Contract Law- Damages

The Court seeks, for contract law breaches, to award damages to put the Claimant in the position he would have been in, had the contract been performed properly.

Basic situations. This is often the difference in value of the item contracted for and the value of the item received e.g. I agree to buy x items for £y, I get fewer than x... so what does it cost for me to go and buy the missing items?

However, life is more complicated than that ….

Expectation loss: I buy an item of equipment which, when up and running, will make me £x per day profit i.e. can lost profit can be claimed? Yes, if the contract specifically envisages that profit and its level

Performance loss:  i.e. cost of substitute performance. This can cause problems. Remedial costs can be dis-proportionate to the benefit obtained e.g. I contract to build a swimming pool to a certain depth but it is built shallower. Cost of demolishing and rebuilding is astronomical. The pool is perfectly good for diving into safely. The higher cost is not allowed 

Punitive damages: Contract damages are compensatory, not punitive; they will only compensate a loss. They will not protect a bad bargain.

Reliance loss: expenditure wasted in reliance on the contractual promise. This is usually out of pocket expenses but can include the cost of a lost opportunity i.e. loss of profit from the lost opportunity.

Remoteness of damages: Only damages, which were in the contemplation of the parties, are recoverable. Anything, which is too remote, is unlikely to be a consequence of a breach of contract and will not be recovered in damages. Unusual losses will be recoverable, if the other party has notice of them at the time of entering into the contract.

Duty to mitigate: Every claimant has a duty to mitigate his losses. He must take all reasonable steps to reduce their losses  - This does not apply to employment contracts e.g. where employer breaches fixed term contract by dismissing employee half way through term. The Employer must pay for rest of fixed term, even if employee gets another job immediately

Recovery for distress and inconvenience: any award will be minor - a matter of a few hundred pounds - unless peace of mind / enjoyment was the whole object of the contract

Related topics you may find useful:

Contract litigation

Contract - force majeure