Damages are the most frequently awarded remedy by a court in cases of breach of

contract. Every breach, no matter how little, grants an innocent party the right to sue for all
losses incurred as a result of the breach. The objective of damages is to compensate the injured
party by putting them in the same situation as if the contract had been completed or if the
contract had not been breached, as far as money may go. The first limb of the objective is to
protect the contracting parties' expectation interests. For example, if a contract is breached, the
plaintiff will not receive the expectation interest (profit), resulting in expectation loss. As a
result, the plaintiff is entitled to receive damages as a remedy. The second limb of the objective
is to preserve the contracting parties' reliance interests. The reliance interest refers to the money
spent by the plaintiff in carrying out his contract obligations when he depended on the defendant
to do so. When a contract is breached, the plaintiff suffers from reliance loss, which can be
compensated through damages. The plaintiff must demonstrate causation, remoteness of damage,
the quantum of damages, and mitigation of loss in order to succeed in his claim for damages.
The first principle of claiming damages is causation. The plaintiff must establish that the
defendant's fault or breach of contract directly resulted in the plaintiff's loss. The plaintiff must
establish that the loss was caused by the defendant's conduct or default and that there is a causal
link between the defendant's breach and the plaintiff's losses.
The second principle of establishing damages is the remoteness of damage. Even if the
plaintiff establishes a causal link between the defendant's breach and the plaintiff's losses, this
does not signify the defendant to assume liability for all damages sustained by the plaintiff as a
result of the defendant's breach. The defendant cannot be held liable for losses that are too
remote, even if they arise from his breach. The principle of the remoteness of damage derived
from the case of Hadley v Baxendale is embedded in Section 74 of the Contracts Act 1950
(hereinafter called ‘the Act’). The significance of this case is it establishes the fundamental rule
for determining consequential damage resulting from a breach of contract, namely that the
breaching party is liable for all losses that the contracting parties should have anticipated.
In Hadley v Baxendale, the plaintiffs' mill's shaft broke down, and the plaintiffs hired the
defendant to transfer the shaft to a repair shop. The defendant was tardy in returning the shaft
and was unaware that the plaintiffs lacked a spare shaft. The plaintiffs sought damages for profit
loss. The appeal in this case concerned whether the defendant in a breach of contract action
might be held accountable for damage that the defendant was unaware would result from the
breach of the contract.
The court has stipulated the 2 limbs of the remoteness of damage principle which are
codified in Section 74(1) of the Act. The first limb consists of ordinary losses that occur
naturally in the normal course of business. Whilst, the second limb refers to extraordinary losses
that result from the reasonable anticipation of the parties at the time the contract has been entered
into. The profit loss did not come under the first limb in this case, as mills often have a spare
shaft. Due to the fact that the defendant was unaware that the plaintiffs lacked a spare shaft, the
losses did not fall under the second limb, making losses not recoverable.
The loss for which a plaintiff seeks recovery must have been reasonably foreseeable by
the parties at the time of the contract, and consideration must be given to the parties' knowledge.
Howbeit, the court in Hadley v Baxendale did not furnish guidance on determining whether the
defendant possessed the knowledge at the time the contract was concluded. Due to this lacuna,
the principle of remoteness of damage was enlarged in Victoria Laundry (Windsor) Ltd v
Newman Industries Ltd. To this end, knowledge is classified into two categories: imputed
knowledge and actual knowledge. As for the first, imputed knowledge, it indicates that
everyone, as a reasonable person, knows the "ordinary course of things" and hence the losses that
could arise from a breach in that ordinary course. This refers to the standards, practises, or
customs applicable to the same industry as the contract in question, making it a matter of fact. In
terms of actual knowledge, if parties truly possess knowledge of special circumstances outside
the "ordinary course of things" of such a nature that a breach will cause more loss in that
particular situation. Ergo, in Hadley v Baxendale, the concept of reasonable foreseeability was
articulated in terms of imputed knowledge, which embodies the first limb, and actual knowledge,
which encompasess the second limb.
The third principle of claiming damages is proving actual loss, which aims to quantify the
amount payable by the defendant in monetary terms. The plaintiff must tender evidence in court
showing the loss he experienced as a result of the breach. In the absence of documentary proof,
the court can assess the losses incurred in a reasonable manner. The complainant, however, must
at least provide adequate or satisfactory proof to allow the court to assume a fair and reasonable
loss.
 In SEA Housing Corp Sdn Bhd v Lee Poh Choo, The defendant developer delayed the
construction of the complainant's house. She claimed for loss of use and enjoyment of the house
due to the defendant's delay in constructing it. The evidence from the plaintiff was that she called
the office of the defendant and was told that the rental would be $2,500 per month. She did not
call or produce any paper to support her claim. The Court found that the plaintiff could not
recover because she couldn't prove her loss of use and occupancy via rent.
The last principle to seek damages is mitigation of loss. The notion that the losses are not
too remote are not to be awarded is supplemented by the principle that the complainant is obliged
to take reasonable steps to mitigate his loss and must not incur reasonable costs. The
responsibility to mitigate exists exclusively in the event of a contract breach. This notion is also
reflected in the Explanation to Section 74(3) of the Act. There are three key mitigation
principles: firstly, the complainant cannot recover the loss for avoidable losses that he should
have avoided; secondly, when a plaintiff avoids a loss, damages for that loss are not recoverable
and, finally, money invested to mitigate the loss or try to mitigate the loss can be recovered.
In British Westinghouse Electric Co Ltd (BWEC) v Underground Electric Railways Co
of London Ltd (UER), UER purchased turbines from BWEC. The turbines were defective in that
they lacked power. UER operated the malfunctioning turbines for a period of time before
replacing them with new ones that were more efficient than the defective ones would have been
even if they had not been defective. UER filed suit for breach of contract. UER was not eligible
to make a claim for the cost of the new turbines. Damages for contract breach were intended to
restore the injured party to the position they would have been in had the contract been
completed. Any additional earnings realised as a result of mitigation actions should be factored
into the calculation of damages. The savings realised via the use of the new turbines surpassed
the cost of the old turbines, and because damages were disputed, the cost of the new turbines was
not recoverable.

Conclusion- the plaintiff has a higher chance of claiming damages against the defendant
provided that there is no mitigation loss issue.