Chapter 11 Multiple Choice Questions

. Contractual damages aim to put the claimant in the position he would have been had the contract been ……….

. George pays £10,000 for a car that would have been worth £12,000 on the open market if it had been in accordance with the contractual specification. He finds, however, that the electric windows and other bonus extras he had bargained for fail to work and that the car is only worth £9,000. Which of the following are true? Please select all that apply.

Georges' reliance loss is £12,000.

George's reliance loss is £1,000.

George's expectation loss is £3,000.

George's expectation loss is £2,000.

. Match the scenario to the measure of damages claimed.

David, an MP, claims the profits Frank has made by selling David's memoirs in breach of a confidentiality agreement.

.

Mega Bank plc claims the profit it would have made on a swap contract if Mini Bank Ltd had not withdrawn the funds it had promised to deposit with Mega Bank plc.

.

Carlo claims the wasted cost of his pre-flight airport hotel room from EZfly after it cancels, at the last minute, Carlo's early-morning flight, in breach of contract.

.

Mark claims the cost of knocking down and rebuilding a garden wall that was built 10cm out of line.

. Thomas contracts for a bicycle measuring exactly 33 inches from the top of the saddle to the pedal; this is Thomas' inside leg measurement and he is keen to have a bicycle that 'fits like a glove' (as he endlessly tells his friends). Dave builds a superb cycle that is actually worth £1,500 on the open market, but Thomas sues for damages because it is half an inch short and does not feel as good as Thomas expected. The contract price was £1,500 and it would cost £2,000 to have the bicycle enlarged.

Thomas cannot recover any damages because he has suffered no loss, because the breach of contract has caused no diminution in value.

Thomas can probably recover the £2,000 it would cost to put him in the position he would have been had the contract been performed.

Thomas relied on Dave not to breach the contract, and has wasted £1,500 because the bicycle did not match the contractual specifications.

Thomas can recover a figure rather less than the £2,000 it would cost to enlarge the bicycle, to reflect the fact that the bicycle does not feel as good as expected, but he is unlikely to receive the full £2,000.

. The remoteness rule stipulates that a claimant claiming damages for breach of contract can recover:

all damages that flow from the defendant's breach.

all damages that arise naturally (i.e. foreseeable as a serious possibility) or ought reasonably to have been in the contemplation of the parties at the time of contracting.

all potential losses that were communicated to the defendant at the time of contracting, but nothing else.

all damages that could be foreseen as a possible consequence of a breach of contract at the time of contracting.

. The rule that the claimant must take reasonable steps to put himself in as good a position as though the contract had been performed is known as the duty to ……….

. A term of a contract that provides for a liquidated sum to be paid upon breach of contract, which is not a reasonable estimate of the innocent party's loss, is likely to be found to be a……….. clause.

. In Alder v Moore (1961), the court interpreted the professional footballer's declaration that he would not play professional football again and promise that he would repay the £500 insurance money if he did as a conditional promise, rather than as a penalty clause.

True

False

. Damages are only available for non-pecuniary losses when the sole purpose of the contract is enjoyment.

True

False

. A clause which specifies for delay a rate of damages much lower than the losses likely to be caused by the delay is neither a penalty nor a liquidated damages clause but is in reality a limitation clause.

True

False

. A forfeiture clause:

stipulates that a party in breach of contract loses a deposit paid in advance.

means that the innocent party forfeits his right to claim damages against the party in breach.

states that a party in breach forfeits the right to insist that the other party mitigates his losses.

provides that a party in breach forfeits his right to rely on the remoteness rule to limit the amount of damages payable.

. Which of the following limit the amount of damages available to a claimant? Please select all that apply.

The remoteness rule.

The duty to mitigate.

Liquidated damages clauses.

Exemplary damages.

. Dodgy Builders plc installed defective wiring in Bob's factory, in breach of its contract with Bob. The losses to Bob were £50,000 but he has since saved £10,000 in cheaper electricity bills by installing more efficient wiring than that specified in the contract with Dodgy Builders. The £10,000 saved is deductible from the damages payable by Dodgy Builders.

True

False

. The ……… Act 1945 has the effect that contractual damages may be reduced for contributory negligence when there has been a beach of an obligation to take reasonable care and there would be independent liability in tort.

. Damages may be reduced or eliminated by reason of the claimant's negligence in which of the following situations? Please select all that apply.

The defendant breached a strict contractual obligation, but the claimant's negligence was the main cause of the loss suffered.

The defendant breached a strict contractual obligation, but the claimant's negligence partly caused the loss suffered.

The defendant breached a contractual obligation to take care, but not a tortious duty to take care, and the claimant's negligence partly caused the loss suffered.

The defendant breached a contractual obligation to take care, and a tortious duty to take care, but the claimant's negligence partly caused the loss suffered.

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