ACCA LW ^Eng Syllabus B. The Law Of Obligations - Explain The Rules Relating To The Award Of Damages - Notes ^{3 / 4}

These are a common law remedy

The idea is to put the innocent party in the position it would have been if the contract HAD BEEN performed

In a claim for damages - the amount is quantified by looking at 2 rules:

1) The REMOTENESS of the damages
2) The MEASURE of the damage

Remoteness of Damage

Hadley v Baxendale

1. Losses must have arisen naturally from the breach

2. If not, both parties reasonably must have been aware of the probable result of the breach

   So a defendant is only liable if they should reasonably have known of the "special circumstances" causing the unnatural consequence of the breach

   Victoria Laundry v Newman Industries

Measure of Damages

Remember this is to put the injured party where they would have been in the contract had been performed

They shouldn't get any more than that from it

Here's things that are considered:

• Expectation Interest

  This is what is said above - the claimant gets out in the position they would EXPECTED to have been in had the contract been performed

  An alternative is Reliance Interest

  Here the claimant gets put in the position they would have been, had not RELIED on the contract. Basically their asking for their wasted expenses back

  Anglia TV v Reed

• Market Price Rule

  Basically lets say the contract allowed you to buy goods for 10 but the contract failed and now the MARKET price is 12 - then 2 is the damages

• Non-Financial Loss

  This has been made available for things like mental distress and loss of enjoyment on holidays

• Mitigation of Loss

  This means that the claimant must try to limit their losses - within reasonable means

• Liquidated Damages

  This is basically an agreed measure of the damages that is out in the contract beforehand

  The court will only allow it though if it is a 'genuine pre-estimate of the likely loss'

  Dunlop v New Garage

  Therefore penalty clauses are void

Other COMMON LAW remedies

1. Action for the Price

   This is asking for the price in the contract to be the damages. The item bought though must have passed to the buyer and the seller is then suing for the price agreed

2. Quantum Meruit

   This means "how much is it worth" - and the claimant is asking for this value for the work they've done - basically to be put back in the position they would have been had the contract never been made

   Because it just puts you back to where you would have been BEFORE the contract (restitutory) - the amount is usually smaller than normal damages (position expected AFTER the contract)