11. Damages

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter examines the principles by which contractual damages are assessed. The discussions cover the aim of contractual damages, the difference between damages in contract and in tort; the relationship between the expectation interest and the reliance interest; cost of cure and difference in value; remoteness of damage; foreseeability and assumption of risk; non-pecuniary losses; mitigation; contributory negligence; and penalties, liquidated damages and forfeiture.

Contractual reliance damages

The term ‘reliance interest’ was coined by Fuller and Perdue, whose classic article ‘The Reliance Interest in Contract Damages’ first clarified and explored the different possible objectives of damages for breach of contract. The aim of damages protecting the reliance interest is, according to Fuller and Perdue, ‘… to put the plaintiff in as good a position as he was in before the promise was made’. This can alternatively and preferably be expressed as aiming to put the claimant into as good a position as she would have been in if no contract had been made.

11. Damages

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter examines the principles by which contractual damages are assessed. The discussions cover the aim of contractual damages, the difference between damages in contract and in tort; the relationship between the expectation interest and the reliance interest; cost of cure and difference in value; remoteness of damage; foreseeability and assumption of risk; non-pecuniary losses; mitigation; contributory negligence; and penalties, liquidated damages and forfeiture.

16. Compensatory remedies

This chapter considers compensatory damages, the primary remedy for breach of contract which an affected party can seek in English law. It first examines how the courts assess and award damages based on two approaches: expectation interest and reliance interest. In particular, it looks at the various measures of damages such as the loss of profit measure, the ‘cost of cure’ and ‘difference in value’ measures, loss of amenity and disappointed expectations, and the loss of chance measure. The chapter also discusses the various ways in which compensatory remedies can be limited in law by focusing on the principles of causation, mitigation, and remoteness. Finally, it evaluates the role damages play in contract law and suggests that English law gives the parties a good deal of freedom to design remedies, which parties can use when designing contracts.

11. Damages

Without assuming prior legal knowledge, books in the Directions series introduce and guide readers through key points of law and legal debate. Questions, diagrams and exercises help readers to engage fully with each subject and check their understanding as they progress. This chapter examines the principles by which contractual damages are assessed. The discussions cover the aim of contractual damages, the difference between damages in contract and in tort; the relationship between the expectation interest and the reliance interest; cost of cure and difference in value; remoteness of damage; foreseeability and assumption of risk; non-pecuniary losses; mitigation; contributory negligence; and penalties, liquidated damages and forfeiture.

16. Compensatory remedies

This chapter considers compensatory damages, the primary remedy for breach of contract which an affected party can seek in English law. It first examines how the courts assess and award damages based on two approaches: expectation interest and reliance interest. In particular, it looks at the various measures of damages such as the loss of profit measure, the ‘cost of cure’ and ‘difference in value’ measures, loss of amenity and disappointed expectations, and the loss of chance measure. The chapter also discusses the various ways in which compensatory remedies can be limited in law by focusing on the principles of causation, mitigation, and remoteness. Finally, it evaluates the role damages play in contract law and suggests that English law gives the parties a good deal of freedom to design remedies, which parties can use when designing contracts.