Contract Law Quiz

What is the preferred remedy in the event of breach of contract?

Answer explanation

At common law, the preferred remedy is damages, but where it is not considered to be the most appropriate remedy, equity will step in to correct any unfairness that cannot be relieved by damages

What is the test of remoteness established in Hadley v Baxendale?

Answer explanation

Remoteness is a test with two limbs: (i) Only the normal damage that may be reasonably expected from the breach can be recovered, or (ii) It must be a damage of which both parties would have been aware of should a breach occur

How was the test reformulated in Victoria Laundry (Windsor) Ltd v Newman Industries?

Answer explanation

The test was reformulated as follows: P is only entitled to recover that part of the loss (i) That occurred, and (ii) That, at the time of entering into the contract, was reasonably foreseeable

Briefly discuss the case in Cullen v Horgan regarding the duty of mitigation upon the plaintiff in breach of contract.

Answer explanation

In that case, the court held that if D fails to deliver the goods, P must at some point accept that the contract has ended and should make reasonable attempts to source the goods from elsewhere, to comply with the duty to mitigate his losses

Otherwise, this could result in no damages awarded for the consequent loss

What are the three heads of loss generally recoverable? Briefly explain them.

Answer explanation

(i) Expectation loss: Expected profit/gain to P had the contract been carried out

(ii) Reliance loss: Incurring on further expenditure that is wasted if the person I relied on to carry out a contract breaks it

(iii) Restitutionary loss: Where D has conferred a benefit to P under the contract - if D does not perform, P is at a loss of benefit

Can you claim for both loss of profit and wasted expenditure according to case law?

Answer explanation

No, you cannot: in the case of Anglia Television v Reed the Court held you cannot claim for both of loss of profit and wasted expenditure, because had the contract been performed, that wasted expenditure would still impact the prejudiced party

How do you calculate damages for intangible loss - particularly for loss of chance?

Answer explanation

Regarding loss of chance, you would award damages that reflect the potential value of the possible outcome discounted by its probability, so that a loss of profit is shown as certain - see Hawkins v Rogers, & O'Keefe v Ryanair Holdings

Is it possible to recover damages for non-financial losses such as inconvenience and emotional distress resulting from breach of contract?

Answer explanation

Under certain conditions, it is possible: the courts have accepted to award damages for non-financial loss when the purpose of the broken contract is to provide recreation, relaxation or pleasure - see Jarvis v Swan Tours, & Dinnegan & Dinnegan v Ryan