Causation, remoteness, mitigation

Question 1

When can damages be recovered?

Answer 1

Only where they are caused by breach - cannot be recovered if they are too remote
* it can be reduced if C has failed to take reasonable steps to mitigate losses

Question 2

Damages - causation?

Answer 2

C must establish a casual link between D’s breach of contract and its losses to recover - done by assessing:
- whether in fact D had caused loss suffered by C (legal causation)
- courts adopt a common sense approach
- said that D’s breach should be dominant or effective cause of loss
- whether as a matter of law D should be held responsible for it
- intervening event can break chain of causation resulting in claim failing but if event was “likely to happen” then it will not be held as breaking chain

if factual causation is established, legal causation can fail = no damages

Question 3

Damages - remoteness?

Answer 3

Its held in law of contract that not all losses caused by breach are recoverable= remoteness

The test is that losses are recoverable if:
* loss ordinarily and naturally arises from breach - it looks at the usual course of things NOT on actual knowledge of particular parties
* OR D had sufficient actual knowledge of the particular circumstances to be aware of risk of those losses = at time of contracting not time of breach

Hadley v Baxendale case

Question 4

Damages - mitigation?

Answer 4

Where one party has suffered loss resulting from other party’s breach, injured party should take reasonable steps to minimise effect of breach
* no legal obligation to mitigate but lossess attributable to failure to so do aren’t legally recoverable
* reasonableness is a question of fact
- e.g., accepting performance offered by D under a new contract even where performance amounts to breach of original contract
* no duty to mitigate a claim for payment of debt as it’s a contracrual right rather than damages