Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
8 Cards in this Set
- Front
- Back
|
What is the law relating to the calculation of damages in contract? |
If there is a breach of contract, the innocent party can sue in the courts for damaged. The aim of damages is to place the claimant in the same positions as if the contract had not been broken. The court is compensating the claimant for his or her loss. The aim is not to punish the Defendant. |
|
|
STANSBIE v TROMAN |
The breach of contract does not have to be the only cause of the loss to the claimant, but is must be a cause. Even if there are other factors, D may still be liable for the loss provided that the chain of causation is not broken: STANSBIE v TROMAN. A decorator left a customer's house unlocked for two hours when he went out. A thief came in and stole property. It was held that the decorator was liable for the loss in spite of the thief as the chain of causation was not broken by the third party. |
|
|
HADLEY v BAXENDALE |
The law does not allow a claim for loss which is considered to be too remote a consequence of the breach. In HADLEY v BAXENDALE H owned a mill and B was late in delivering a driving shaft which was needed for the mill to be able to operate. B did not know how important the new shaft was and the loss of profit was too remote so could not be claimed for. |
|
|
Principle from HADLEY v BAXENDALE |
The case decided that damages should be ordered for loss which:
- arose naturally from the breach; or - was in the reasonable contemplation of both parties when the contract was made. In this case, the court held that the loss of profit would not have arisen naturally from the breach as most mills would have a spare shaft and the loss was not in the 'reasonable contemplation of both parties.' This was later applied in VICTORIA LAUNDRY v NEWMAN INDUSTRIES. |
|
|
BRITISH WESTINGHOUSE v UNDERGROUND ELECTRIC RAILWAYS Co |
The innocent party to the breach must take responsible steps to minimise his or her loss, This is known as the mitigation of loss. An example of this was in BW v UER. |
|
|
Where there is anticipatory breach... |
Where this is anticipatory breach and the innocent party has chosen to affirm the contract, they can claim for loss caused after the other party breached the contract. The innocent party should take reasonable steps to mitigate their loss in two situations. |
|
|
Mitigating the loss of anticipatory breach #1 |
Where performance of the contract requires cooperation between the two parties and that cooperation is clearly not going to happen, the innocent party must make an effort to find a replacement and the original party can be sued for loss of profits. |
|
|
Mitigating the loss of anticipatory breach #2 |
Where the greater cost would be incurred by the innocent party from continuing the contract rather than cancelling it. In ALASKAN TRADER, Ds said half way through a contract that they no longer had need for a ship as it needed repairs. The owners did not accept this anticipatory breach of contract. The owner spent a considerable sum repairing the ship. They should have mitigated losses and accepted the breach. As they acted wholly unreasonably, they were not entitled to affirm the contract and then claim the greater cost of the hiring charge. |
