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    Remedies Assignment

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    George Isabella
    1) When a party breaches a contract, the common remedy is monetary damages to compensate the injured party for losses from the breach and return them to the position before the breach. 2) The amount of damages is meant to cover the actual loss suffered, not serve as a penalty, though liquidated damages can be stipulated in the contract to avoid litigation. 3) English common law developed the test of "remoteness of damages" to determine what losses from a breach may be compensated, beginning with the rule in Hadley v Baxendale that damages must arise naturally from the breach or have been contemplated by the parties.

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    Remedies Assignment

    Uploaded by

    George Isabella
    71 views1 page
    1) When a party breaches a contract, the common remedy is monetary damages to compensate the injured party for losses from the breach and return them to the position before the breach. 2) The amount of damages is meant to cover the actual loss suffered, not serve as a penalty, though liquidated damages can be stipulated in the contract to avoid litigation. 3) English common law developed the test of "remoteness of damages" to determine what losses from a breach may be compensated, beginning with the rule in Hadley v Baxendale that damages must arise naturally from the breach or have been contemplated by the parties.

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    1) When a party breaches a contract, the common remedy is monetary damages to compensate the injured party for losses from the breach and return them to the position before the breach. 2) The amount of damages is meant to cover the actual loss suffered, not serve as a penalty, though liquidated damages can be stipulated in the contract to avoid litigation. 3) English common law developed the test of "remoteness of damages" to determine what losses from a breach may be compensated, beginning with the rule in Hadley v Baxendale that damages must arise naturally from the breach or have been contemplated by the parties.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    71 views1 page

    Remedies Assignment

    Uploaded by

    George Isabella
    1) When a party breaches a contract, the common remedy is monetary damages to compensate the injured party for losses from the breach and return them to the position before the breach. 2) The amount of damages is meant to cover the actual loss suffered, not serve as a penalty, though liquidated damages can be stipulated in the contract to avoid litigation. 3) English common law developed the test of "remoteness of damages" to determine what losses from a breach may be compensated, beginning with the rule in Hadley v Baxendale that damages must arise naturally from the breach or have been contemplated by the parties.

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    Name: Adelana Boyede Michael

    Matric: 150601048.
    Once a party successfully proves that the other party is in breach of a contract,the most common
    relief afforded him for the loss sustained through the breach is monetary compensation called by
    lawyers damages. Since the main object is to place the injured party to as far as position in his
    original position before breach of contract,the measure or monetary assessment of damages is the
    amount of the loss sustained by the innocent party through the breach of contract. The parties may
    have fixed the amount payable as damages in case of a breach of contract but the court would
    scrutinize it to distinguish it from a penalty. Penalties are monies paid in 'terrorem' and as such are
    held illegal by courts. A sum of money stipulated in a contract as money payable as damages in
    case of a breach of contract to avoid litigation is called liquidated damages.
    The term 'remoteness of damages' refers to the legal test used to decide the type of losses
    caused by a breach of contract that may be compensated by an award of damages in the event of
    no explicit provisions in the contract concerning the liquidated damages. Traditionally the courts
    used the 'reciprocal risk test' in which the courts construes an implicit agreement between the
    parties i.e the guilty party implicitly undertakes to be liable for an usual loss arising from a breach
    from him while the innocent party is contruesd to undertake that he will not hold the guilty party
    to any unusual loss arising from the breach of contract while trying to place the innocent party in
    the position he would have been if the breach had not occurred.
    However this was changed in the case of Hadley v. Baxendale (1848)1 Ex. 341 where in the
    famous judgement of Alderson B. He Stated that " damages...Should be such as may fairly and
    reasonably be considered either arising naturally ie according to the usual course of things
    from the 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 probable result of the
    breach of it." The was expansiated in the case of Victoria laundry v.Newman industries (1949) 2
    K.B 528 where Asquith L.J stated that the rule in the Hadley's case was to remove the harshness
    of the traditional position of trying to place the innocent party to the position he would have been
    if the breach didn't occur. He divided the rule into two. The first, is that damages would be award
    to an innocent party for losses sustained arising naturally from the usual course of things due to
    the breach of contract. The second rule, that in cases of special circumstances or consequences
    which arise from the breach of contract, the guilty party would only be liable if as at the time of
    contracting he possessed a knowledge of an exiting or likely to exist event which would lead to
    the special circumstances or consequence in case of a breach on his part. This knowledge can
    either be actual or imputed.
    The second rule was futher interpreted in the case of Koufos v. C. Czarnikow Ltd ( the Haron
    ll) where it was held that in the absence of a pre-existing knowledge of the special circumstances
    or consequences, the defendant would still be liable if it can proven that in the great multitude of
    cases with similar material facts such special consequences would or likely to arise by breach of
    the contract.

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