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Contractual damages: Difference between revisions
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{{a|contract|{{subtable|{{small|80}}{{loss v damages}}</div>}}}}The measure of [[compensation]] one can expect as a result of another’s [[breach of contract]]. This is generally targeted at putting the claimant in the ''financial'' position it would have been in had the naughty little rabbit performed its obligations up to expectation. Financial, not physical: the common law could not generally insist on performance as such — for that, you need the [[equitable remedy]] of [[specific performance]]. | |||
These ordinary principles apply pragmatically to limit the damages a party must pay to what is reasonable for what that party was responsible. | |||
==={{casenote|Hadley|Baxendale}} === | |||
All summed up very nicely in the case of {{casenote|Hadley|Baxendale}} where Baron Alderson said: | |||
:“Where two parties have made a contract which one of them has broken, the [[damages]] which the other party ought to receive in respect of such [[breach of contract]] should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. | |||
:Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated. | |||
:But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract. | |||
:For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case, and of this advantage it would be very unjust to deprive them.” | |||
====Since Hadley==== | |||
A bunch of garlanded cases, some [[Victoria Laundry v Newman - Case Note|involving laundry]] and others [[Koufos v Czarnikow (The Heron II) - Case Note|named after ships]], have drummed out this original [[Obiter dicta|dicta]]. Chitty would summarise these as concluding that a loss is not too remote a consequence of breach if, at the time of contract, the consequence it was within their reasonable contemplation as a not-unlikely result of their breach. | |||
===Heads of damage=== | |||
====[[General damages]]==== | |||
These include the direct and foreseeable losses of a contract. If I have loaned you £100 against the collateral of your car, and you default, my damages are £100 ''minus'' the realised value of the car (£50 — it was a crappy car). These could conceivably by consequential losses — loss of profit and so on — provided it was genuinely within the contemplation of the parties, foreseeable, determinate and so on. Since consequential losses are of their nature indeterminate, it is very hard to get them awarded in normal circumstances. | |||
====[[Special damages]]==== | |||
{{special damages capsule}} | |||
====[[Aggravated damages]]==== | |||
To compensate the defendant for mental distress | |||
====''No'' [[punitive damages]] for [[breach of contract]]==== | |||
{{punitive damages capsule}} | |||
{{sa}} | |||
*[http://www.lawcom.gov.uk/app/uploads/2015/04/LC247.pdf Law commissioon report on exemplary damages] in 1997 | |||
*[[Breach of contract]] | |||
*[[Causation]] | |||
*[[Consequential loss]] | |||
{{ref}} | |||