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damages
A likely consequence of a breach of contract is a claim for damages from
the injured party. This article aims to illustrate how the law of damages
¤ alteration of the swimming alterations were completed within late completion of the
pool to include a five-metre a fortnight. After checking with construction work.
deep end and diving platform John that the pool was fit for 2 A claim for £200,000 for the
¤ construction of a 12-lane use Carlos threw himself off loss of the appearance bonus.
ten‑pin bowling alley the diving board in trademark 3 A claim for £1m for the mental
¤ construction of a fashion only to suffer severe anguish suffered by Carlos as a
60‑seat cinema. head and facial injuries when he result of missing the Cup Final.
hit his head on the bottom of 4 A claim of £12,000 to
During discussions between the pool. It transpired that JWB rectify the depth of the
himself and John, the owner had not deepened the pool from swimming pool.
of JWB, Carlos enthused about its original depth of two metres 5 A claim of £100,000
the proposed diving pool when fitting the diving board, as for the loss of the photo
pointing out that it would help agreed in the contract. shoot contract with
improve his already renowned Unfortunately Carlos was Goodbye magazine.
‘diving technique’. unable to play in the Cup Final
the following day due to his
injuries and was advised by his
doctor that he would also miss
the remaining fixtures, leaving
him stranded on 49 appearances
for the season.
student accountant issue 02/2010
02
after constructing your diagram, transpose the relevant areas of law from
it into your answer. Remember, in the Paper F4 exam you must write in proper
English sentences, so you should not use the bullet points and notes
The question Applying legal knowledge – how to ¤ unliquidated damages are
Advise JWB as to their liabilities answer a question court determined and the
in respect of the claims Having seen above how to learn injured party may sue for
by Carlos. legal facts you now need to apply either:
these to questions in the exam. – losses putting them
How to answer this question To do this we’ll work through our where they expected to be
In order to answer questions in scenario using the ‘ISAC’ (issue, ‘Expectation interest’
a Paper F4 exam you will need state, apply, conclusion) approach. – losses as a result of relying
two things: on the other party ‘Reliance
¤ a knowledge of the law State the issue – state the area interest’ (Anglia TV v Reed)
¤ an ability to apply the law. of law that is at issue to provide (1972)
the context of your answer. ¤ damages must not be too
Each of these will be The issue here is whether remote (Hadley v Baxendale)
illustrated below. or not John is liable to pay (1854):
the damages being claimed – arise as a natural
Learning legal knowledge by Carlos. consequence of the breach
A good way of learning legal or else
principles is to construct State the law – now transpose – be in the contemplation
that appear in this illustrative example.
diagrams and mind maps. the relevant areas of law from of both parties when
These should contain all of your diagram into your answer. the contract was formed
the legal facts, principles and Remember, in the Paper F4 (Victoria Laundry v
cases relevant to an area of law. exam you must write in proper Newman Industries) (1949)
Once constructed you should English sentences, so you ¤ normally actual financial losses
then practise recreating these should not use the bullet points are recoverable, however the
diagrams until you can do and notes that appear in this claimant must take ‘reasonable
so accurately. illustrative example. steps’ to mitigate their losses
At this point you should notice A full answer would cover the (Payzu v Saunders) (1919)
that jotting down one word such following points: ¤ non-financial losses may
as ‘damages’ will trigger a lot ¤ damages are an automatic be recovered in certain
of associated words helping you common law right following circumstances including:
recall all of the legal facts and breach of contract – the cost of restitution is too
cases associated with a topic. ¤ damages are compensatory high per Ruxley Electronics
An example of a diagram for in nature v Forsyth (1995)
damages is shown in Figure 1 on ¤ damages may be agreed by the – the contract was for the
page 4. parties in contract (liquidated) provision of enjoyment
– though these will not be (Jarvis v Swan Tours) (1973)
upheld if they are penalty
clauses designed to discourage For each relevant point of law/
either party breaching Dunlop v case you include in your answer
New Garage (1915) you will be awarded one mark.
03 technical
knowledge to the issues in the scenario, restating the facts in legal terms.
Apply the law – apply your legal 3 Claim for £1m – damages are Final words
knowledge to the issues in the when answering the question, Apply the law – apply your legal generally awarded for actual At the end of this article
scenario, restating the facts in financial losses only. A claim you should be able to do
legal terms. This stage will lead for mental distress will not the following:
you towards your conclusions. be upheld as it does not fit 1 Understand how to
1 Claim for £5,000 – this is an the exceptions outlined in the structure your revision and
example of liquidated damages Ruxley and Jarvis cases. learning through the use of
and will only be upheld if they 4 Claim for £12,000 – this diagrammatic techniques.
are a genuine pre-estimate of amount will be upheld if it These should improve your
This stage will lead you towards your conclusions.
Damages
maps. These should contain all of the legal facts, principles and cases
Liquidated
Unliquidated
Dunlop v New Garage
– court determined
– not penalty clauses
recreating these diagrams until you can do so accurately.
Reliance interest
Expectation interest
Anglia TV v Reed
Remoteness
Hadley v Baxendale
First rule + second rule
Victoria Laundry v Newman
Industries
Measure of damage