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Summary LAWS10078 Contract Damages for breach of contract
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LAWS10078 Contract Damages for breach of contract
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Damages for breach of contractMcBryde- page 290- broad approach can be taken for the assessment of loss, various
measures of loss are used to cross check each other e.g. diminution in value can be
compared with rectification costs. Law of damages should not be reduced to a rule of thumb
i.e. damages is an art not a scientific process.
Restitution- putting the parties back into their original position before the contract
was entered into. The loss pressing case for action as not only has the person lost
out but the benefit has also been taken by another person.
Reliance- innocent party suffered a loss- the actions taken by the innocent party on
reliance of the obligations of the other party- e.g. contract to buy land to build
houses- buy the equipment, but the party selling the land breaches and as a result
the innocent party suffers a loss. Incurred expenditure on reliance thinking that the
contract is going to be performed.
Expectation- putting the innocent party in the position they would have been in had
the contract been performed.
Electing between reliance and expectation- should u be able to choose which one
suits better?
o Expectation interest is difficult to calculate whereas the reliance interest is
easier to calculate.
o If there is a bad bargain then it is unlikely that you will get damages for
reliance e.g. of you claim to have spent a huge amount in expenditure and
the bargain is a losing one, then it is unlikely to be awarded damages.
o The reliance measure does not relate really to what is going on in the
contract- reliance is really a delictual measure. Contract is not about putting
you back to your original position?
o Profits are speculative therefore posing dangers for expectation.
The Golden Victory Case:
o Charter of a ship- repudiation by charterer (hirer of the ship) half way
through the hire- clause in the contract which allows either party to withdraw
from the contract without penalty where war breaks out- when repudiation
happens there is no war
o By the time the parties go to court for breach of contract, war breaks out i.e.
the gulf war- the normal rule is that the loss is calculated on from the breach
of contract, and therefore the innocent party’s loss would be from the date
of breach till the end of the lease
o The question was then did the outbreak of war, triggering the repudiation
clause, mean that the loss would be calculated as of the date of the breach of
the contract till the date at which the war broke out which would allow either
party to repudiate?
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