#9044 - Common Law Remedies And Damages - Contracts Law

TOPIC 5: COMMON LAW REMEDIES, DAMAGES

REMEDIES

Injunctions Specific Performance Damages

(equitable) (equitable)

Expectation

reliance

loss of income

intangible losses

One or more remedies can be available for breach of contract, but damages are most common (compensation for loss suffered as a result of the breach). PL rarely acquires specific performance, but rather the monetary value of X because the courts do not like to compel individuals. Types of damages include:

1. compensatory

2. punitive

3. liquidated

4. nominal

Depending on the issues at stake, there are various ways of calculating relief. Damages protect the following interests:

1. Reliance Interest (BACKWARD): monetary compensation for expenses made towards performance of K. Puts PL into position before K was made, had she not entered contract. “Give me back what I’ve lost”

2. Expectation Interest (FORWARD): monetary compensation intended to put PL in position she would have been in had K been performed (lost profit or substitution performance)

   1. Most common form of relief

   2. Monetary value PL expected to receive as benefit of contract

   3. Forward looking and places innocent party in position expected to be in after contract was properly performed

3. Restitution interest: Restoration to the PL of a benefit conferred on DF to which she is not entitled.

Damages are too remote where (Hadley v Baxendale):

1. The loss was not naturally occurring (DF cannot be liable for something he didn’t see coming)

   1. ASK: did a reasonable person contemplate that X loss would have occurred at the time of the K?

2. Was the breach within the reasonable contemplation of both parties? (Were the risk of losses in special circumstances were communicated to the DF).

*Independently sufficient. All damages subject to the remoteness principle.

When choosing between expectation and reliance costs, look to whether the client has made a bad bargain. If yes, this may preclude PL from claiming reliance damages. Expectation damages are awarded for the most part. If they are impossible to award, we look to reliance interests. The interest being measured is our scope and there are two primary methods of assessment: expectation (puts party in the position they would be in had the contract been performed) and reliance (puts party in position they would have been in had K never been made, but cannot award if a bad bargain was made).

This case seems to contradict McRae on the notion of expectation damages that are incalculable. At first glance, it appears that there is a speculatory element involved. In McRae there was a higher risk factor. That is to say that both McRae and Chaplin demonstrate that courts will look to chances, risks and probability when determining expectation damages.

COMMENTARY: courts will often follow Groves (not Peevyhouse). They are more likely to use Groves if PL has actually spent time curing defective performance or if they are interested in having the K completed. If the difference between cost of cure and benefit of cure is unreasonably large then COP will not be awarded. Cost of cure is the value of the services necessary to achieve end product – in Groves it was the cost of leveled land. Ex. in pool situation where it was designed a few inches less deep, this is why court awarded loss of amenity.

INTANGIBLE LOSSES *subjectively driven

• Not always awarded (inconsistent)

• Deal with humiliation, sadness, emotional distress, inconvenience and stress

• These losses must flow...