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Remedies Tutorial Notes

Remedies Tutorial Notes

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Published by Adam 'Fez' Ferris
remedies shitty tutorial notes
remedies shitty tutorial notes

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Published by: Adam 'Fez' Ferris on Apr 17, 2010
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11/27/2012

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TUTORIAL 9
 
REMEDIES FOR BREACH OF CONTRACT
Reading;
McKendrick: Ch 23
Important cases
 Alfred McAlpine Construction Ltd 
v
Panatown Ltd (No 1)
[
2001] 1 AC 518
Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344Farley 
 
v
 
Skinner 
 
[
2001] 3 WLR 899
Mr Farley bought a big house - Riverside House - in Blackboys, Sussex, not far fromGatwick . It had a croquet lawn, tennis court, orchard, paddock and swimming pool. It cost£420,000 and after purchase was complete in 28 February 1991, he spent £125,000improving it. He also had a flat in London, a house in Brighton and one overseas. He got Mr Skinner to survey the house, particularly onaircraft noise. Skinner carelessly answered it wasnot bad, when at 6 am the noise was very bad. Holding patterns formed right above the house.This distressed Mr Farley because he liked to spend early morning in the garden.The trial judge held that Mr Farley had paid no more than someone who knew of the noise, sothere was no financial loss, but awarded £10,000 for distress. The Court of Appeal disagreedand wiped out the award.
[edit] Judgment
The House of Lords restored the trial judge¶s award, because not being put at suchinconvenience was an important term.Lord Scott held that if Mr Farley had known about the aircraft noise he would not have bought the property. He could either claim for being deprived of the contractual benefit(
 Ruxley Electronics Ltd v Forsyth
)
, or he could claim as having consequential loss on breach
 
of contract (
Watts v Morrow
)
. He added that if there had been an appreciable reduction in thehouse¶s market value, he could not recover both, which would have been double recovery.Although £10,000 was µon the high side¶, the value was within the right range.
µIf the cause is no more than disappointment that the contractual obligation has been broken, damagesare not recoverable even if the disappointment has led to a complete mental breakdown. But, if thecause of the inconvenience or discomfort is a sensory (sight, touch, hearing, smell et
)
experience,damages can, subject to the remoteness rules, be recovered.¶
Lord Clyde said it was µthe specific provision relating to peacefulness of the property inrespect of the aircraft noise which makes the present case out of the ordinary¶. The predominant object test was dispensed with, so it was enough that the term broken wasknown by both parties to have been important (it did not matter whether the purpose of thecontract was to provide peace of mind
)
. So it seems surveyors will not ordinarily be liablewhen a house is defective and it causes distress
D
unlop Pneumatic Tyre Co Ltd 
 
v
 
New Garage and Motor Co Ltd 
 
[
1915] AC 79
Co-operative Insurance Society 
 
v
 
 Argyll Stores (Holdings) Ltd 
 
[
1997] 3All ER 297 (noted by Phang(1998) 61 MLR 421)
 
 
 When preparing your tutorial, you should consider the following issues:ne can claim damages muchmore easily.Dunlop: A penalty clause is there to punish parties the courts will judge this on a case by case basis.If a contract is for the exchanging of money then the clause cannot be for more than the price that thegoods are being sold for in the contract. The courts are unlikely to interfere if you cannot quantify theloss. A liquidated damages clause: When someone breaches a contract, instead of going through thenormal process, can claim damages far more easily.1. What is the aim of an award of damages for breach of contract?
Da
m
a
ges
for  breach of contractis acommon law remedy, available as of right. It is designed
 
to compensate the victim for their actual loss as a result of the wrongdoer¶s breach rather thanto punish the wrongdoer. If no loss has been occasioned by the plaintiff, only nominaldamages will be awarded.A victim will not necessarily recover every loss which flows from the breach by thedefendant. In order to recover any damages, the losses suffered by the victim must be caused by the defendant, and not be too remote. Further, the plaintiff has a duty to mitigate hislosses.
2. Define ³reliance loss´ and ³expectation loss´. When and how is each applied in measuringdamages?In contract cases, thecourtis usually interested in securing the performance of what was agreed.Where one party is about to or has suffered loss as a result of the other's breach, the court offerspractical protection to his or her expectations as to performance (in some cases, the use of injunction or specific performancemay be appropriate). Where a party pro
v
es that he or she has sustained lossflowing from any breach (potentially including non-pecuniary or intangible losses, e.g. for disappointment, damage to reputation, etc.), the purpose of damages is, so far as money can do it, toplace the claimant in the same situation as if the contract had been performed. Thus, the mostrele
v
ant basis upon which to calculate any loss is to examine the economic potential of the contractas worded. This will pro
v
ide a measure of what the claimant expected to gain, and so quantify whathas been lost by the breach.3. What is the rule in
Hadley 
 
v
 
Baxendale
? How has it de
v
eloped since the time of that case?4. "A party to a contract has an unfettered choice between performing the contract andcompensating the other party."Is this statement true?
5.
When are injunctions and specific performance orders a
v
ailable as remedies?
 
6. Do you agree that there is little merit in the rule against penalties, when the lawmakes it so easy to produce results similar to a penalty clause through other forms of contract term? What do you consider to be the benefits anddisad
v
antages of the rule against penalties in modern commercial conditions?
Pl
ease come prepared to discuss the fo
ll
owing question:
 Andy, a young aristocrat, wanted to buy a country house in Rutland to use as a weekend home. Heinstructed Bob to sur 
v
ey it, saying to him that he was particularly concerned about noise, as one of the purposes of buying the house was to enable him to relax with his friends at weekends. Bobagreed to sur 
v
ey the house for £800 and to in
v
estigate the question of noise. In his report he statedthat the property was in good condition and there was no problem with noise. Andy therefore bought
 
the house for £300,000, its full market
v
alue. Prior to mo
v
ing in, Andy also contracted with Clear Blue& Co. who agreed to build a swimming pool at the back of the house that was to be 15m long and 8mwide for £10,000. Andy specifically stated that he wanted the pool to be deep enough to enable himto practise his di
v
ing.On mo
v
ing in to the property Andy quickly disco
v
ered that planes from a nearby military base madefrequent low le
v
el flights o
v
er his house. He also disco
v
ered that the swimming pool was only 13mlong and was not deep enough for di
v
ing. The cost of lengthening and deepening the swimming poolwould be £8,000. Andy used the house at weekends for six months in which time the aircraft noisesubstantially impaired his enjoyment of the property. In that time the
v
alue of the house dropped to£280,000, the fall in price being due solely to the decline of property
v
alues in the area. Andy now seeks damages for breach of contract by Bob, for:The financial loss caused by the fall in
v
alue of the houseRemoteness ± The breach (regarding the noise) is not responsible for the loss in market
v
alue of thehouse.The disappointment, anxiety and distress caused by the noise from the planes Andy is likely to get the £8000 because unlike Ruxley the pool is not deep enough for di
v
ingNotes on answering problem questions on remedies: First determine what it is: Warantee, breachetc?Is there a liquidated damages clause in the contract? Is it a penalty clause?Do you wish to get specific performance or pecuniary damages? (ne
v
er will it be specificperformance)Expectation or reliance?Le
v
el of damages?Pain loss or amenity?Check remoteness Assumption of responsibilityMake sure that the loss was caused by the breachMitigation ± has the innocent party mitigated the damages reasonably Arri
v
e at the number that you are going to get.Don¶t mention the fact that Ruxley and Farley contradict each other in a problem question, just dealwith the law as it is. Maybe just a couple of sentences or so can be used. Howe
v
er, in essayquestions do discus this contradiction. Don¶t mention many of the facts in problem questions.Underline cases.

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