Chapter 27 Self-test questions

. Which of the options given best encapsulates the aim of compensatory damages?

Damages should put the injured party in a better position than they would have been in had the contract been performed.

Damages should put the injured party in the same position as they would have been in had the contract been performed.

Damages should reverse any gains obtained by the breaching party and transfer them back to the injured party.

Damages should put the injured party in the same position as they had been in prior to concluding the contract.

. When might a seller in a sale of goods contract be entitled to substantial damages where the buyer refuses to accept and pay for the goods?

Where the market price is lower than the contract price.

Where the market price is the same as the contract price.

Where the market price is higher than the contract price.

Where there is a market for the goods.

. 'Damages should represent the value of the contractual benefits of which the claimant has been deprived by the breach of contract, no less but also no more.' True or false?

True.

False.

. What type(s) of causation must be proven for a claimant to recover damages from the defendant in breach of contract?

Factual causation.

Legal causation.

Both of the options given are correct.

None of the options given is correct.

. How must the injured party take steps to reduce their loss?

They must ensure that they do not make any loss.

They must act reasonably to reduce their loss.

They must act in good faith to reduce their loss.

They do not need to act in a particular way.

. When might a contract-breaker be liable for losses caused by a new intervening act?

Always.

Never.

Where they deserve punitive damages.

Where they had undertaken to prevent the act from occurring.

. Which of the statements given best describes the traditional remoteness rule in contract law?

Damages are limited to losses which arise naturally from the breach of contract, or as may reasonably have been in the contemplation of the parties, at the time of breach, as the probable result of breach of contract.

Damages are limited to losses which arise naturally from the breach of contract, or as may reasonably have been in the contemplation of the parties, at the time of judgment, as the probable result of breach of contract.

Damages are limited to losses which arise naturally from the breach of contract, or as may reasonably have been in the contemplation of the parties, at the time the contract was made, as the probable result of breach of contract.

Damages are not limited to losses which arise naturally from the breach of contract.

. Why did Lord Hodge rely exclusively on Hadley v Baxendale rather than The Achilleas in deciding Attorney General of the Virgin Islands v Global Water Associates Ltd?

He believed that The Achilleas is wrongly decided.

Hadley v Baxendale is the best authority to apply in all cases.

He was bound by authority.

He did not think that The Achilleas applied on the facts.

. When will contributory negligence be a defence to breach of contract?

In all cases where B acted with fault.

Where B is in breach of a strict contractual duty.

Where B is in breach of a contractual duty of care.

Where B is in breach of a contractual duty of care and would also be liable in the tort of negligence.

. Where a claimant is at fault and responsible for some of the loss suffered, how will damages be reduced?

Not at all.

There will be a 100% reduction in damages.

There will be a 50% reduction in damages, reflecting their being one of two parties at fault.

According to the claimant's share in the responsibility.

. How might the law of contributory negligence be reformed to be consistent?

Allow contributory negligence to be a defence to all claims in breach of contract.

Abolish contributory negligence from the law of contract entirely.

Both of the options given are correct.

None of the options given is correct.

. Generally, when are damages assessed?

At the date at which the contract is concluded.

At the date of claim.

At the date of judgment.

None of the options given is correct.

. Might a party who terminates their contract, expecting a certain amount of damages, recover less than their expectation interest calculated at that point in time?

No, they will always receive their expectation interest.

No, but they may be awarded more than their expectation interest.

Yes, if subsequent events mean that they would not have recovered as much had the contract remained alive.

The expectation interest can always be departed from.

. If the purpose of a contract is to provide pleasure, and because of a breach it fails to do so, what type(s) of damages may be available?

Damages for economic loss.

Damages for disappointment.

Damages for injured feelings.

All of the options given are correct.

. What was the effect of Farley v Skinner regarding recovery for non-economic loss?

Farley allowed recovery for non-economic loss in all cases.

Farley allowed recovery of non-economic loss if a major part of the contract is to give pleasure.

Farley limited recovery for non-economic loss to tort claims only.

Farley rejected recovery for non-economic loss in all cases.

. Which of the statements given best encapsulates the approach of the courts to 'cost of cure' damages?

The cost of cure measure will always be available.

The courts are more willing to award cost of cure damages than they are 'difference in value' damages.

The courts are less willing to award cost of cure damages than they are 'difference in value' damages.

The cost of cure will never allow claimants to recover the full cost of cure.

. In which of the following cases were the actual intentions of the party to cure their breach not taken into account?

Tito v Waddell (No 2)

Radford v De Froberville

Ruxley v Forsyth

The courts in all of the cases given disregarded the actual intentions of the parties.

. What is meant by 'negotiating damages'?

The parties can dispute the measure of damages initially awarded by the court.

The defendant may have to pay the claimant the sum they would have had to pay had they bargained for the right not to perform their contract immediately prior to breach.

If the parties have negotiated a measure of damages in their contract, that is the measure which will be paid in the event of breach.

In the event of particular types of breach of contract, the defendant will be liable for a penal measure of damages, to punish them for their breach.

. What was the effect of Morris-Garner v One Step (Support) Ltd on negotiating damages?

It confirmed that the damages can be awarded, and clarified that they are compensatory in nature.

It confirmed that the damages can be awarded, and clarified that they are restitutionary in nature.

It confirmed that the damages can be awarded, and clarified that they are penal in nature.

It rejected that the damages may be awarded.

. In quantifying a hypothetical bargain for negotiating damages, what must the court take into account?

The claimant's loss only.

The defendant's gain only/

Both the claimant's loss and the defendant's gain.

Only financial loss.

. Why was the claimant able to recover substantial damages in Chaplin v Hicks?

The defendant had promised her that she would have won the competition had she been interviewed.

The defendant breached its contract, and all breaches of contract entitle the claimant to substantial awards of damages.

The defendant breached its contract, and this deprived the claimant of the opportunity to enter—and possibly win—the competition.

The defendant caused significant non-pecuniary loss to the claimant.

. In which circumstance will loss of a chance damages more readily be awarded?

Where the loss of a chance arises because of the conduct of a third party.

Where the loss of a chance arises because of the claimant's own conduct.

Where the loss of a chance arises because of a frustrating event.

Where the claimant does not know of the opportunity to enter the contract.

. When assessing the value of compensation, how do courts generally assess damages?

On the basis that the contract-breaker would have performed their obligations in the most advantageous manner to the other party.

On the basis that the contract-breaker would have performed their obligations in a manner most advantageous to themselves.

On the basis that the contract-breaker would never have performed their obligations as required in the contract.

On the basis that the contract-breaker would have performed their obligations exactly as required in the contract.

. May a claimant recover both 'reliance' and 'expectation' damages?

Yes.

No.

. In Anglia Television v Reed, the court held that damages may be recovered for certain costs incurred before the contract was made. Which one of the options given was not mentioned in this list?

Legal costs of approving and executing the contract.

Costs of performing an act required to be done by the contract, albeit in anticipation of that contract.

Costs as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken.

Finders fees, in searching for a counterparty.

. If the view is taken that damages are awarded to vindicate the claimant's right that has been infringed, how can we describe the effect of these damages?

Damages are awarded to compensate the claimant for consequential loss.

Damages are awarded to substitute for the right of performance of which the claimant has been deprived.

Damages are awarded to penalise the breaching party for their wrongful act.

Damages are awarded as an institutional recognition of the unhappiness suffered by the claimant.

. Why should caution be taken before adopting the language of 'substitutive damages'?

It has not been used by the courts.

Valuing substitutionary damages is more difficult than compensatory damages.

Both options given are correct.

Neither option is correct.

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