizon Holidays Ltd ( affirmed Javis) Diesen v Samson ( wedding photos) Heywood v Wellers (stalkingsolicitors liable) Rexley Electronics v Forsyth ( swimming pool loss of amenity)
Major purpose Farley v Skinner(country side- Gatwick airportaircraft noise- surveyor liable- loss of amenity 0
CAUSATION
person is liable for losses caused by his breach His breach need not be the SOLE cause but an EFFECTIVE cause of claimant's loss Intervening acts between the breach of contract and loss incurred may break the chain General rule where breach can be shown as an actual cause of the loss the fact that there is another contributing cause will not break the chain
Causation cases
County Ltd v Girozentrale Securities ( stock brokers liable- many causes but this was effective cause) Quinv Burch Bros D not liable for not providing step - ladder
Remoteness
Some losses are clearly the result from Ds breach but are considered E.g. taxi driver booked to take passenger to the airport Rules concerning remoteness were originally laid down in Hadley v Baxendale
2 situations laid down by court to check whether D is liable for the breach
1. loss which would arise naturally according to the usual course of things from their breach 2. loss as may reasonably be supposed to have been in the contemplation of the parties at the time when they made contract t as the probable result of the breach of it both heads failed in the case
The approach in Hadley V Baxendale was affirmed in Victoria Laundry (1949) Discussed again in Heron ii (1969) Both cases discussed abnormal losses
Mitigation
Claimant are under a duty to mitigate their losses and cant recover damages for losses which could have been avoided taking reasonable steps Pilkington v wood Brace v Calder British Westing House Electric Co Ltd
Calculating loss
Once established that loss is one for which D is liable the court must calculate the sum of damages There are 2 ways to calculate 1. Loss of expectation 2. reliance loss
Loss of expectation
Here the court aims to put Claimant in the position he would have been if the contract has been performed This is the difference in value between the promised performance and the actual performance Expectation loss provide an incentive to performance a contract so the parties will be discouraged not performing the contract
Reliance loss
Damages seek to put the claimant in the position he was in before the contract was made Damages will be given for actual wasted expenditure and other losses incurred due to the breach ( normal test in tort) Anglia TV v Reed RL can include money spent before the contract was made
Speculative rule
R L basis must be used when it is virtually impossible to calculate what profit claimant would have made if the contract was performed In practice courts are unwilling to conclude that damages are speculative MaRae v Commonwealth Disposal Commission (salvage ship) was able to recover the wasted cost on the basis of RL Sapwell v Bass- damages too speculative( stallion)
Quantum merit
Where work has been done or goods supplied but no payment has been received and cannot be obtained under a contract, an action quantum merit is available.
C can claim for a reasonable price for performance and not compensate for loss
Quantum merit based on extra goods or work done only be allowed if the D had the choice of accepting them or rejecting
Quantum merit
Where there is a precise promise of remuneration quantum merit cannot be used to alter the price, even if extra work is done
Exceptions:
i. Incapacity ii. Wrongful prevention of performance ( fails to finish as a result of the other partys breach) iii. Agreed partial performance iv. Contract is void
Equitable remedies
Equitable remedies will be granted where common law remedies are inadequate These are provided at the discretion of the court taking in to account the actions of both parties and the overall justice There are 2 types; injunction and specific performance
Specific performance
An order of specific performance is a court order compelling someone to perform their obligations under a contract. This will compel the party in breach to perform. Specific performance only rarely applies and the making of such an order is limited to the foll. restrictions:
SP - restrictions
Damages must be inadequate Specific performance is only granted where damages alone would be an inadequate remedy, and could be granted along with damages It is not ordered where the claimant could easily purchase replacement goods or performance. Where the goods that are the subject of the contract are in some way unique then SP can be available, e.g.:
contracts for the sale of land ( as each piece of land is unique)
Where damages are only nominal, specific performance could be granted to avoid one party being unjustly enriched
Beswick V Beswick
SP restrictions
Hardship to the defendant Since SP is a discretionary remedy, will not be applied where it could cause the claimant great hardship or unfairness Patel V Ali Contracts made unfairly Equity also allows the courts to refuse SP of a contract which has been obtained by unfair means, even if they do not amount to the sort of vitiating factor which would invalidate the contract. Walters V Morgan
SP restrictions
Contracts unsuitable for SP Some types of contracts by their nature are unsuitable to be subject to an order of SP 1. Contracts involving personal services
(SP would infringe personal freedom)
2. Contracts that involve continuous duties (impractical for the courts to supervise proper
performance and failure to perform would mean contempt of court, thus give rise to a series of contempt actions arising from a long term contract )
SP will not be applied to a contract which is vague as to the performance required, nor to a promise which is only supported by nominal consideration in a deed. It is not used where the contract allows the party concerned to terminate it An order of SP is also subject to the test of mutuality. E.g. SP never ordered where the claimant is a minor as it cannot be ordered against a minor. SP is usually ordered where substitute performance cannot be bought
Injunction
An injunction normally orders the D to not do a particular thing.
Where the action has already taken place the courts may make a mandatory injunction, which orders the D to restore the situation that existed before the Ds breach. To decide on a mandatory injunction: o the courts would apply the convenience test o Nature of the breach & circumstances o If Ds loss in the event of restoration outweighs the claimants gain
Limitations of remedies
Interests protected Law only focuses on financial loss to the party concerned. It ignores mental distress, anxiety, sheer inconvenience which a contract may cause. Contract law has to recognize that customers tend to contract for reasons other than for financial profit so that remedies which focus entirely on their loss of economic bargain are inadequate. E.g.
loss of customers over long term or inconvenience caused by suppliers failure to deliver to a small business
Environmentalist paying to not have the trees cut down. Will receive the damages but no damages could restore her to the position she would be in if the contract was performed
Limitations of remedies
Practicalities: Entirely impractical for the claimant to make a claim as the costs/ time and effort involved in litigation are out of proportion to the amount that can be claimed. Breaches of contract are encouraged. In many cases the injured party does not know they have a right to claim.
Limitations of remedies
Limitation periods Damages and profit: Attorney General V Blake working against the creation of wealth According to the theory of efficient breach the D would only be required to compensate the claimant for their loss and not be punished for non performance ( profit made by breach not confiscated)