Remedies — damages (incl. remoteness, mitigation)

CON.12 — Remedies: Damages (Remoteness & Mitigation)

Purpose. Damages are the primary common-law remedy for breach. They are a right, not discretionary. Aim: put the claimant in the position as if the contract had been performed (Robinson v Harman) — the expectation interest.

Measure of loss

• Expectation is the default — loss of bargain. Usually cost of cure (cost to put right) or diminution in value.
• Ruxley Electronics v Forsyth: where cost of cure is wholly disproportionate, court may award loss of amenity instead (the shallow pool).
• Reliance interest (wasted expenditure) available as an alternative where expectation is too speculative (Anglia TV v Reed) — but not to escape a bad bargain (C&P Haulage).

Causation & Remoteness — Hadley v Baxendale (the two limbs)

Loss is recoverable only if, at the time of contracting, it was:

1. arising naturally — in the ordinary course of things; OR
2. in the reasonable contemplation of both parties as a probable result of breach (i.e. special losses the defendant knew about).

• Victoria Laundry v Newman: ordinary loss of profits recoverable; lucrative special dyeing contracts NOT (defendant didn't know). Test = "reasonable contemplation" / "not unlikely" (a lower bar than tort's reasonable foreseeability).
• The Achilleas: assumption of responsibility may limit liability even where loss was foreseeable.

Mitigation

• Claimant must take reasonable steps to minimise loss and cannot recover for avoidable loss (British Westinghouse). It is a duty only loosely — failure caps recovery, it isn't an independent breach.
• Burden of proving failure to mitigate is on the defendant.
• Standard is reasonable, not perfect; claimant need not take great risks or sacrifice rights.
• Credit must be given for benefits actually obtained while mitigating.

Non-pecuniary loss

• Generally no damages for distress/disappointment (Addis v Gramophone). Exception: contracts whose object is pleasure, relaxation or peace of mind (Jarvis v Swans Tours; Farley v Skinner).

Common SBAQ traps

• Liquidated damages vs penalties: a genuine pre-estimate (or one protecting a legitimate interest not out of proportion — Cavendish v Makdessi) is enforceable; a penalty is not.
• Remoteness ≠ mitigation ≠ causation — keep them distinct; remoteness is judged at the time of contracting, not breach.
• Nominal damages for breach causing no loss; substantial damages need proven loss.
• Don't confuse expectation with reliance, or apply tort's foreseeability test.