Chen-Wishart: Contract Law 2e 
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Diagrams from the textbookChen-Wishart: Contract Law 2e
Chapter 14
1. To what extent, if any, is there room to award reliance damages, punitive damages, restitution, or account of profits for breach of contract?
See 14.2.1, 14.3 – 14.5.
This question invites you to consider the availability, and circumstances in which courts will award, damages measured other than by reference to the claimant's expectation. The issues you need to address include:
What are punitive damages? How would it be measured (compare with expectation)? When, if ever, is it available (note the possible ramifications of Kuddus v. Chief Constable of Leicestershire Constabulary (2001))?
What are reliance damages? How would it be measured (compare with expectation)? When, if ever, is it available (note the issue of 'circumventing bad bargains')?
What are restitutionary damages? How would it be measured (compare with expectation)? When, if ever, is it available (again, note the issue of 'circumventing bad bargains')?
What is an account of profits? How would it be measured (compare with expectation)? When, if ever, is it available (note Attorney-General v. Blake (2001))?
What is the justification for these exceptional measures of damages for breach of contract?
To what extent do they derogate from the protection of an innocent party's performance interest (consider the extent to which the expectation damages itself may derogate from the protection of an innocent party's performance interest)?
2. 'Monetary awards for breach of contract should do no more, and no less, than compensate the innocent party for his loss.' To what extent is this true? To what extent should it be true?
See 14.2.
This is essentially a re-run of question 1 with the focus on the derogation from the protection of the performance interest. What constitutes compensatable 'loss' under the expectation measure (see notes to question 3)?
3. What counts as 'loss' in the context of damages for breach of contract?
See 14.2.
The overriding question is the extent to which the law protects an innocent party's performance interest:
In so far as the 'normal' measure of damages for breach of contract is the claimant's loss of expectation, what 'losses' are counted and what are excluded? A useful division can be made between the courts' approach to physical and pecuniary loss on the one hand, and non-pecuniary loss on the other (see 14.2.4).
In the light of Panatown does loss of performance itself ever count if there is no pecuniary loss (here a useful distinction can be made between loss of performance itself and loss of what the performance was for)?
How do rules such as mitigation and remoteness (others?) affect the scope of recoverable loss?
What do the answers to these sub-questions tell us about the extent to which the law protects an innocent party's performance interest?
4. 'Contract law recognizes non-pecuniary loss reluctantly and only within narrow confines.' Discuss
See 14.2.4.
There is clearly an overlap here with question 3. The issues you should consider include:
Why is contract law reticent about recognizing non-pecuniary loss?
What is the general rule? What are the exceptions to the rule? What is the scope of the exceptions?
What is the significance of Ruxley v. Forsyth (1996) and McAlpine v. Panatown (2001)?
How rules such as that on causation and remoteness apply?
Is the current law satisfactory? Why or why not? Can you outline any desirable reforms?
5. 'In theory, the award of damages for breach of contract puts the claimant in the position he would have been in had the contract been performed. The reality falls far short of this.' Discuss.
See 14.2.
There is significant overlap between this question and question 3. The sub-issues to be considered include:
Why this overall aim is not achieved simply by treating specific performance (see 15.2) as the primary remedy for breach of contract?
When is the cost of cure (i.e. monetary specific performance) awarded?
When is the cost of cure denied? In such cases, what is the measure of damages? What is their justification? To what extent do such alternative measures fail to put "the claimant in the position he would have been in had the contract been performed"?
What is the courts' approach where the purpose of the performance lost is non-pecuniary?
How should we understand the cases of Ruxley v. Forsyth (1996) and McAlpine v. Panatown (2001)?
How do rules such as mitigation and remoteness (others?) affect the scope of recoverable loss? Are they justifiable?
What can be concluded about the accuracy of the statement in the question? About the extent to which damages protects the claimant's performance interest?
6. 'The protection of an innocent party's performance interest is merely one of the considerations that must be taken into account in assessing damages for breach.' To what extent is this true? What other considerations, if any, affect the amount of damages awarded?
See chapter 14.
This covers broadly the same ground as question 5, but with the emphasis on policy considerations discernible from the rules.
What rules detract from the protection of an innocent party's performance interest (see notes to question 5)?
What policies do they manifest (what is their justification? e.g. minimization of waste, prevention of harshness to the contract breaker)?
What can you conclude about the considerations, if any, which qualify (weaken) the law's protection of an innocent party's performance interest in contract? Is any reform desirable?
7. Ken employed Lou to install a new kitchen and add an extension to the living room: he paid Lou £30,000 on completion. Advise Ken on the following facts:
(a) Ken is very annoyed to find that the plasterwork in the extension has been painted a slightly different shade from that stipulated. Ken has rejected Lou's offer to redo the plasterwork for an extra £3,000 and hired Milo to redo the plasterwork for £6,000.
Has Lou breached the contract? If so, what damages would Ken seek? What are the arguments for and against Ken's claim? Does Ruxley v. Forsyth apply? Should Ken have accepted Lou's offer to redo the plasterwork?
(b) Completion is delayed, necessitating Ken and his family staying an extra month with Ken's in-laws in very cramped accommodations which caused great discomfort and distress all around. Moreover the delay meant that Ken had to pay £500 for an alternative venue for his friends wedding which he had offered to hold at his house.
Can Ken claim for his and his family's physical discomfort and distress? What about the cost of hiring a wedding venue? Is either loss too remote?
(c) After a few weeks, Lou's faulty wiring in the kitchen caused small sparks which ignited a gas leak that Ken had been meaning to fix for some time. The ensuing fire has caused £15,000 worth of damage to the kitchen.
Can Ken claim £15,000 for the damage to the kitchen? What of Ken's role in the fire?
(d) What difference would it make if Ken has not yet paid?
The question is then, whether Ken would be obliged to pay in circumstances (a) to (c) above. If payment is only due on completion then the entire obligations rule and the substantial completion exception apply. It will be a moot point whether (a) and (b) above would amount to substantial completion; (c) is a stronger case of non-substantial completion, allowing Ken to withhold payment. Spell out the alternative consequences. Would Lou be able to claim restitution for the work done?
8. Bugbusters won a major contract to clean 40 hospitals undertaking to meet 10 specified targets. Bugbusters instructed its workers to meet only six of the targets, saving £30,000 over six months. The hospitals are outraged when they learn of the breach, but it is impossible to prove whether any additional infections have resulted. Advise the hospitals.
There is a clear breach by Bugbusters. What damages can the hospitals claim when no provable loss has resulted? Specifically:
Can the hospitals claim an account of profits? Is this an exceptional case where the hospitals have a special interest in preventing Bugbusters from profiting by its own breach?
Can the hospitals seek punitive damages? Is this a particularly reprehensible breach and requires deterrence?
Can the hospitals seek restitution for partial failure of consideration (see dicta in Attorney-General v. Blake)?
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