FLK1 · Contract

Remedies — damages (incl. remoteness, mitigation)

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

Explained simply

Remoteness of damage in contract, explained simply

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:

arising naturally — in the ordinary course of things; OR
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). The Heron II restated the test as what the parties would reasonably have contemplated, at the time of contracting, as "not unlikely" to result. That test is more restrictive than tort's reasonable foreseeability (Wellesley Partners v Withers [2015] EWCA Civ 1146 at [74]).
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.

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In January, a doctor negotiating the sale of his medical practice tells the buyer, truthfully, that the practice generates around £2,000 a month in income. Contracts are not signed until May. Between January and May the doctor falls seriously ill, stops practising, and the patient list collapses, so that by the time of signing the practice earns almost nothing. The doctor says nothing about this change. The buyer, still relying on the January figure, completes the purchase and then discovers the true position.

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