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REMEDIES [Damages] prt 2. - Coggle Diagram
REMEDIES [Damages] prt 2.
causation & remoteness of damage
compensatory damages = only relevant once established what losses need compensation
causation:
losses = possibly foreseeable at time of making contract but are only recoverable if losses were caused by BoC
C must prove breach cause loss, not just provide opportunity for loss, i.e.,
'but for' test
- but for BoC, would C have suffered the loss claimed?
if loss would have happened in any event, then breach could not be said to have caused the loss.
remoteness of damage:
this doesn't establish how much compensation will be payable (damages), but merely which losses can be subject of compensation (damage)
test of remoteness set out in
Hadley v Baxendale (1854)
remoteness test is in 2 parts:
the objective test: what loss is a natural consequence of the breach, in Hadley cases, loss was late delivery
the subjective test: this is based on specific knowledge of potential losses in the minds of both parties when the contract is formed. did carrier know the mill couldn't operate without the crankshaft?
the remoteness test is:
recoverable loss should be measured against a test of reasonable foreseeability
foreseeability loss depends on knowledge at time the contract was made
2 types of knowledge: common knowledge & actual knowledge of D [as in Hadley]
knowledge can be implied on basis of what a reasonable man might've contemplated in the same circumstances
[Czarnikow Ltd v Koufos (The Heron II) 1969]
the principle in The Heron II was later considered in
H Parson (Livestock) Ltd v Uttley Ingham (1978)
in
Wellesley Partners LLP v Withers LLP (2015)
, the position was clarified when a claim is made in both contract and negligence, by stating that the contract interpretation of the law as set out here should prevail
once test of causation and remoteness have established there is liability for the loss claim, the court then has to determine how much C can recover
test has been developed in subsequent decisions, as in **Victoria Laundry Ltd. v Newman Industries Ltd (1949)
Mitigation loss
injured party must take reasonable steps to minimise the effects of the breach
known as
mitigation of loss
the way this works can be seen in
British Westinghouse Electric v Underground Electric Railways (1912)
however, C isn't bound to go extraordinary lengths to mitigate the loss, only to do what's reasonable in the circumstances
in an anticipatory breach, they aren't bound to sue immediately once they know of the possibility of breach, but may continue until breach is an actual breach
[White and Carter (Councils) Ltd v McGregor (1962)
case of
Thai Airways v KI Holdings (2015)
shows principle of mitigation when calculating damages
Liquidated damages