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Topic 18- Remedies (Calculating the loss (3 main types of loss…
Topic 18- Remedies
Calculating the loss
Generally
- Measure of damages is calculated according to the amount the wronged party stood to make if the contract had been carried out as planned
- Includes foreseeable profits
- Estab- if contract likely to result in a profit, the court will attempt to estimate any probable loss
Hawkins v Rogers
Racehorse had been prevented from entering a series of races as result of breach of contract
- Court assessed award of damages on the basis of the performance of the horse in other competitions
- Despite the fact there was no guarantee that the horse would have won the race
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1.Expectation Loss
Aims to compensate the P for what he would have expected if contract performed
McDermott points out: these damages are forward looking in that they seek to give P something that he never had but expected to obtain
Rationales:
- Important from POV of promoting certainty in planning contracts
- Deterring parties from breaching contracts in the first place
Section 50(3) Sale of Goods Act 1893
Where there is an available market for goods in qu the measure of damages is to be ascertained by difference between contract price and market or current price at time or times when goods ought to have been accepted, or if no time fixed for acceptance, then at the time of the refusal to accept
e.g. A selling piano to B for 100
Breaches
Aim to put B in position to buy substitute immediately
Price of piano now 120
Damages=20
May also result from breach of contract provided hte damage is not too remote
- Closely resemble expectation loss
Stoney v Foley:
Facts: 10 sheep, warranted as sound, sold by D to P
- Sheep subsequently developed disease, result of which P's land deemed unfit for use for 5 months
Held: In addition to compensation for loss of sheep, P recovered damages for being unable to let the land for 5 months
Leahy v Rawson
Facts: D was contracted to build extension to building
- He carried out the work so negligently that the extension had to be demolished
Held; P awarded compensation for the cost of the demolition and the reconstruction of the extension
- P also considered to be entitled to consequential loss for loss of income the P may have received from using original building and extension to B&B
P's action for damages will not necessarily be limited to his own personal damage
- Expectation damage may include awarding P compensation for any profits that the D made as a result of breaching his contract with the P
AG v Blake
Facts: D was a British spy who also worked for the KGB
- Signed lifetime confidentiality clause
- Captured but subsequently escaped to Russian
- Later published memoirs from which he was paid £60,000 and was to be paid further £80,000
Issue: Crown sued D and damages sought was the remaining payment he was entitled to under his contract with the publishes
- Argued he had profited from his breach of contract with them and that it should be entitled to any profits made therefrom
Held; Despite Crown had not suffered any loss the court upheld the claim
- Lord Nicholls' noting 'exceptionally, an account of profits may be the most appropriate remedy for breach of contract'
Reasonable license fee
Experience Hendrix v PPX Enterprises:
Facts: Parties had entered into an arrangement whereby it was agreed that the D could licence certain recordings from claimant
- In fact, D licensed other recordings not subject to the agreement
Held: While not awarding the claimant damages for 'account of profits' court did order a measure of compensation be awarded on basis of a 'reasonable license fee' for the unauthorized recordings
- Feel short of an 'account of profits' award as claimant not entitled to all the profits D had made from breach of contract
World Wildlife Fund for Nature v World Wrestling Foundation
Held; a 'reasonable licence fee' measure of damages was appropriate as compensation for D's breach of contract
Reliance loss is based on the injured party altering his/her position in reliance of the contract being performed
- McDermott acknowledges: Reliance damages are a secondary remedy in contract and will most frequently be recovered in cases where the court cannot estimate expectation loss because of the impossibility of determining what profit, if any, the P would have made on the contract
- Aims to compensate the P for alternative arrangements he may have made, mostly with third parties, on the basis of the contract
Angla Television v Reed
Facts; Famous actor was contracted to star in a film but at v late stage in production he decided not to
- As result film not completed
Issue: in this case it would have proved difficult to estimate the likely profit, if any, that would have been made
- Therefore P sued by basing his claim on reliance loss
Held: Company entitled to recover for the loss sustained in making the film because it had relied on its contract with Reed
- It was deemed to be entitled to costs that had arisen in advance of production as he court of opinion these costs would have been in contemplation of Reed at the time he entered into the contract
Friel: Reliance loss is somewhat an unnecessary notion, for the compensation of the loss is not to compensate the reliance but rather as a natural consequence of the rules on remoteness
- Opines expectation loss includes reliance costs
On certain occassions the P might expect damages for defective performance of a contract which equal the costs associated incurred with correcting the defect in performance
- Common occurs in construction contracts where D fails to perfom the contract as promised leading to P incurring further costs in remedying the damage
- Trietal: This is a prima facierule and would not be applied where the cost of putting things right would be out of all proportion to he actual damage suffered
Ruxley Electronics and Construction v Forsyth
Facts: Ruxley constructed a swimming pool for Forsyth
- Contract specified that the pool would be 7 foot 6 ft deep
- Built to 6 ft 9 inches
- Pool still safe for swimming and diving
Issue; because of defect in construction, Forsyth to pay anything for the construction of the pool
- Ruxley sued for breach of contract
- Forsyth counted sued for non-performance
- Argued by Ruxley that as pool was perfectly serviceable forcing them to demolish and reconstruct the pool (at their expense) was wholly disproportionate given the relatively minor nature of breach
Held; Diminution of value of the pool was nil while cost of curing was 21,560
- H of L awarded damages of 2,500 for loss of amenity
- Of opinion that to award full damages of cost of cure would be excessive, particularly as it was unlikely that Forsyth would use the compensation to demolish and reconstruct the pool
HOWEVER- damages for loss of amenity were appropriate as they recognised customer's disappointed expectations arising from failure to perform contract as agreed
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Similar to reliance loss
- But does not necessarily involve third parties
- If P has paid deposit to D, but D refuses to supply goods as promised, P will be entitled to reclaim the money already paid
- Essentially designed to avoid D becoming unjustly enriched
- Aims - to prevent the defaulting promisor gaining at the expense of promissee
Hickey v Roches Stores:
- Where wrongdoer has calculated and intended by his wrongdoing to achieve a gain
- Which he could not otherwise achieve and has in that way acted mala fide
- then irrespective of whether the form of his wrongdoing constitutes a tort or a breach of contract
- the court should in assessing damages look not only at the loss suffered by the injured party but also to the profit or gain unjustly or wrongfully obtained by the wrongdoer
If the assessment of damages confined to the loss of the injured party should still leave the wrongdoer profiting from his calculated breach of the law, damages should be assessed so as to deprive him of that profit