Chapter 23 Self-test questions

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. Fuller & Perdue's seminal article ‘The Reliance Interest in Contract Damages’ changed the way the courts thought about expectation damages and led to a general decline in judges’ willingness to protect the performance interest. True or false?

True correct incorrect

False correct incorrect

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. Two principal methods are used by the courts to fulfil the performance interest. The court may choose to award the claimant ‘diminution in value’ damages or ‘cost of cure’ damages. Which of these methods did the House of Lords use in awarding damages to Mr Forsyth in Ruxley Electronics and Construction Ltd v. Forsyth [1996] AC 344?

The ‘diminution in value’ method correct incorrect

The ‘cost of cure’ method correct incorrect

Neither method correct incorrect

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. In which of the following instances did the judge recognize the fact that parties can and do enter into contracts for reasons other than to make money “where the value of the promise to the promisee exceeds the financial enhancement of his position which full performance will secure” (per Lord Mustill, in Ruxley Electronics and Construction Ltd v. Forsyth [1996] AC 344)? Select all that apply.

Lord Clyde in Alfred McAlpine Construction Ltd v. Panatown Ltd [2001] 1 AC 518 correct incorrect

Lord Hobhouse's dissenting speech in Attorney General v. Blake [2001] 1 AC 268 correct incorrect

Lord Griffiths’ speech in Linden Gardens Trust Ltd. v. Lenesta Sludge Disposals Ltd [1994] 1 AC 85 correct incorrect

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. Which of the following aspects of Alfred McAlpine Construction Ltd v. Panatown Ltd [2001] 1 AC 518 made it unnecessary for the judges to express a concluded opinion on the precise scope of Panatown's entitlement to damages in respect of its own loss?

Panatown was not the owner of the property subject to the contract correct incorrect

Panatown's agreement with UIPL had not entailed any loss to it financially correct incorrect

The breaches by McAlpine did not create any liability as between Panatown and UIPL correct incorrect

The existence of the duty of care deed between UIPL and McAlpine correct incorrect

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. From the speeches in Ruxley Electronics and Construction Ltd v. Forsyth [1996] AC 344 and in Alfred McAlpine Construction Ltd v. Panatown Ltd [2001] 1 AC 518, we know that a claimant does not have an unfettered right to claim ‘cost of cure’ damages. Two limits have been explicitly imposed. What are they?

A ‘cost of cure’ award can only be made where the ‘diminution in value’ damages are nil correct incorrect

A ‘cost of cure’ award will not be made where it would be unreasonable to make such an award because it would cause unnecessary hardship to the defendant correct incorrect

A ‘cost of cure’ award will not be made where the court is not convinced that the cure will bring any benefit to the claimant correct incorrect

A ‘cost of cure’ award will not generally be made where the court is not satisfied that the claimant will use the money to obtain the cure correct incorrect

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. In principle claimants have the right to choose whether to bring a claim for damages to cover the reliance interest or damages to cover the performance interest. Generally speaking however it will be preferable for them to opt for performance interest damages. Why is this so?

A reliance loss claim will generally not allow recovery for pre-contract expenditure correct incorrect

A reliance loss claim will generally not include a claim for loss of profit correct incorrect

A reliance loss claim will generally be more difficult to prove correct incorrect

A reliance loss claim is strictly confined to tort law and will not be accepted in a contract case correct incorrect

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. Prior to Farley v. Skinner [2001] UKHL 49, the leading case on the issue of damages for physical inconvenience or ‘mental distress’ was Watts v. Morrow [1991] 1 WLR 1421. In the latter case, it was held that damages could be recovered for non-pecuniary loss in two situations. What was the most important change effected by the decision in Farley v. Skinner [2001] UKHL 49 in terms of the cases that would follow?

The extension of the first category of non-pecuniary loss set out in Watts v. Morrow to encompass the breach of an important term intended to bring “pleasure, relaxation or peace of mind” correct incorrect

The size of the award made in damages for non-pecuniary loss correct incorrect

The extension of the second category of non-pecuniary loss set out in Watts v. Morrow to cover all ‘inconvenience’ the cause of which is “sensory” correct incorrect

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. Which case poses an obvious difficulty for Lord Scott's division of the case law into two distinct groups in Farley v. Skinner [2001] UKHL 49?

Ruxley Electronics and Construction Ltd v. Forsyth [1996] AC 344 correct incorrect

Hobbs v. London and South Western Railway Co (1875) LR 10 QB 111 correct incorrect

Watts v. Morrow [1991] 1 WLR 1421 correct incorrect

None of the options given are correct correct incorrect

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. In terms of the courts’ application of Hadley v. Baxendale (1854) 9 Exch 341 to limit the liability of the party in breach, are there strictly two rules or is there only one?

There are clearly two rules in Hadley v. Baxendale (1854) 9 Exch 341 correct incorrect

There is clearly only one rule in Hadley v. Baxendale (1854) 9 Exch 341 correct incorrect

It depends on the context correct incorrect

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. In Parsons (Livestock) Ltd v. Uttley Ingham & Co Ltd [1978] QB 791, Lord Denning MR suggested that the test of remoteness should not depend on whether the claim was brought in contract or tort, since this essentially involved “swim[ming] in a sea of semantic exercises”. Instead he drew a distinction between certain types of losses flowing from breach of contract and proposed that the test of remoteness should differ depending on the type of loss under consideration. Which classes of case did he distinguish? Select all that apply.

Non-pecuniary loss consequent on breach of contract correct incorrect

Physical damage consequent on breach of contract correct incorrect

Economic loss consequent on breach of contract correct incorrect

Exceptional loss consequent on breach of contract correct incorrect

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. In which of the following types of claim for damages for breach of contract is a contributory negligence defence currently available?

The defendant has breached the contract in a way which would have given rise to a claim in tort absent the contract correct incorrect

The defendant has breached a strict liability clause of the contract correct incorrect

The defendant has breached a clause containing an express contractual obligation to exercise care correct incorrect

Contributory negligence is never available as a defence to a claim for breach of contract correct incorrect

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. What is the name given to damages calculated on the basis of a clause of the contract quantifying the amount due on breach?

Liquidated damages correct incorrect

Unliquidated damages correct incorrect

Restitutionary damages correct incorrect

Penalty damages correct incorrect