Common law flashcards

Question 1

Purpose of contractual damages?

Accepted Answer

**Compensate** innocent party — put in position as if contract performed (expectation loss), not punish breacher.

Question 2

Hadley v Baxendale — first limb?

Accepted Answer

Loss **arising naturally** from breach in ordinary course of things.

Question 3

Hadley v Baxendale — second limb?

Accepted Answer

Loss **reasonably contemplated** by both parties at contract time as **probable result** of breach (special circumstances communicated).

Question 4

Duty to mitigate?

Accepted Answer

Claimant must take **reasonable steps** to minimise loss — cannot recover avoidable loss (*Pilkington v Wood*).

Question 5

What is reliance loss?

Accepted Answer

Damages to cover expenses incurred by the claimant in reliance on the contract being performed. Used when expectation loss is too speculative. See *Anglia Television v Reed*.

Question 6

Non-pecuniary loss?

Accepted Answer

Generally **not recoverable** in contract (contrast tort) — exceptions: consumer distress in limited cases where enjoyment is a key part of the contract (Farley v Skinner, Jarvis v Swans Tours).

Question 7

What is the principle of expectation loss as established in Robinson v Harman?

Accepted Answer

The principle that damages for breach of contract should place the claimant, so far as money can do it, in the same situation as if the contract had been properly performed.

Question 8

What are the two limbs of the remoteness test from Hadley v Baxendale?

Accepted Answer

1. Losses arising naturally from the breach in the 'usual course of things'. 2. Losses that were reasonably in the contemplation of both parties at the time of contracting, due to knowledge of special circumstances.

Question 9

What is the duty to mitigate?

Accepted Answer

The duty on the innocent party (claimant) to take all reasonable steps to minimise the loss caused by the breach. They cannot recover for losses they could have reasonably avoided.

Question 10

What is 'loss of amenity' in contract damages?

Accepted Answer

A moderate award for non-pecuniary (non-financial) loss, such as disappointment or loss of enjoyment, where the cost of rectifying a defect is wholly disproportionate to the benefit. Established in Ruxley Electronics v Forsyth.

Question 11

What is the difference between 'cost of cure' and 'diminution in value'?

Accepted Answer

Cost of cure is the cost of fixing the defective performance. Diminution in value is the difference in market value between what was promised and what was delivered. Cost of cure is the primary measure, unless it is unreasonable.

Question 12

Expectation vs reliance loss?

Accepted Answer

Expectation — profit of bargain; reliance — wasted expenditure; claimant usually chooses higher measure, but can only claim reliance loss if expectation loss is too speculative to prove.