Damages Flashcards

Question

Chaplin v Hicks [1911] decision

Answer 1

* Court decided nominal damages were not enough: she lost the chance to be one of 50 people competing for 12 prizes * She was awarded £100 of damages

Answer 2

• Plaintiff must demonstrate a causal connection between the breach and the loss in order to recover damages for the loss

Answer 3

• Simple: ○ But for test: But for the breach, the loss would not have occurred • More complex: ○ A number of factors leading to the loss: breach is only one factor ○ Common sense approach to determine if loss is caused by breach (Alexander v Cambridge Credit Corporation)

Answer 4

Common sense approach to causation

Answer 5

* Defendants auditors - ensure financials were in * Mistake - overstatement of Cambridge Credit Corporations situation * Without - they wold have been put into receivership * At time: Cambridge Credit would not have been able to meet all debts * Because of mistake it continued trading and eventually went into receivership * Additional loss of $145 million

Answer 6

* Auditors not liable for larger amount * No causal connection between the breach and the loss * Real cause was that land prices had slumped between the inaccurate audit and when they came into receivership * Other events which overtook breach * Actions couldn't constitute causation * Mahony agreed - didn't think the but for test was useful because it can lead to overstretched outcomes * Common sense approach to causation

Answer 7

The 'but for' test is not, and should not be, a definitive test of causation. Common sense, logic and policy should be considered.

Answer 8

Negligence case - causation

Answer 9

You cannot recover for losses which are too remote

Answer 10

When the loss is not ordinary and it is not within the contemplation of the parties: Hadley v Baxendale

Answer 11

Damages are available for loss which: - naturally arises from the breach according the usual course of things; or - is within the reasonable contemplation of the parties at the time of contracting as the probable result of a breach (this may be, for example, because special circumstances have been communicated at the time of contracting and therefore can be said to be within their reasonable contemplation) - These are referred to as the two limbs of Hadley v Baxendale.

Answer 12

- Plaintiffs worked the mills with a steam-engine. - The crank shaft of the engine was broken and needed to be taken to be fixed - plaintiffs hired defendants to take crank to be fixed - Defendants were meant to deliver the crank in 2 days but it took 7 - The delay prevented the plaintiffs working their steam-mills for the five days comprising the delay, which in turn prevented them meeting supply of customers from their own mills, depriving them of the profits they would otherwise have received. Issue: Are the lost profits too remote?

Answer 13

Lost profits were not ordinary and were not in the reasonable consideration of the party. Therefore too remote.

Answer 14

Damages are available for loss which: - naturally arises from the breach according the usual course of things; or - is within the reasonable contemplation of the parties at the time of contracting as the probable result of a breach (this may be, for example, because special circumstances have been communicated at the time of contracting and therefore can be said to be within their reasonable contemplation) - These are referred to as the two limbs of Hadley v Baxendale.

Answer 15

The compensating party must have knowledge of the circumstances giving rise to the loss for them to be able to contemplate the loss.

Answer 16

Contract for purchase of boiler for laundry Defendant supposed to deliver by a certain date - but it was 20 weeks late They knew they needed it for immediate use but didn't know the precise use Laundry claimed - Profit it lost from day-to-day business ($16 pound per week) - Lost the possibility of a lucrative government contract ($260 pounds per week) Issue: Was the second loss too remote?

Answer 17

First loss: arising naturally - not too remote Second loss: Extraordinary loss - not usually expected to suffer - Laundry hadn't let defendant know of the possibility of this loss at the time of making the contract - Defendant hadn't considered the loss as a possibility at the time

Answer 18

the crucial question is whether on the information available to the defendant when the contract was made that he should or the reasonable man in his position would have realised that the loss was sufficiently likely to result from breach of contract so as to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind could have been within his contemplation" ○ Defendant doesn't need to contemplate the degree of the loss suffered or the actions/events which give rise to loss but must contemplate this 'kind' of loss

Answer 19

* Defendants auditors - ensure financials were in * Mistake - overstatement of Cambridge Credit Corporations situation * Without - they wold have been put into receivership * At time: Cambridge Credit would not have been able to meet all debts * Because of mistake it continued trading and eventually went into receivership * Additional loss of $145 million

Answer 20

Too remote because a reasonable person in is position would not have contemplated that type of loss

Answer 21

A person cannot recover for losses which were avoidable. Ons on defendant to show that reasonable steps to mitigate haven't been taken. You cannot recover if you have fully mitigated your loss.

Answer 22

Damages will not be awarded if the loss was avoidable | An impecunious plaintiff can still be required to mitigate

Answer 23

* Burns had bought a prime mover on hire purchase to use in his business. * Should have been apparent that he wasn't very well off * There had been a representation that the engine had been fully conditioned but it hadn't - it was in very poor condition and the truck kept * Machinery seller refused to fix it and Mr Burns couldn't afford to fix it * Mr Burns only used it on smaller jobs (not interstate routes) and ended up making a loss and the truck was repossessed * Burns sued the truck dealer * Clear breach

Answer 24

- Loss was too remote - Once he found out about how bad the engine was he should have got a new engine or given the truck back to the finance company - Losses were 'avoidable'

Answer 25

○ He had a few options available § Try and enforce contractual warranty (which he did - but seller refused to fix) § Go back to finance company and terminate - but he would have had to terminate leaving him with a debt: open not to choose to do that § Have the engine fixed ($7000-8000) but he just didn't have that money ○ In all circumstance the only option was do the limited repairs he could afford and use it only within the state and try to make enough to pay out liability to finance company ○ He did this and made a loss - it put him in a worse position ○ Brennan didn't think this was an unreasonable step

Answer 26

○ Within reasonable contemplation at the time the contract was made that if the warranty was broken Mr Burns might lose those profits which he would otherwise have made with interstate haulage ○ Mitigation: not required to do what was unreasonable. Unjust to prevent him recovering full damages simple because he lacked ability to fix. Especially because the inability largely resulted from the fact that the engine was already damaged and they refused to fix it. ○ Would have awarded damages for lost profits but not to cover losses caused by continuing to use the prime mover once it became evident he was operating at a loss

Answer 27

A plaintiff can recover damages for additional loss incurred in the course of attempts to mitigate the initial loss 'Where the sufferer from a breach of contract, finds himself in consequence of that breach placed in a position of embarrassment, the measure which he may be driven to adopt, in order to extricate himself, ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who themselves have created the emergency.

Answer 28

* Firm of wool brokers in Switzerland * Sydney office was run by cowboys? who exceeding scope of authority * Participated in sceptical transactions * Swiss had auditors in place who should have picked up on this but failed to do so * Wool brokers sued auditors in contract and tort * The defendants ordered plaintiffs had failed to act reasonably to mitigate damages: by the time they realised the errors there were many speculative contracts and they thought the market was going to drop and so the best thing to do would be to hold onto the contracts. However, the market rose which increased their losses. Auditors argued it was their duties to close the contracts when they had ascertained their position

Answer 29

* Court said they hadn't proved the conduct was unreasonable. The mere fact that it didn't have the desired effect didn't mean it was unreasonable in the circumstances. * 1932 HoL 'Where the sufferer from a breach of contract, finds himself in consequence of that breach placed in a position of embarrassment, the measure which he may be driven to adopt, in order to extricate himself, ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who themselves have created the emergency.

Answer 30

If the purpose of the contract was to obtain leisure from the experience - like on a cruise - then it is possible to claim damages for non pecuniary loss

Answer 31

- OCT 1985: Dillon sees an advertisement for a cruise, contacts a travel agent, selects cabin and is given a booking acknowledgement - 9 NOV 1985: Dillon receives a booking form which states that a contract of carriage is only made at the time of issuing tickets and is subject to conditions printed on the tickets. These conditions available at Cruise offices. - DEC 1985: Dillon pays balance for cruise - JAN 1986: Dillon issued with ticket containing term limiting liability for damages - FEB 1986: Dillon boards ship, during cruise ship sinks - Dillon sues for damages

Answer 32

The purpose of the cruise was for enjoyment. Therefore damages can be claimed. Exception to the general rule that damages can't be claimed for disappointment.

Answer 33

``` Generally: No Exceptions: - Contract is for enjoyment - Personal injury - Physical inconvenience ```

Answer 34

Loss of bargain damages are not available unless there is a right to terminate under the common law (i.e. breach or repudiation)

Answer 35

- Shevill were the guarantors of due performance by the lessee of the terms of a lease by the respondent of land for a term of three years - Lease was to be paid in advance in equal monthly instalments - Clause 9 provided that if the rent remained unpaid for 14 days - Lessee paid rent late constantly and cheques were dishonoured

Answer 36

- The conduct did not amount to repudiation or breach of condition or sufficiently serious breach of an intermediate term - No right to terminate under common law Right to damages for recovery of lost rent but no right to loss of bargain damages unless there is a right to terminate under common law

Answer 37

A contract including an express right to termination (and there is no right under the common law) may give rise to loss of bargain damages if it is expressed in the intention of the parties.

Damages Flashcards

(61 cards)