Case List: Performance of a Contract and Damages

Cutter v Powell (1795) 6 TR 320 - the Standard of Performance; Type of Contracts --> Entire Contracts requiring Entire Obligations

- Facts: Cutter was a sailor who was the second mate and the carpenter on the vessel; Cutter died on the way between Jamaica to England, and his wife sued for the payment, because she argued that he had substantially performed his duties before his death - Court: no payment was entitled until the voyage was completed —> this was an entire contract, and it requires the entire obligation to be performed before payment can be issued, there is no partial payment for partial performance for entire obligation

Schuler v Wickman Machine Tool Sales [1974] AC 235 - Determining if a Term is a Condition by Contract Construction; Leading to an Unreasonable Result

- Facts: D arranged to service the machines that they had installed, the contract stipulated that it was a condition of the contract that the engineer would service the machine about once a week - Wickman failed to make weekly services - Issue: was the term a condition? It said it was a condition of the contract, and Schuler argued that the condition acquired the meaning given the Sales of Goods Act, therefore he could termine the contract - Court: even though the contract clearly stipulates the term to be a condition, it leads to such unreasonable results that there court must construe it as being a warranty, it cannot possibly have meant to be a condition (as known by a lawyer, as no provisions preventing the unreasonable results existed) Lord Reid [250-251]: "In the present case it is not contended that Wickman's failures to make visits amounted in themselves to fundamental breaches. What is contended is that the terms of clause 7 'sufficiently express an intention' to make any breach, however small, of the obligation to make visits a condition so that any breach shall entitle Schuler to rescind the whole contract if they so desire...It makes no provision for Wickman being entitled to substitute others even on the death or retirement of one of the named representatives. Even if one could imply some right to do this, it makes no provision for both representatives being ill during a particular week... So if the parties gave any thought to the matter at all they must have realised the probability that in a few cases out of the 1,400 required visits a visit as stipulated would be impossible. But if Schuler's contention is right, failure to make even one visit entitle them to terminate the contract however blameless Wickman might be. This is so unreasonable that it must make me search for some other possible meaning of the contract...The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear."

Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361 - the Measures of Damages; the Restitution Measure --> Gains Based Damages are Not Awarded Often

- Facts: D had permission to build certain amount of homes on land; exceeded this number, breached the contract, and therefore made a greater profit - Claimant sought to receive damages based on the profit made by the defendant - Court: gains based damages are not generally awarded for a breach of contract

Personal Touch Financial Services Ltd v Simplysure Ltd [2016] EWCA Civ 461 - Determining if a Term is a Condition by Contract Construction; Leading to an Unreasonable Result

Stanley Burnton [28]: 'As the judge correctly remarked, the fact that a contractual provision is described as a condition of the agreement is not conclusive. Agreements often refer to all their terms as conditions, as in "conditions of sale". However, this was not such a case. The word "condition" appears only once in the Agreement, in clause 7, and its use was emphasised by the introductory words "It is a condition of the agreement". While its use is not conclusive, it must be given due weight when the agreement is construed. - refers Lord Reid at 251 in Schuler

Robinson v Harman (1848) 1 Exch 850 - the Measures of Damages; the Expectation Measure --> the claimant Obtains the Profits he Would Have Received had the Contract been Performed

Parke B [855]: 'the rule of the common law is, that where a party sustains loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.'

Universal Cargo Carriers Corporation v Citati [1957] 2 QB 402 - the Arisal of a Repudiatory Breach and the Contract can be Terminated; the Defendant is Unable to Perform

Per Devlin J [438]: 'if a man puts it out of his power to perform, the breach will be inevitable in fact - or practically inevitable, for the law never requires absolute certainty and does not take account of bare possibilities'. - even in D has not actually said that they are walking away from it

Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401 - a Repudiatory Breach arising from Conduct/Words; the Reasonable Person Test

Per Devlin J. [436]: 'A renunciation can be made either by words or by conduct, provided it is clearly made. It is often put that the party renunciating must "evince an intention" not to go on with the contract. The intention can be evinced either by words or by conduct. The test of whether an intention is sufficiently evinced by conduct is whether the party renunciating has acted in such a way as to lead a reasonable person to the conclusion that he does not intend to fulfil his part of the contract.' (Case affirmed in part [1967] 1 WLR 979 and reversed in part [1958] 2 QB 254)

Bentsen v Taylor [1893] 2 QB 274 - a Term being Determined a Condition by Contract Construction

Bowen LJ [281]: There is no way of deciding that question except by looking at the contract in the light of the surrounding circumstances, and then making up one's mind whether the intention of the parties, as gathered from the instrument itself, will best be carried out by treating the promise as a warranty sounding only in damages, or as a condition precedent by the failure to perform which the other party is relieved of his liability. In order to decide this question of construction, one of the first things you would look to is, to what extent the accuracy of the statement - the truth of what is promised - would be likely to affect the substance and foundation of the adventure which the contract is intended to carry out

The Kanchenjunga [1990] 1 Lloyd's Rep 391 - the Loss of the Right to Terminate; through Affirmation of the Contract

Lord Goff [399]: "if with knowledge of the facts giving rise to his right to reject, he [the injured party] nevertheless unequivocally elects not to do so his election will be final and binding upon him and he will have waived his right to reject the tender as uncontractual."

AG of the Virgin Islands v Global Water Associates Ltd [2020] UKPC 18, [2021] AC 23 - Limitations to the Award of Damages; Clarifying Various Points in relation to Remoteness

Lord Hodge DPSC [31-35]: 'First, in principle the purpose of damages for breach of contract is to put the party whose rights have been breached in the same position, so far as money can do so, as if his or her rights had been observed. But secondly, the party in a breach of contract is entitled to recover only such part of the loss actually resulting as was, at the time the contract was made, reasonably contemplated as liable to result from the breach. To be recoverable, the type of loss must have been reasonably contemplated as a serious possibility, in the sense discussed in paras 27 and 28 above. Thirdly, what was reasonably contemplated depends upon the knowledge which the parties possessed at that time or, in any event, which the party, who later commits the breach, then possessed. Fourthly, the test to be applied is an objective one. One asks what the defendant must be taken to have had in his or her contemplation rather than only what he or she actually contemplated. In other words, one assumes that the defendant at the time the contract was made had thought about the consequences of its breach. Fifthly, the criterion for deciding what the defendant must be taken to have had in his or her contemplation as the result of a breach of their contract is a factual one.'

Lombard North Central Finance v Butterworth [1987] QB 527 -Determining if a Term is a Condition by Contract Construction; Leading to a Reasonable Result

- Court: if a contract says that a term is condition, and it is clear that it was intended to have the effect of being a condition (as interpreted by lawyers), it will be construed as a condition Nicholls LJ [545-546]: "On this, the question which arises is one of construction: on the true construction of the clause, did the "time of the essence" provision have the effect submitted by the plaintiffs [being a condition]? In my view, the answer to that question is "Yes."...Given that context, the "time of the essence" provision seems to me to be intended to bring about the result that default in punctual payment is to be regarded (to use a once fashionable term) as a breach going to the root of the contract and, hence, as giving rise to the consequences in damages attendant upon such a breach. I am unable to see what other purpose the "time of the essence" provision in clause 2(a) can serve or was intended to serve or what other construction can fairly be ascribed to it." --> "time of the essence" clause was supported to be a condition in Union Eagle v Golden Achievement [1997] AC 514

South Australia Asset Management Corporation v York Montague [1997] AC 191 - the Measures of Damages; the Expectation Measure --> Restricted Awards for Losses Arising Indirectly Ruxley Electronics and Construction v Forsyth [1995] 3 All ER 268

- Facts: A valuer negligently valued a property for a lender that was proposing to take a mortgage of the property, which it duly did in reliance on the valuation. - The borrower subsequently defaulted and the lender enforced the mortgage but recovered substantially less upon enforcement than the amount of the valuation. - However, this was partly due to a general fall in the market value of the property. - The House of Lords held that the scope of the defendant's duty had been to report on the true value of the property, so the lender could only recover the amount of its loss that was attributable to the negligent valuation (only for the incorrect information given) --> the given value minus the true value

Addis v Gramophone Co Ltd [1909] AC 488 - the General Elements of Damages; Punitive Damages are Not Awarded in English Law

- Facts: A was employed by G as manager of their business in Calcutta at a salary together with a commission on trade done - G wrongfully dismissed A without giving him the required 6 months' notice. - The House of Lords held that, although A might recover a sum representing his salary for the period of notice and the commission he would have earned during that period, his employers were not to be penalised in damages for the humiliating and oppressive manner in which they had dismissed him --> Contractual damages cannot be used to punish, however outrageous the defendant's conduct

Attorney General v Blake [2001] 1 AC 268, [2000] 3 WLR 625 - the Measures of Damages; the Restitution Measure is Only Awarded if all other Remedies are Inadequate

- Facts: Blake was a spy, entered into a contract to not divulge information he had found out with the British Government (without their permission) - Blake started spying for the soviet; found out, sentenced and then escaped to Russia - the ruby collapsed and to get money he wrote a book of memoirs (he did not have permission of Uk gov. to expose these secrets) - Government sued Blake for breach of contract, seeking damages for the gains that Blake would make by publishing (they are trying to strip him of his profits, not compensate themselves for loss by either expectation interest or wasted expenditures) - HoL: awarded the accounts of profit to strip Blake of his enrichment Lord Nicholls [385]: an account of profits would only be awarded in exceptional cases where the normal remedies for breach of contract are compensatory damages, specific performance, or an injunction, and if these ordinary remedies provide an adequate response for the breach a restitutionary measure won't be awarded —> there must be an inadequacy of the other remedies - since Blake realised he would never receive any money from the memoir he never published the secrets The only reason this was awarded was probably because of the public interest in keeping the secrets safe

The Hansa Nord [1976] 1 QB 44 - an Example of an Intermediate Term NotAllowing for Termination of the Contract

- Facts: Buyer sought to terminate a contract to buy citrus pellets after they had been partly damaged, but could still be used for their intended purpose (animal feed) - Lord Denning MR [61]: 'If there was any previous authority holding it [the term] to be a condition strictly so called, we should abide by it [there was not]...I do not think the buyer was entitled to reject these instalments of the contract. The board only said that "not all the goods in hold no. 1 were shipped in good condition." That does not say how many were bad. In any case, their condition cannot have been very bad, seeing that all of them were in fact used for the intended purpose. The breach did not go to the root of the contract. The buyer is entitled to damages, but not to rejection.' Roskill LJ [70-71]: In principle contracts are made to be performed and not to be avoided according to the whims of market fluctuation and where there is a free choice between two possible constructions I think the court should tend to prefer that construction which will ensure performance and not encourage avoidance of contractual obligations --> the injured party was not reserved a right to terminate the contract in the light of the seriousness of the consequences of the breach

Farley v Skinner [2001] UKHL 49, [2002] 2 AC 732 - Limitations to the Award of Damages; an Exception to the General Rule that Non-Pecuniary Loss Cannot be Awarded Damages --> Pleasure is an Important Part of the Contract

- Facts: F, a prospective purchaser of a house who wanted peace and quiet, employed a surveyor to report on the property and specifically requested him to advise whether the house might be affected by aircraft noise. - The surveyor advised that it was unlikely that the property would suffer greatly from aircraft noise and F bought the house (the day the surveyor went out aircrafts were not flying over the house). - In fact, the house was near a navigation beacon used by aircraft waiting to land at Gatwick Airport and was substantially affected by noise - The House of Lords held that F was entitled to damages for the significant interference with his enjoyment of the property caused by the noise, but made it clear that a contract for an ordinary survey report on a house would not fall within the exception. - What made this case different was the specific request relating to the noise. —> damages can be awarded for loss of amenity where the provision regarding the amenity is was a major/important part of the contract; it need not be the sole object Lord Steyn [21]: 'the principle of pacta sunt servanda would be eroded if the law did not take account of the fact that the consumer often demands specifications which, although not of economic value, have value to him'... on why the courts are becoming more willing to allow cases of non-pecuniary loss

Decro-Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361 - Determining if a Contract has been Breached; a Warranty as a Minor Undertaking

- Facts: French company attempting to sell self-adhesive wall tiles - Really a cross-cultural miscommunication; French thought that once they send out an invoice to a party they had to pay it, whereas English thought that one waited for a period of time - French sought to terminate the contract after they believed the English were late in payment - Issue: who had committed a fundamental breach of the contract? - Court: the English's breach was only one of minor undertaking, the claimant could no therefore seek to terminate the contract --> by non-performance it is the French who commit a breach of a condition (a major undertaking), therefore they can no longer seek damages, as was available to them after the warranty breach, and only the English can seek to terminate the contract Salmon L.J. [368]: - 'How is the legal consequence of a breach to be ascertained? Primarily from the terms of the contract itself. The contract may state expressly or by necessary implication that the breach of one of its terms will go to the root of the contract and accordingly amount to repudiation. Where it does not do so, the courts must look at the practical results of the breach in order to decide whether or not it does go to the root of the contract ...I am confident that the terms of the present contract relating to time of payment of the bills cannot properly be regarded as of the essence of the contract, or, to put it the other way, there is nothing expressed in or to be implied from the contract to suggest that a failure punctually to pay the bills goes to the root of the contract and thereby amounts to a repudiation.'

Golden Strait Corporation v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] UKHL 12, [2007] 2 AC 353 - the General Elements of Damages; a Flexible Approach to Assessment for Damages

- Facts: Golden Victory was chartered for a term of seven years; one of the contractual terms was a war-clause, either party could cancel the charter in the event that hostilities broke out between countries - The charterers repudiated (walked away from the agreement) in December 2001 (3.5 years into the contract); this was accepted by the ship-owners (they did not attempt to hold them to performance) - A claim for damages was brought by the ship-owners against the charterers; suing them for the hire they would have received from the ship if the contract was lived out - Pursuant to K, the matter was referred to arbitration (but by this time the second gulf war had broken out); arbitrator found that the chartered were liable for a breach of contract, although assessment of damages raised an interesting - Issue: Were damages to be assessed as at the date of breach on the basis of the value of a four-year remaining charterparty ignoring the outbreak of war (= more money, original principle), or as at the date of trial taking into account the known outbreak of war and hence on the basis of only a fifteen-month remaining charterparty? - At the time of repudiation it was not clear/foreseeable that the war would break out and that the war clause would be used to terminate the agreement; instead it was at that point foreseeable that the charterers would have kept the vessel for a longer period of time - Arbitrator found that outbreak of war placed a temporal limit on the period that the damages could be awarded (because the charter-party would have been terminated, it would be too much money to provide the owners with the entire period of damage, when it is now known that this money would not have been gained fi the contract was not breached) - This was upheld first in the high court, then CA, then went to HL HL (3:2): agreed to dismiss the appeal; to uphold the arbitrator's decision —> damages should be assessed on the second basis Lord Scott [36]: 'The contractual benefit for the loss of which the victim of the breach can seek compensation cannot escape the uncertainties of the future. If, at the time the assessment of damages takes place, there were nothing to suggest that the expected benefit of the executory contract would not, if the contract had remained on foot, have duly accrued, then the quantum of damages would be unaffected by uncertainties that would be no more than conceptual. If there were a real possibility that an event would happen terminating the contract, or in some way reducing the contractual benefit to which the damages claimant would, if the contract had remained on foot, have become entitled, then the quantum of damages might need, in order to reflect the extent of the chance that that possibility might materialise, to be reduced proportionately. The lodestar is that the damages should represent the value of the contractual benefits of which the claimant had been deprived by the breach of contract, no less but also no more.' Lord Carswell [64]: 'The damages can be assessed at the date of repudiation by valuing the chance that the contingency would occur and that the charter would be cancelled, an approach accepted by Lord Mance at paragraph 23 of his judgment. That value might lie anywhere on the scale between extreme unlikelihood, which would give the deduction a minimal value, to virtual certainty, which would mean that it would be assessed at a figure very close to that which would be reached if one made the definite assumption that the contingency would occur.' - The minority preferred to adhere to the date of breach rule as promoting commercial certainty

Malik v BCCI [1997] 3 WLR 95 - Limitations to the Award of Damages; an Exception to the General Rule that Non-Pecuniary Loss Cannot be Awarded Damages --> Causing Financial Loss

- Facts: M and other relatively senior employees of BCCI, were made redundant following the bank's insolvency - They claimed that they were unable thereafter to obtain employment in the financial services industry because of the stigma attached to former employees of BCCI, and sought substantial compensation for this handicap in the labour market. - For the purposes of the proceedings it was assumed that BCCI had carried on its business in a corrupt and dishonest manner, that this had become widely known, that M and the other employees were innocent of any involvement, were at a handicap in the labour market because of the stigma, and had suffered financial loss as a result - The House of Lords held that contracts of employment contained an implied term of mutual trust and confidence so that the defendant was under an implied obligation not to carry on a dishonest or corrupt business, and that, in principle, financial loss in respect of damage to reputation caused by breach of this term is recoverable in a contractual action --> It will, however, often be difficult to prove a handicap on the labour market.

Hoenig v Isaacs [1952] 1 TLR 1360 - the Standard of Performance; Type of Contracts --> an Example of Substantial Performance

- Facts: Mr Isaacs was contracted to decorate and furnish Mr Hoenig's' flat for £750 - When the work was done, there were problems with a bookcase and wardrobe, which would cost £55 to fix - Mr Hoenig refused to pay the £350 outstanding - Sommervell LJ [179]: 'the price must be paid subject to set-off or counterclaim if there was a substantial compliance with the contract. I think on the facts of this case where the work was finished in the ordinary sense, though in part defective, this is right...The buyer cannot reject if he proves only the breach of a term collateral to the main purpose. I have, therefore, come to the conclusion that the first point of counsel for the defendant fails.' --> the court can allow recovery for the party in breach if they have substantially performed the contract

Sumpter v Hedges [1898] 1 QB 673 - the Standard of Performance; Type of Contracts --> Entire Contracts requiring Entire Obligations

- Facts: Mr Sumpter was a builder, he contracted to build two houses and stables for Mr Hedges for £560 - He did work valued at £333 and said he had to stop because he had no more money, however, substantial payments on account have in fact been made to the builder - Hedges finished the building, using materials which Sumpter had left behind - Sumpter sued for the outstanding money - Court: Hedges had to reimburse Sumpter for the building materials, but not the half-built structure - Smith LJ at page 674: 'The law is that, where there is a contract to do work for a lump sum, until the work is completed the price of it cannot be recovered. Therefore the plaintiff could not recover on the original contract (for the half-built structure, this was an entire contract requiring an entire obligation) --> it left Mr Hedges without any choice of whether to adopt the work; 'He cannot keep the buildings on his land in an unfinished state for ever.' (Smith LJ at page 674)

Bolton v Mahadeva [1972] 1 WLR 1009-the Standard of Performance; Type of Contracts --> an Example of No Substantial Performance

- Facts: Mr Walter Charles Bolton installed central heating for £560 in Mr T Mahadeva's house - It was too cold, the heat came unevenly and it all gave off fumes - Bolton refused to correct it, which would cost £174, and Mahadeva refused to pay any money at all; Bolton sued - The Brentford Deputy County Court judge, Sir Graeme Finlay: held that the contract price needed to be paid, minus a sum for the cost of putting the heating system right (a total of £446, including labour) - On Appeal, this decision was reversed Sachs LJ [1015]: 'I find myself, like Cairns L.J., quite unable to agree that there was a substantial performance by the plaintiff of this lump sum contract. It is not merely that so very much of the work was shoddy, but it is the general ineffectiveness of it for its primary purpose that leads me to that conclusion' --> the court did not allow recovery for the party in breach because they did not substantially perform the contract

Victoria Laundry (Windsor) v Newman Industries [1949] 2 KB 528 - Limitations to the Award of Damages; Remoteness --> Loss as Reasonably Foreseeable

- Facts: V, a launderer and dyer, wished to expand its business, and for this purpose entered into a contract with the defendant to purchase from it a new boiler. - It was agreed that the boiler was to be delivered on 5 June, but when V sent to collect the boiler on that day it was informed that it had been damaged by a fall and was not ready - The boiler was not, in fact, delivered until November. - In consequence of this delay, V lost the profits which it would have earned during this period, and, in particular, certain highly lucrative dyeing contracts which it could have obtained with the Ministry of Supply - V sued inter alia to recover these losses - Asquith LJ, delivering the judgment of the Court of Appeal, stated that the defendant knew before, and at the time of the contract, that V was a launderer and dyer and required the boiler for immediate use in its business - From the defendant's own technical experience, and from the business relations existing between the parties, the defendant must be presumed to have anticipated that some loss of profits would occur by reason of its delay - But in the absence of special knowledge on its part, the defendant could not reasonably foresee the additional losses suffered by V's inability to accept the highly lucrative dyeing contracts --> According to Asquith LJ, the general principle which governs both branches of the rule (in Hadley v Baxendale) is that the aggrieved party is only entitled to recover such part of the loss actually resulting from the breach as was at the time of the contract reasonably foreseeable as liable to result from the breach. What was at that time reasonably so foreseeable depends on the knowledge then possessed by the parties or, at all events, by the party who later commits the breach Critique: - this may engender confusion with the rule regarding remoteness of damage in tort (Overseas Tankship (UK) v Morts Dock and Engineering Co, The Wagon Mound [1961] AC 388) where a defendant will be held responsible for damage which is reasonably foreseeable as liable to happen even if the risk is very small (The Heron II [1969] 1 AC 350, 385-6, 389) = instead, the second limb of the Hadley test should be regarded as loss which was reasonably contemplated by the parties --> Koufos v C. Czarnikow Ltd, The Heron II [1969] AC 350

X v Kuoni Travel Ltd [2021] UKSC 34 - the Standard of Performance; The Scope of the Performance of a Contract

- Facts: X went on an all inclusive holiday for her honeymoon, a package provided for by D Employee raped D, the Issue was whether the rape was a breach of contract? What was the scope of the performance of the contract? - Kuoni argued: the employee's job was obviously not to rape her, and the rapist was not an employee intended to help guests find beverages (he was an electrician) - Court: the assault was within the scope of the performance of the contract, as it was a very upper end hotel, where 'any employee' is said to be able to the the guests

Behn v. Burness (1863) 3 B. & S. 751 - an Example of a Term being Determined a Condition due to Common Usage

- Facts: a ship could not get into Amsterdam owing to strong gales, but she got in a day or two later when the gales abated - The Court of Exchequer Chamber: the statement in a charterparty (specific contract whereby one arranges to 'hire' a ship), that the ship is "now in the port of Amsterdam" was held to be a "condition." [194] --> the charterer was entitled to call off the charter (even though the delay was due to the high winds, and of no fault of the other party)

Fulton Shipping Inc of Panama v Globalia Business Travel SAU of Spain (The New Flamenco) [2017] UKSC 43 - Limitations to the Award of Damages; Collateral Benefit Arising Mitigation

- Facts: a ship was sold after the breach of contract - D claimed that this income was a compensating advantage, and should be set off against damages recoverable from his breach - Court: the sale was independent of the breach of contract, as it was not dependant on the return of the vessel (the vessel could have been sold during the contract as well) --> therefore the benefit will not be deducted from damages

Jarvis v Swan Tours (1973) QB 233J - Limitations to the Award of Damages; an Exception to the General Rule that Non-Pecuniary Loss Cannot be Awarded Damages --> Pleasure is an Important Part of the Contract

- Facts: a solicitor, entitled to two weeks' paid holiday a year, booked with S Tours a 15-day Christmas winter sports holiday at a hotel in Switzerland - He did so on the faith of S's brochure which described the holiday as a 'house-party', and promised a variety of entertainments including excellent skiing, a yodeller evening, a bar, and afternoon tea and cakes - In the first week there were only 13 people at the hotel and in the second week he was entirely alone - The promised entertainments proved to be wholly inferior in quality in comparison with the description in the brochure. - The Court of Appeal held that J was entitled to damages consisting of the amount which he had paid for the holiday and an additional sum of some £60 as compensation for the disappointment he had suffered.

Anglia Television v Reed [1972] 1 QB 60 - the Measures of Damages; the Reliance Measure; the claimant Obtains the Value of the Wasted Expenditures

- Facts: actor Reed contracted to act in a television series for the claimant, but later repudiated the contract (so never came to England, being from North America, to film) - the claimants could not properly calculate how much profit they would make from the mini-series, so could not rely on the expectation measure to claim damages - Instead, as they had already begun production of the show (incurred expenses), they used the reliance measure - They also included sums (incurred expenses) from before the contract was entered into, and these were allowed as long as they were in the reasonable contemplation of the parties at the time the contract was entered into - Lord Denning specifically stated this: the claimant had an election between lost profit or wasted expenditure, although they could not have both. If there was no lost profit, or the lost profit cannot be proved, the claim is one for wasted expenditure; expenditure that has been thrown away by the ready of the breach

Hong Kong Fir Shipping v Kawasaki [1962] 2 QB 26 - Establishing Intermediate Terms

- Facts: after WWII ships were quite bad, this one was very bad and lots of time was lost for the charterer by having to have it constantly repaired (the engineer was an alcoholic) - The charterer eventually wanted to terminate the contract for this reason - Issue: was the loss of the use of the ship for this time constitute a breach of a condition of the contract, such that the injured party could terminate the contract? - Court: this breach was not found to deprive the injured party of substantially the whole benefit of what the contract was intended to give him Diplock LJ: 'There are many . . . contractual undertakings . . . which cannot be categorised as being 'conditions' or ' warranties' [66]: 'Does the occurrence of the event deprive the party who has further undertakings to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings?' Upjohn LJ at [63]: 'It is open to the parties to a contract to make it clear either expressly or by necessary implication that a particular stipulation is to be regarded as a condition which goes to the root of the contract, so that it is clear that the parties contemplate that any breach of it entitles the other party at once to treat the contract as at an end. That matter has to be determined as a question of the proper interpretation of the contract.' Commentary: - it inevitably introduces greater uncertainty into the law, in some cases the need for certainty must prevail, such as occurred in The Mihalis Angelos (1970) - has had a 'knock-on' effect; modern courts are more likely to determine a term to be intermediate than a warranty/condition

Arcos v Ronaasen [1933] AC 470 - the Standard of Performance; the Strict Liability Performance

- Facts: barrel staves were to be half an inch thick and when some delivered were over or under this thickness, - Court: the buyer was entitled to demand goods which answered the description in the contract and were not bound to accept the goods tendered merely because they were merchantable under the description given

Ruxley Electronics and Construction v Forsyth [1995] 3 All ER 268 - the Measures of Damages; the Expectation Measure --> the Amenity Value

- Facts: building of a swimming pool in D's garden of a specific depth by claimants; when pool was finished it was deep enough to use as a pool, deep enough to dive into - But not quite the depth D specified; and the difference in value between these two was really quite small - D refused to pay claimants full amount (it was in their action against D for this money that D realised the error of the pool)— counter-claimed: wanted the value of re-building the pool (this would have been a lot of time and money) - Issue: in this case the difference in value was much less than cost of the cure; what should be awarded? - Court: in assessing damages it would be unreasonable to award 'cost of the cure (of putting the work right)', because the expense involved would be greatly out of proportion to the benefit obtained (that would have obtained by performance) —> the claimant in cases such as these (here D though), would be awarded the difference in the value as specified in K and as constructed; called the amenity (= desirable feature of a building/place) value (only modest damages are awarded in cases such as these, here £2,500) Critique: - allows builders, such as Ruxley, to deliberately breach a contract and no damages will accrue (Lord Mustill considered this in his speech) - Persons contract for particular reasons, these reasons ought not to generally tied to what other people might do and the value that accrues to this (that makes up market price if something): 'the principle of pacta sunt servanda would be eroded if the law did not take account of the fact that the consumer often demands specifications which, although not of economic value, have value to him' (Farley v Skinner [2001] UKHL 49, [2002] 2 AC 732 at [21] (Lord Steyn)) - Persons would never have entered into a contract if they knew that their desirable outcome would not be provided (this outcome is also displayed in Tito v Waddell (No 2) [1977] Ch 106, concerning miners making an island uninhabitable, and islanders only getting damages for the difference in value between vegetated island and non-vegetated, instead of much higher amount of the value to cure (to make vegetated)

Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008] UKHL 48, [2009] 1 AC 61 - Limitations to the Award of Damages; Extending the Remoteness Rule --> a Requirement of Accepted Liability/Responsibility by D

- Facts: charterers had ship, gave it back 10 days late, caused claimant to have to re-negotiate fixture thereafter with T (was supposed to get high price, but due to market fall did not) - CA and lower courts awarded 'lost fixture measure' = the difference between what the owners would be provided from the original contract with T, and the second much reduced contract; here $1.35 M) - HoL did not; allowing the 'overrun period measure' = in agreement with the Charters, the claimant instead got an amount representing the hire of the days that were overrun, the days it was late given back; here $158,000 Lord Hoffman [18]: 'The [Hadley] test appears to be: have the facts in question come to the defendant's knowledge in such circumstances that a reasonable person in the shoes of the defendant would, if he had considered the matter at the time of making the contract, have contemplated that, in the event of a breach by him, such facts were to be taken into account when considering his responsibility for loss suffered by the plaintiff as a result of such breach.' —> departed from the conventional test for remoteness by adding to it a requirement that the defendant must have accepted liability or responsibility for the loss - Lord Hoffmann saw remoteness as an aspect of construing the contract; a matter of implication to determine whether it was D's intention to assume responsibility (as laid out in para 9) --> in this case, D could not have thought to have undertaken/assuming responsibility (at the time of contracting) for all of the risk of the lost profit of the second fixture Lady Hale and Lord Roger rather argue that this just a classic application of limb 2 of the Hadley Test; there was no reasonable contemplation of the parties for this - the courts have also previously rejected the view that loss should be regarded as too remote unless the defendant has accepted liability for it as a term of the contract (The Heron II [1969] 1 AC 350, 422)

Chaplin v Hicks [1911] 2 KB 786 - the Measures of Damages; the Expectation Measure --> includes Compensation for the Loss of a Chance

- Facts: claimant denied opportunity to compete in beauty pageant; sued holders of the pageant - Awarded damages for the loss of a chance (of success)

ARB v IVF Hammersmith [2018] EWCA Civ 2803, [2020] QB 93 - Limitations to the Award of Damages; Impossibility and Moral Unacceptability

- Facts: claimant had IVF treatment with their partner; number of embryos frozen - Signed agreement with clinic that if the couple were to be broken up, the embryos could only be implanted (and become a baby) if the consent of both partners was given - After broken up, ARB's partner went to the clinic with a forged consent form and eventually had a baby; ARB liable to pay arising 'allowance' - Court: ARB cannot claim damages for the money and burden/benefits of having to do this (basically raise a child) because it is not only impossible to quantify it, but also morally unacceptable to give damages for the birth of a healthy child (and this issue arises due to the lack of a liquidated damages clause [36] by Davies LJ)

Addis v Gramophone Co [1909] AC 488 - Limitations to the Award of Damages; Non-Pecuniary Loss

- Facts: claimant was fired; sued for wrongful dismissal, and claimed (bland annat) for his injured feelings in the manner he was fired (in the manner the contract was breached) - HoL: the manner of the dismissal which had caused his injured feelings was not compensable as a breach of contract Lord Lorburn: the damages 'cannot include compensation for the injured feelings of the servant, or for the loss he may sustain from the fact his being dismissed itself, makes it more difficult for him to obtain fresh employment' (check)

Panatown Ltd v Alfred McAlpine Construction Ltd [2000] 4 All ER 97, [2000] 3 WLR 946 - the Measures of Damages; the Expectation Measure --> there must be Personal Loss

- Facts: claimants contract with D to build a multi-storey car park for third party T, on T's land (T and Panatown had some sort of reduced VAT pact if P did this) - The performance of the contract was insufficient as the car park was built poorly - Issue: could P sue for damages for the faulty built building? - Court: No, because the performance interest of the contract only concerned T, the claimants had no personal interest of the usability of the building, therefore could not be compensated for something that didn't affect them (as they would never own the carpark) - Also, in the normal rules of privy, T being a third party cannot sue D (also pre-dated Contracts Rights to Third Parties Act 1999, however even if it existed then, they way the transactions were structured probably made it difficult for T to sue on a term anyways)

Koufos v C. Czarnikow Ltd, The Heron II [1969] AC 350 - Limitations to the Award of Damages; Remoteness --> Loss as Reasonably Contemplated

- Facts: contracted to have delivered sugar, was 10 days late and in that time the sugar market had fallen (the respondent obtained £3,800 less for the sugar than the price obtainable when it should have been delivered) - Issue: could the claimants be awarded damages for the lost profit by the falling of the market; is it within reasonable contemplation of the parties? - The appellant contended that he was not liable for this sum as he had no special knowledge of the seasonal and other fluctuations of the sugar market. - HoL: yes it is, by being late the charterers could reasonably have contemplated that the market would fall, a shipowner must be presumed to know that prices in a commodity market were liable to fluctuate —> D pay claimants the difference in value between the sugar on the day it was supposed to have arrived, and the day it arrived Critiques Victoria Laundry (Windsor) v Newman Industries' take that the 2nd limb of the Hadley Test related to what was reasonably foreseeable [385-6, 389]: this may engender confusion with the rule regarding remoteness of damage in tort (Overseas Tankship (UK) v Morts Dock and Engineering Co, The Wagon Mound [1961] AC 388) where a defendant will be held responsible for damage which is reasonably foreseeable as liable to happen even if the risk is very small

Union Eagle v Golden Achievement [1997] AC 514 - Determining if a Term is a Condition by Contract Construction; Leading to a Reasonable Result --> the General Rule that Time Stipulation is 'Of the Essence of the Contract'

- Facts: in a contract for the sale of a flat where time was stated to be of the essence, the vendor was entitled to terminate when the purchaser tendered the price 10 minutes late

Geys v Societe Generale, London Branch [2012] UKSC 63 - the Nature of Termination; an Example of the Contract being Effective Until the the Non-Injured Party Accepts the Termination

- Facts: man employed by a bank was to be given a bonus by simply being employed by the bank on a certain date - the bank fired him shortly before the bonus was due; Geys was told by his lawyer to simply not accept the repudiation of the contract —> the contract is valid, therefore he received his bonus, until the termination is accepted (one cannot go endlessly without accepting the termination, as it results in frustration of the contract, MSC Mediterranean Shipping, but he managed to prolong it within the time boundaries)

White & Carter (Councils) v Macgregor [1962] AC 413 - the Effect of Affirmation; the Right to Performance

- Facts: the claimants, an advertising contractor, agreed with D, a garage proprietor, to display advertisements for his garage for 3 years (displaying them on rubbish bins) - On the same day, D refused to perform the agreement (a repudiatory breach) and requested the claimant to cancel the contract - W&C refused to acceot the repudiation, and elected to treat the contract as still continuing; tt made no effort to relet the space, displayed advertisements as agreed, and sued for the full amount due - McG argued: since he had renounced the agreement before anything had been done under it, the claimant was not entitled to carry out the agreement and sue for the price; its remedy, if any, lay in damages - A bare majority of the House of Lords: rejected this contention and held that W&C was entitled to the full contract sum —> Lord Reid: 'It is in my judgment, impossible to say that the appellants should be deprived of their right to claim the contract price merely because the benefit to them, as against claiming damages and re-letting their advertising space, might be small in comparison with the loss to the respondent. . . .'. Critique: the judgment encourages wasteful and unwanted performance (according to Anson's Law of Contract (31st edn) at page 505)

Payzu v Saunders [1919] 2 KB 58 - Limitations to the Award of Damages; Reasonableness in Mitigation is Determined Factually

- Facts: the defendant was to deliver goods to the claimant on a monthly basis and the claimant was to pay for the goods within one month of delivery. - The contract was to run for nine month; the claimant received the goods at a discounted price because he had committed to purchase from the supplier over the nine month period - The claimant was late in making the first instalment (This amounted to a breach of warranty not entitling the defendant to repudiate the contract). - The defendant refused to continue with the original contract but told the claimant that he would deliver the goods in future if the claimant paid cash on delivery and would still let him have the goods at the discounted price - The claimant rejected this offer and purchased the good elsewhere at a higher price - He then sued the defendant claiming the difference between the contractually agreed price and what he actually paid for them. - CA: The claimant was not entitled to damages. He was given the opportunity to purchase at the discounted price but rejected this; He was under a duty to take reasonable steps to mitigate his loss. - The offer was a reasonable one and one which the claimant could easily have complied with. —> determining of the steps taken were reasonable (in mitigation of his losses) is a question of fact: it depends on each circumstance - in another factual circumstance it may instead have been unreasonable to take up a second contract

Hughes-Holland v BPE Solicitors [2017] UKSC 21, [2017] 3 All ER 969 - the Measures of Damages; the Expectation Measure --> Restricted Awards for Losses Arising Indirectly

- Facts: this case concerns the correct approach to damages where a client incurred loss in a transaction that, but for his advisor's negligence he would not have entered into, but as a result of risks which it was no part of the advisor's duty to protect agains = a solicitor was negligent in preparing certain documents (although he wasn't giving advice whether to enter into the transaction for which the documents pertained) - Issue: does the entirety of the loss arisen from the transaction fall upon the solicitor? Or a lesser sum? - Court: the loss arose as a result of the 'commercial misjudgment' [55] of the silent, rather than the negligence (the breach of an implied term to take reasonable care owed by the solicitor to the client) —> solicitor not liable for the full extent of the loss

Hadley v Baxendale (1854) 9 Exch. 341 - Limitations to the Award of Damages; Remoteness

Facts: H's mill was stopped by the breakage of a crankshaft, and it was necessary to send the crankshaft to the makers as a pattern for a new one. - The defendants, who were carriers, undertook to deliver the shaft to the makers, but the only information given to them was 'that the article to be carried was the broken shaft of a mill, and that H was the owner of the mill'(Alderson B at 355) - By some neglect on their part the delivery of the shaft was delayed, and in consequence the mill could not be restarted until some time after it could otherwise have been - H lost profits which he would otherwise have made - The question was whether this loss of profits was recoverable - the Court stated that the circumstances communicated to the defendants did not show that a delay in the delivery of the shaft would entail loss of profits of the mill; H might have had another shaft, or there might have been some other defect in the machinery to cause the stoppage - Accordingly, H could not recover for this loss because, per Alderson B [356]: [I]n the great multitude of cases of millers sending off broken shafts to third persons by a carrier under ordinary circumstances, such consequences would not, in all probability, have occurred; and these special circumstances were here never communicated by [H] to the defendants The Test of Determining Remoteness: 'Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such a contract should be such as may fairly and reasonably be considered as: 1. either arising naturally, that is according to the usual course of things, from such breach itself, or 2. such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.' = can't recover for exceptional/unusual losses unless they were contemplated as a probably result of a breach by both parties at the time the contract was made --> 'But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract. For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case; and of this advantage it would be very unjust to deprive them' [354,355]

Heyman v Darwins Ltd [1942] AC 356 - the Prospective Effect of Termination

Lord Porter: "To say that the contract is rescinded or has come to an end or has ceased to exist may in individual cases convey the truth with sufficient accuracy, but the fuller expression that the injured party is thereby absolved from future performance of his obligations under the contract is a more exact description of the position. Strictly speaking, to say that on acceptance of the renunciation of a contract the contract is rescinded is incorrect. In such a case the injured party may accept the renunciation as a breach going to the root of the whole of the consideration. By that acceptance he is discharged from further performance and may bring an action for damages, but the contract itself is not rescinded."

Swynson Ltd v Lowick Rose LLP [2017] UKSC 32 - Limitations to the Award of Damages; Collateral Damage Arising from Mitigation is Recoverable

Lord Sumption [11]: 'the general rule is that loss which has been avoided is not recoverable as damages, although expense reasonably incurred in avoiding it may be recoverable as cost of mitigation' = collateral damage

Grand China Logistics Holding (Group) Ltd v Spar Shipping AS [2016] EWCA Civ 982 - an Example of an Intermediate Term Not Allowing for Termination of the Contract

Sir Terence Etherton MR: 'whether the time payment stipulation was such a condition, or a warranty sounding only in damages or (what has now come to be known as) an intermediate or innominate term . . . is a pure question of interpretation of each of the charterparties ...There is some authority...in the absence of a clear indication to the contrary, the court leans against the interpretation of a contractual term as a condition. The approach to interpretation on this aspect is best explained on the ground that it is inherently unlikely that the contracting parties would have wished to confer on the innocent party a right to treat the contract as at end for breach of a term which may be broken in ways and with consequences which are objectively not sufficiently serious to warrant such a draconian right...[in addition] There is no presumption in a mercantile contract that a stipulated time for payment is a contractual condition the slightest breach of which is a repudiatory breach entitling the innocent party to bring the contract to an end'

British Westinghouse Electric Co Ltd v Underground Electric Rys Co of London Ltd [1912] AC 673 - Limitations to the Award of Damages; Failure of the Duty to Mitigate

Viscount Haldane: 'The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.' —> [689]: Meaning, that the innocent party cannot claim to be compensated by the party in default for loss which is really due not to the breach but to their own failure to behave reasonably after the breach