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Chapter 2

Damages

Damages are a common law remedy. They are the main remedy for
breach of contract. If a contract has been breached they are available
as a right. They are intended to put both parties in the position they
would have been in had the contract been properly performed.

If there is no provision in the contract for damages the court will
determine the damages payable on the basis of the principles below.
Such damages are known as UNLIQUIDATED DAMAGES.

Remoteness

The basic rule is that damages are awarded to compensate the injured party for loss
arising from the breach.

The first issue is ‘remoteness’ of damage since it may not be justifiable to blame the
party at fault for all of the consequences of their actions. Damages will only be
rewarded for losses which are not too remote.

Illustration 25 – Damages

HADLEY v BAXENDALE 1854

Facts:

C owned a mill. One of the mill parts had broken and C made a contract with D
for the transport of the old part to London as a pattern for making a replacement.
D was responsible for a delay in delivering the part and as a result the mill was
closed for a longer duration than would have been necessary if there had been
no delay. C claimed for loss of profits during the period of delay.

Held:

D did not know that the mill was inoperable without the part and whilst he was
directly responsible for the delay itself, that stoppage was not a natural
consequence of delay in transportation. C could have had a spare part and did
not alert D to the fact that the mill would be inoperable until the new part was
made. Accordingly, D was not liable for the loss of profit.

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