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By the end of these notes, you should understand:
3.4.1 Common Law Remedies:
3.4.2 Equitable Remedies:
This topic helps you reflect on the key concepts of liability (who is responsible), justice (fairness in outcomes), fairness (treating parties equally), and effectiveness (whether remedies actually work).
Damages are the most common remedy for breach of contract. They are a sum of money awarded by the court to compensate the innocent party (the person who didn't break the contract) for their losses.
Purpose of Damages: The main purpose of damages is to put the innocent party in the position they would have been in if the contract had been properly performed. This is called the compensatory principle – damages are meant to compensate for loss, not to punish the person who broke the contract.
Key point: Damages aim to compensate, not punish. The innocent party should receive what they lost, nothing more, nothing less.
When a court calculates how much money to award, it looks at different types of loss. There are three main categories:
Expectation loss means the loss of what you expected to get from the contract.
Simple explanation: If you made a contract expecting certain benefits or profits, and the other party breaks the contract, you lose those expected benefits. Expectation loss damages give you the value of what you missed out on.
Example: You order 100 chairs for your restaurant at £20 each (total £2,000). The supplier breaks the contract and doesn't deliver. You now have to buy the chairs elsewhere for £25 each (total £2,500). Your expectation loss is £500 – the extra cost you had to pay because the contract was broken.
Another example: You buy a business expecting it to make £50,000 profit per year. The seller lied about the accounts, and the business only makes £30,000 per year. Your expectation loss is £20,000 per year – the difference between what you expected and what you actually got.
Reliance loss means money you spent because you relied on the contract happening.
Simple explanation: Sometimes you spend money preparing for a contract (before the other party breaks it). If the contract is broken, you want that money back. Reliance loss damages reimburse you for expenses you wouldn't have made if the contract hadn't existed.
Example: You hire a photographer for your wedding and pay a £500 deposit. You also spend £200 on special outfits for the photo shoot. The photographer cancels at the last minute. Your reliance loss is £700 – the money you spent relying on the contract happening.
Key difference from expectation loss: Expectation loss is about future benefits you missed. Reliance loss is about past expenses you wasted.
Non-pecuniary loss means losses that aren't about money – things like disappointment, distress, or inconvenience.
Simple explanation: "Pecuniary" means relating to money. "Non-pecuniary" means not about money. These damages compensate for emotional upset or other non-financial harm caused by the breach.
Important rule: Generally, the law does NOT award damages for non-pecuniary losses in commercial contracts. However, there are exceptions where the whole purpose of the contract was to provide pleasure, relaxation, or peace of mind.
Examples where non-pecuniary damages ARE awarded:
Example where they are NOT awarded:
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