LAW 103X LAW OF CONTRACTS

TOPIC 1
COMMON LAW REMEDIES

Aims and Objectives

As you can see from the discussion in Chapter 1 of Contract in Context, contract law’s role is
to provide legal enforceability. The way it does so is through the courts granting remedies
for breaches of contract. Remedies fall into two categories: common law remedies (available
as of right) and equitable remedies (in the discretion of the court). In this topic we aim to
gain a knowledge of the principles of common law remedies for breach of contract. This will
enable you to advise on how the courts are likely to approach the question of calculating
damages, which is the remedy in the vast majority of contract cases.

Required Reading
Read the following items as directed.

Textbook

Taylor and Taylor, 8th edn 292-97, 300-308, 310-12 (you may choose to read Taylor and
Taylor ch 11 as a whole to obtain a general picture, but the pages specifically listed discuss
the issues focused on in the lectures and seminars)

Cases
Robinson v Harman (1856) 1 Exch 850; 154 ER 363 (Ex Ct)

Hadley v Baxendale (1854) 9 Exch 341 (Ex Ct)

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528

(CA)

Transfield Shipping Inc of Panama v Mercator Shipping Inc of Monrovia, The

Achilleas [2008] UKHL 48, [2009] 1 AC 61
 Charter v Sullivan [1957] 2 QB 117 (CA)

Thompson (WL) Ltd v Robinson (Gunmakers) Ltd [1955] Ch 177 (Ch D)

Payzu v Saunders [1919] 2 KB 581, 587 (CA)

Chaplin v Hicks [1911] 2 KB 786 (CA)

Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344 (HL)

Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798 (Ch D)

Planché v Colburn (1831) 8 Bing 14; 131 ER 305

Attorney General v Blake (Jonathan Cape Ltd Third Party) [2001] 1 AC 268 (HL)

One Step (Support) Ltd v Morris-Garner [2018] UKSC 20

Seminar Preparation
Read and make notes on the required readings listed above, and revise your lecture notes.
Prepare written answers to the following questions. You may wish to use the questions
below to help structure your approach to engaging with the reading list.

Seminar Questions

1. What is the function of the law of contract and how does the concept of a remedy

relate to it?

The law of contract is useless unless people can make exchanges. The exchange economy

is all based upon self-interest and that is how exchanges occur. Surplus is the motivation

for all economic exchange. When you put your economic exchange into a legally

enforceable contract you generate an expectation interest. The law of contract creates a

remedy that protects your expectation interest. Remedies are compensatory damages and

can sometimes be awarded by default.

 2. What is the distinction between primary and secondary obligations?

Primary obligation under a contract is where there is an exchange obligation. However,

secondary obligation stimulates if D breaches the contract, as then the primary obligation

has not taken place.

Primary obligation-physical action part of the contract.

C  C-claimant, D-Defendant, K-contract, P-performance, B-breach.

K P

D B-primary 

--------

Secondary

Secondary obligation- legal part of the contract.

3. What is the distinction between the expectation interest and the reliance interest?

The expectation is the net profit, and the expectation interest is generated when you enter

the contract. However, reliance expenditures are what C spends in reliance of the contract

to perform the contract, so if D breaches the contract, then D is also reliable for the

reliance losses.

Surplus-> the motivation of economic exchange.

Expectation interest-> protected by law of contract to prevent lost expectation.

C -> x+p= expectation and profit.

K P

4. What is the rule in Robinson v Harman?

The rule in Robinson v Harman is established as being, that C must be put in the position

they would have been in had the contract been performed.

5. What is the distinction between nominal and substantial damages and how does it

relate to the doctrine of causation?

Substantial damages are damages that compensate a significant amount of money

however in order to do so, C must be able to prove their loss is caused by the breach in

contract. Whereas, nominal damages are received in name only, and are only compe

nsated as long as there is a signal of breach of contract, and a very small amount of

money is compensated. The quantification of damages, especially substantial damages, is

through C showing factual and legal causation but also possessing the doctrine of

mitigation. In factual causation, the main aspect to prove, is whether D’s breach caused

the losses? The breach itself doesn’t count however the loss must be substantial. If the

loss isn’t substantial then only nominal damages will be awarded. Consequential loss and

a certainty of amount are also taken into consideration here. Next, legal causation must

also be established, and this is where D is only liable for proximate losses. The 2 limbs

which are reasonable contemplation and notice must also be satisfied.

6. What is the distinction between certain losses and speculative losses?

The claimant will be compensated for certain losses but not speculative losses. Certain

losses allow the courts to put a reasonably precise number on the loss, whereas with

speculative losses this is diffulct to do so.

7. What is the relationship between proximity and reasonable contemplation?

D is liable for those losses that are in reasonable contemplation at the time of the negation

of the contract, therefore this is the proximity of reasonable contemplation. If there is a

reasonable clause then this will suffice and it doesn’t hav eto be explicitly stated within

the contract. Proximity means that the partner must be sufficiently close so that it is

reasonably contemplation, that one party’s negligence would be to cause damage or loss

to the other.

8. What is the distinction between the first and second limbs of Hadley v Baxendale?

The first limb which is reasonable contemplation, is whether D is liable for the losses that

are in reasonable contemplation at the time of the negation of the contract. In Hadley v

Baxendale, D breached the contract through the delay of time, as he hadn’t bought it back

in time and the production at the mill was stopped, generating losses. I believe D is liable

for the losses as they can be reasonably contemplated at the negation of the contract. The

second limb is notice, and whether D had it in his reasonable contemplation that the mill

would’ve stopped and large consequential losses will occur. Here, D did have it in his

reasonable contemplation that the mill would stop production and large consequential

losses would occur, because he had the contractual duty to take the grinding device to

London and bring it back.

9. Why does the law of contract impose the requirement of mitigation?

This is to avoid overcompensation and make it reasonable for the courts. As C will only

be compensated for unavoidable losses and not avoidable ones. Avoidable losses are
 those which could have been avoided by reasonable steps in mitigation-Kiliuis v

Saunders.

Preparation time

Estimated time to complete the reading for this seminar: at least 12 hours.

On average you are expected to spend up to 15 hours per fortnight completing your
preparation for each seminar.