Damages law refers to the legal framework within which compensation is claimed for and awarded at court. Damages are defined as the compensation for a loss or injury suffered by the claimant, as a result of the defendant’s action.
How the compensation is awarded changes depending upon which type of law the claim is brought under
Various remedies exist in contract law whenever a party to a contract breaches the terms of that contract, some of these remedies are;
Damages, Repudiation, Rescission, Specific performance and Injunctions
In order to prove that a tort has occurred, the plaintiff must be able to prove that his loss was a direct result of the breach that the defendant had caused. An act of the defendant in a sequence of events leading to a loss might not be held to be the cause of the loss.
In Smith, Hogg ; Co v Black Sea Insurance (1940) A shipowner was held liable to a charterer in damages for loss of a cargo which had been caused by a combination of perils of the sea and the unseaworthiness of the ship. The latter was sufficient to carry a claim for damages.
REMOTNESS OF DAMAGE
Its not all the time that when a person seeks for damage from an individual that thy will recover from that in an event that the loss suffered is too remote to cause so much of the loss that the plainfiff is claiming then those damages will not be granted. The losses, to be recoverable, must have been within the reasonable contemplation of the parties.
Watts v Morrow
Surveyor’s report negligently failed to show structural defects; measure of damages
Watts instructed Morrow to provide a full structural survey on a house he wished to purchase. The report found the property to be sound, stable and in good condition. Such defects as there were could be dealt with as part of ordinary, on-going maintenance and repair. Watts purchased the property and subsequently discovered substantial defects which cost over £33,000 to correct. Watts brought an action for breach of contract.
Watts argued the survey had been sub-standard and in breach of contract because Morrow had failed to identify the substantial defects. As such, Watts sought to recover the cost of the repair work together with further damages for the distress caused by having to live on a ‘building site’ for several months. Watts bought the house in reliance on the report and the house had not been in the condition as described in the report. Therefore, he contended, the correct measure of damages was the sum necessary to restore the property to the condition described in the report. Morrow contended the correct measure of damages was the excess purchase price which had been paid in reliance on the report. He also contended that damages for distress were irrecoverable.
Watts recovered damages for the excess purchase price paid in reliance on the report, and not the cost of conducting the repairs. The proper measure of damages was the sum necessary to put Watts in the position he would have been if the report had been correctly prepared. Therefore, the loss he suffered was the difference in value of the property as it was presented in the report, and its value in its actual condition. Modest damages for physical discomfort were awarded.
It is the duty of every plaintiff to mitigate his loss, that is, to do his best not to increase the amount of damage done. There are three rules:
(i) The plaintiff cannot recover for loss which the plaintiff could have avoided by taking reasonable steps.
(ii) The plaintiff cannot recover for any loss he has actually avoided, even though he took more steps than were necessary in compliance with the above rule.
(iii) The plaintiff may recover loss incurred in taking reasonable steps to mitigate his loss, even though he did not succeed.
The plaintiff must minimise the loss resulting from the breach by taking all reasonable steps available to him. If he fails to do so, then he cannot recover anything in respect of that extra loss.
British Westinghouse Electric Co Ltd v Underground Electric Railways Co of London Ltd
Supply of defective turbines; relevance of profit accruing from acts done in mitigation
Underground Electric Railways (UER) purchased turbines from British Westinghouse Electric Co (BWEC). The turbines were faulty in that they were deficient in power. UER used the defective turbines for a time and then purchased new turbines which were more efficient than the defective ones would have been even if they had not been faulty. UER brought an action for breach of contract.
The issues under this case were UER claimed the cost of the replacement turbines. They asserted the purchase was reasonable and prudent and, therefore, the cost of purchasing them should be recoverable as a direct consequence of the breach. Additional profits made from purchasing the new turbines was not a matter for consideration when assessing damages. BWEC contended that even if the turbines had not been defective, the more efficient turbines would have been purchased in any event and, therefore, UER had not suffered a material loss because of the defect. Damages awarded are to place the innocent party in the position he would have been had there been no breach. Even if the new turbines were purchased because of the breach, account should be taken of the increased profits made with the installation of the more energy efficient turbines. It was held, UER could not claim for the cost of the new turbines. Damages for breach of contract were to place the injured party so far as possible in the position they would have been had the contract been performed. Any additional profits made because of acts done in mitigation should be considered when quantifying damages. The savings made by using the new turbines exceeded the cost of the old turbines and as damages were a question of fact, the cost of the new turbines were not recoverable.
An extraordinary equitable remedy that compels a party to execute a contract according to the precise terms agreed upon or to execute it substantially so that, under the circumstances, justice will be done between the parties.
Specific performance grants the plaintiff what he actually bargained for in the contract rather than damages (pecuniary compensation for loss or injury incurred through the unlawful conduct of another) for not receiving it; thus specific performance is an equitable rather than legal remedy. By compelling the parties to perform exactly what they had agreed to perform, more complete and perfect justice is achieved than by awarding damages for a breach of contract.
Specific performance can be granted only by a court in the exercise of its equity powers, subsequent to a determination of whether a valid contract that can be enforced exists and an evaluation of the relief sought. As a general rule, specific performance is applied in breach of contract actions where monetary damages are inadequate, primarily where the contract involves land or a unique chattel (personal property). Damages for the breach of a contract for the sale of ordinary personal property are, in most cases, readily ascertainable and recoverable so that specific performance will not be granted..In Beswick v Beswick
PB was in poor health and agreed with the defendant, his nephew, that he would transfer the trade and good will of his coal business to him on the basis that the nephew employed him as a consultant for the rest of his life and paid him for this. The nephew also agreed to pay PBs wife after PB died for the rest of her life. She was not a party to the agreement. Upon the death of PB, the nephew paid PB’s wife once but then not again. PBs widow brought an action as administrator of PB’s estate and also in her personal capacity claiming for specific performance.
PB’s widow raised two interesting questions for the court to consider. The first was whether the widow, as an administrator to PB’s estate, could claim for an order of specific performance for PB’s nephew to honour his agreement. It was also important to see how the court weighed this claim alongside her claim on a personal level, which that she could claim as a party to the contract between her late husband and nephew.
The court granted the widow an order of specific performance for the payment owed by PB’s nephew as an administrator to her husband’s estate. The court held that the damages would also not be limited due to the loss that had been caused to PB’s estate. However, the court found that PB’s widow could not claim under her personal capacity as she was a third party to the contract and was not a party to the original agreement.