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GDL Law Notes GDL Contract Law Notes

Remedies Notes

Updated Remedies Notes

GDL Contract Law Notes

GDL Contract Law

Approximately 560 pages

A collection of the best GDL notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through applications from top students and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor". In short these are what we believe to be the strongest set of GDL notes available in the UK this year. This collection of GDL notes is fully updated for recent exams, also making them the most up-to-date GDL study materials ...

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REMEDIES

  • The injured party will be awarded a remedy to compensate them for the loss suffered as a result of the breach of contract.

  • The parties may have planned for a breach by including a liquidated damages clause which sets out the sum payable in case of a breach of contract.

  • If there is no liquidated damages clause, the injured party will bring a claim for unliquidated damages.

Liquidated damages

  • An agreed amount to be paid upon breach of contract.

    • Guidelines per Lord Dunedin in Dunlop Pneumatic Tyres v New Garage:

      • Labelling is inconclusive – doesn’t matter if the parties call it a liquidated damages clause as the court will consider substance, not form.

      • If the request to pay was made in terrorem = penalty clause.

      • Court will consider the construction of the contract at the time of contracting.

      • Valid liquidated damages clause = ‘genuine pre-estimate of loss…set at the time of contracting’

  • The estimate made does not have to coincide with the loss suffered (McAlpine Capital v Tilebox)

    • Test for penalty clause:

      1. Sum to be paid is extravagantly greater than the greatest possible loss that could arise from breach.

      2. Sum to be paid is greater than the breach, where the breach is non-payment of money.

      3. A single lump sum payable on any of several breaches, notwithstanding the severity of the breach.

      4. Even where it is impossible to provide an accurate pre-estimate of loss, the sum stipulated may still be a genuine pre-estimate.

  • If any of these apply, the clause will be a penalty clause and it will not be valid.

  • If it’s a liquidated damages clause, it will be valid so long as it is not unfair under UTCCR when dealing with business-consumer contracts.

    • If invalid, C will claim unliquidated damages.

  • If it is a penalty clause it is invalid and C will claim for unliquidated damages.

Unliquidated damages

  • The measure of damages is assessed by the court. The court aim to compensate C, not punish D. (Robinson v Harman; confirmed in The Golden Victory)

  • GR: C has unfettered right of election on which measure to claim, but he cannot claim both. (Anglia Television v Reed)

  • Expectation Interest

    • Puts C in the position they would have been in had the contract been properly performed. (Robinson v Harman; confirmed in The Golden Victory)

    • Different ways of calculating the expectation interest: cost of cure, diminution in value or loss of amenity.

      • Cost of cure: the cost of remedy work to put C in the position he would be in had the contract been properly performed. Expectation interest measured by cost of cure when dealing with defective works e.g. building works (Birse Construction v Eastern Telegraph)

      • Diminution in value: difference between performance promised and performance received.

      • Cost of cure and diminution in value usually amount to the same.

      • Ruxley v Forsyth: Contract to build a swimming pool with a diving area of 7ft 6in deep for 17,797. Swimming pool was only 6ft deep – breach of contract. Still suitable for diving and did not affect the market value so no diminution in value. However, the cost of cure was 21,560.

HELD: it would be unreasonable for C to claim the cost of cure – disproportionate. Court considered whether C would actually carry out the remedial work – if unlikely that C intends to remedy then he has lost nothing but the diminution in value, which in this case was nil. It was stated that the cost of cure is not automatically awarded where there is no diminution in value where it would be unjust to do so. Instead, court measured the expectation interest by loss of amenity. C was awarded 2,500.

  • Loss of amenity: where diminution in value is nil and cost of cure would be an unreasonable award, C may be awarded loss of amenity instead.

    • However, it would be ‘unusual, if not impossible’ to award loss of amenity in a commercial setting. (Regus v Epcot Solutions)

  • Courts will not award expectation interest if the damages are too speculative – C will only be able to claim his reliance interest (McRae v Commonwealth)

Reliance Interest

  • Puts C in the position they would have been in had he never entered into the contract.

    • Anglia Television v Reed – C awarded damages to cover expenses which had been wasted as a result of D breaching the contract – actress refused to perform

  • Reliance loss = C’s expenditure prior to the breach, not as a result of the breach.

  • Courts will not award damages that are highly speculative – C will only be able to claim his reliance interest (McRae v Commonwealth)

  • It must be shown that, had the contract gone ahead, C would have been able to recoup the expenditure.

    • C&P Haulage v Middleton – C denied reliance interest because he could not prove that he would have been able to recover his costs if the contract went ahead. He was limited to an award of nominal damages.

    • Burden of proof is on D to prove that C would not have been able to recoup his expenditure if the contract had gone ahead. (Omak Maritime v Mamola Challenger Shipping)

Restitution Interest

  • Where party in breach has been unjustly enriched by the breach, C may be able to claim his restitution interest.

    • AG v Blake: Blake was a former member of the intelligence service and made an undertaking not to share official information. He wanted to publish his memoirs which would include confidential information - breach.

HELD: D required to pay the Crown royalties that he was owed from his publishers. Court held that in exceptional circumstances, D can be required to account for any profit made from the breach. C was said to have a ‘legitimate’

  • It’s hard to claim restitution interest. It is not enough that:

    • the breach was deliberate/cynical AND

    • by breaching the contract, D was able to enter into a more profitable contract AND

    • C was unable to perform his contractual obligation as a result of entering into the more profitable contract

      • The Sine Nomine: charter contract – D withdrew, in breach of contract. D entered into a more profitable...

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