Remedies - jskj PDF

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Remedies There are two type of remedies 1- Damages 2- Specific performance

Damage Damages are a financial remedy that aims to compensate the injured party for the consequences of the breach of the contract. in general, the principle that guides the award of damages is that the injured party should be put into the position, as far as possible, that they would have been in if the contract had been carried out. The requirements for damages are:

- Causation The claimant can only recover damages if the breach of contract caused his loss. The loss must be a consequence of the breach. As such the chain of causation can be broken if an intervening act has occurred Key case: county Ltd v Girozentrale securities (1996) Ratio: The plaintiff bank had agreed to underwrite a share placement. The defendant brokers made representations to potential investors outside and in breach of the terms of the engagement letter. The bank failed to check on the status of indicative commitments obtained by the chairman of the company. A significant number of shares were not taken up, and the bank held a loss. At trial Judge had held that ‘the brokers’ representations were not of equal efficacy with the bank’s decision to accept the quality of the indicative commitments . . without making proper inquiries’ Held: The bank’s appeal succeeded. It was entitled to recover its loss from the brokers. Hobhouse LJ said: ‘Where a plaintiff does not know of a defendant’s breach of contract and where he is entitled to rely upon the defendant having performed his contract, it will only be in the most exceptional circumstances that conduct of the plaintiff suffices to break the causal relationship between the defendant’s breach and the plaintiff’s loss. The plaintiffs’ conduct was not voluntary in the sense of being undertaken with a knowledge of its significance. Conduct which is undertaken without an appreciation of the existence of the earlier causal factor will normally only suffice to break the causal relationship if the conduct was reckless. It is the character of reckless conduct that it makes the actual state of knowledge of that party immaterial.’ There is a close relationship between the application of such concepts as remoteness, contributory negligence and causation. Where a defendant’s breach of contract remains an effective cause of the loss, at least ordinarily, the chain of causation will not be broken.

- Remoteness It is necessary to establish that the loss even though caused by the breach, was not too remote from it. Hadley v Baxendale (1854) The crankshaft broke in the Claimant’s mill. He engaged the services of the Defendant to deliver the crankshaft to the place where it was to be repaired and to subsequently return it after it had been repaired. Due to neglect of the Defendant, the crankshaft was returned 7 days late. The Claimant was unable to use the mill during this time and claimed for loss of profit. The Defendant argued that he was unaware that the mill would have to be closed during the delay and therefore the loss of profit was too remote.he damages available for breach of contract include: 1. Those which may fairly and reasonably be considered arising naturally from the breach of contract or

2. Such damages as may reasonably be supposed to have been in the contemplation of both the parties at the time the contract was made. f any special circumstances exists which were actually communicated to the Defendant, the Claimant may recover any damages which would ordinarily follow from a breach of contract under the special circumstances communicated.

This gave raise to the foreseeability test (per Alderson B): “damage that could be recovered is either one raising naturally i.e according to the usual course of things, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it.”

- Mitigation of loss This is the duty for the innocent party suffering the loss the minimise the loss arising from the breach Brace v calder(1895) the claimant was offered employment for 2 years however 2 of the company owners haver retired resulting in the company dissolving. The other two owners continued the business in their own and offered the claimant an employment offer which he refused. The court concluded that he could’ve minimised the damage by taking the job offer and therefore he couldn’t claim as his claim failed on mitigation loss as he could’ve minimised the damages by taking the job offer.

Calculating damages - Loss of bargain - Reliance loss Loss of bargain

This form of remedy aims to put the party in the position it would be in had the contract been performed. This falls into two categories: 1- There is no performance by one of the parties to the contract. This could mean that the party who was bound to supply goods or services failed to do so or it could mean that the party who was bound to receive the goods or services has refused to. This could be the actual value of the contract if a substitute can be found. Or the market value had it been higher in the market. Sullivan(1957)

WL Thompson Ltd v Robinson Gunmakers Ltd(1955)

Both cases the defendants agreed to purchase a car. In Sullivans(1957) the car was in high demand so it was sold at the same agreed price and therefore only nominal damages were awarded, moreover with WL T v R G(1995) the demand for the car was low and therefore it was sold for a lower price and therefore the defendant had to pay the difference for loss of profit.

2- There is performance in the sense that goods or services are provided but are defective or interior quality to the one agreed on. Here the damages awarded could either be calculated to cover the cost of the repairing to restore the goods to their

expected standards (cost of cure). Or represent the price difference between the given goods and the expected ones. Ruxley Electronics and Construction Ltd v Forsyth (1995) - Swimming pool that was an inch less than It should’ve been. The cost to repair that would’ve imposed unacceptable hardship on the defendant. Given that the pool was okay in every other aspect and the breach didn’t go into the heart of the contract. The claimant was only given nominal damages of £2500 and not £20,000 Attorney General v Blake (2000) Blake was a member of M16 he had signed a declaration to not disclose info which he later on breached. By writing a book. The crown commenced an action with a view to ensuring that Blake should not receive the money. Reliance loss There are situations in which it is difficult or impossible to calculate damages on the basis of the position that the defendant would have been in if the contract had been performed so a different basis for calculation is used that focuses on loss caused by reliance on the contract. The aim is to place the innocent party in the position that they would have been in if the contract had been made. Anglia Television Ltd V Reed(1972) The defendant is an actor the claimant is a filming company. The defendant breached the contract by doing another filming in the time of the contract. This resulted in the movie failing and therefore the movie company claimed and got compensated for expenditure both before and after the contract was signed on the basis that this money was spent in reliance on the contract with the defendant. In this case the court of appeal had concluded that the innocent party was entitled to decide whether they wanted to claim for expectation loss or reliance loss. Non-pecuniary loss This is none pecuniary damages such as mental distress and loss of amenity. Jarvis v Swans Tour(1973) The claimant booked a two weeks holiday that specified specific features, some features weren’t there, at the first instance the claimant was going to compensate for those particular features. However the court on appeal awarded for loss of enjoyment. Action for an agreed sum Also known as action for the price. A debt action under which the rules on remoteness and causation are irrelevant. The claimant need only prove that the debt is due. Airport Ltd v Bmibaby Ltd [2010] Specific performance - it is available only if damages are not an adequate remedy - as it is an equitable remedy, it is available at the discretion of the judge - it is available only for certain type of contracts No substitute is available An award of damages will often enable the claimant to purchase the property or service from an alternative source; in other words, the party in breach will pay the injured party a sufficient sum to enable him to pay someone else to do that which the party in breach

should have done. However if there is no alternative to this property and its one of kind. A no substitute remedy can be used to obtain that particular item. Cohen v roche (1927) Ratio of this case is that the chair purchases claimed there was nothing like it failed as the chair had no specific feature that made them unique Philip v Lamdin (1949) Concerning the purchase of a house with a rare door which was removed. The claimant won the case on the basis that there is no alternative to the door as its unique. Sale of Good Act 1979 In any action for breach of contract to deliver specific or ascertained goods the court may, if it thinks fit, on the plaintiff’s application, by its judgment or decree direct that the contract shall be performed specifically, without giving the defendants the option of retaining the goods on payment of damages. Discretion of the court When the court wouldn’t award a specific performance: - A claimant who delays in bringing an action may be denied specific performance Milward v Earl of Thanel(1801) 5 Ves 720 (delay defeats equity) - Specific performance is not available to a claimant who has behaved dishonestly or improperly Walters v Mogan (1861) - A defendant may resist specific performance on the basis that it would cause extreme hardship to him Patel v Ali (1984) - A claimant will not be granted specific performance where e has provided no consideration (equity will not assist a volunteer) - If it was impossible for the defendant to perform what was agreed on - Specific performance will be granted only if the claimant is also willing to perform his side of the bargain - Specific performance will not be ordered if the contract requires performances which is impossible - Specific performance will be granted only if the claimant is also willing to perform his side of the bargain - Specific performance will not be ordered if the contract requires performance over a period of time so that constant supervision is needed as this would be impractical co-operative insurance society ltd v Argyll stores (1997)...