Remoteness of Damages in Contract Law
Added on 2023-04-19
12 Pages3360 Words258 Views
|
|
|
Running Head: BUSINESS AND CORPORATION LAW 0
Contract Law
2/18/2019
Student’s Name
Contract Law
2/18/2019
Student’s Name
Contract Law
1
Contents
Introduction......................................................................................................................................2
Remoteness of Damages..................................................................................................................2
Victoria Laundry Windsor v Newman Industries 3
Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd 4
The conflict between the decisions of these two cases....................................................................5
Test of Remoteness of damages and common law rule...................................................................5
Conclusion.......................................................................................................................................9
Bibliography..................................................................................................................................10
Books/Journals 10
Cases 10
Other Sources 11
1
Contents
Introduction......................................................................................................................................2
Remoteness of Damages..................................................................................................................2
Victoria Laundry Windsor v Newman Industries 3
Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd 4
The conflict between the decisions of these two cases....................................................................5
Test of Remoteness of damages and common law rule...................................................................5
Conclusion.......................................................................................................................................9
Bibliography..................................................................................................................................10
Books/Journals 10
Cases 10
Other Sources 11
Contract Law
2
Introduction
Under a contract, both the parties have to perform their obligation. The issue in a case of contract
emerges when either party does not fulfill certain obligations. Such a situation is known as a
breach of contract1. In the case of such breaches, parties have to pay some obligations such as the
performance of contract or payment of compensation2. While determining the quantum of
damages/compensation, the court sees the remoteness of damages3. It means while determining
the damages, court checks that whether the loss occurred is a direct result of a subjective breach
or not. Many of the cases happened there where the loss was too remote and could not be treated
as a direct result of the breach. However, different judges gave different decisions in such cases.
These different decisions of cases create confusion. Certain tests are there under the law, which
proves the causation and known as tests of causation. In the report presented hereby, the focus
will be made on two of the leading cases related to the remoteness of damages, the decision of
that creates largely an issue and such issue is still unresolved. In addition to the discussion of
these cases, some other cases, which have provided the common law rules on the topic of
remoteness, will also be discussed.
Remoteness of Damages
Before moving ahead towards the discussion on a test of causation, first, it is necessary to
understand the meaning of remoteness and causation and the reason because of which study of
the same is important. For a successful claim of damages, the loss should not be remote. In other
words to say a person can only ask for the damages in those cases where the loss is a direct result
1 Richard Stone, Q&A Contract Law (Routledge 2014).
2 Ewan McKendrick, Contract Law: Text, Cases and Materials (OUP 2016).
3 John A Trenor, Guide to Damages in International Arbitration (Law Business Research Ltd. 2018).
2
Introduction
Under a contract, both the parties have to perform their obligation. The issue in a case of contract
emerges when either party does not fulfill certain obligations. Such a situation is known as a
breach of contract1. In the case of such breaches, parties have to pay some obligations such as the
performance of contract or payment of compensation2. While determining the quantum of
damages/compensation, the court sees the remoteness of damages3. It means while determining
the damages, court checks that whether the loss occurred is a direct result of a subjective breach
or not. Many of the cases happened there where the loss was too remote and could not be treated
as a direct result of the breach. However, different judges gave different decisions in such cases.
These different decisions of cases create confusion. Certain tests are there under the law, which
proves the causation and known as tests of causation. In the report presented hereby, the focus
will be made on two of the leading cases related to the remoteness of damages, the decision of
that creates largely an issue and such issue is still unresolved. In addition to the discussion of
these cases, some other cases, which have provided the common law rules on the topic of
remoteness, will also be discussed.
Remoteness of Damages
Before moving ahead towards the discussion on a test of causation, first, it is necessary to
understand the meaning of remoteness and causation and the reason because of which study of
the same is important. For a successful claim of damages, the loss should not be remote. In other
words to say a person can only ask for the damages in those cases where the loss is a direct result
1 Richard Stone, Q&A Contract Law (Routledge 2014).
2 Ewan McKendrick, Contract Law: Text, Cases and Materials (OUP 2016).
3 John A Trenor, Guide to Damages in International Arbitration (Law Business Research Ltd. 2018).
Contract Law
3
of the breach of contract. This rule named as causation4. The factor is essential and required to be
reviewed to determine the damages in a case. Under the contract law, there is a difference
between legal causation and factual causation. Here this is to state that if losses are too remote,
then damages cannot be awarded for the same irrespective of the factual relationship between
loss and breach of contract5.
Victoria Laundry Windsor v Newman Industries6
This is a case of contract law, where the parties of the contract were two companies namely
Victoria Laundry (Windsor) Ltd. and Newman Industries Ltd. Here according to the contract
developed between these two parties, the later one was required to deliver a boiler to the prior
one, but the delivery was delayed by five months. Because of the late delivery of boiler, Victoria
laundry lost a significant contract, as the same did not have enough laundry capacity. The
company sued the defaulting company for ordinary losses. Nevertheless, the question was
whether the same could sue the other party for the extraordinary loss, which was the loss of a
new contract. It was held in the court of appeal that the company could not ask the damages for
the loss of a new contract as the defendant (Newman Industries Ltd).
In the reasoning of the decision of the case, it was provided that the defendant did not have
knowledge of such a contract. Asquith LJ stated that;-
The lead objective of damages is to put the claimant in such a situation where the same
would be if another party would have fulfilled the obligation7.
4 Vanessa M. Morgan, Contract Law Made Simple (AuthorHouse 2015).
5 Uk.practicallaw.thomsonreuters.com, ‘Remoteness’ <https://uk.practicallaw.thomsonreuters.com/4-107 7138?
transitionType=Default&contextData=(sc.Default)> accessed 21 February 2019
6 Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528
7 Swarb.co.uk. 2017 Victoria Laundry (Windsor) Ltd V Newman Industries: Ca 1949. https://swarb.co.uk/victoria-
laundry-windsor-ltd-v-newman-industries-ca-1949/ accessed 21 February 2019
3
of the breach of contract. This rule named as causation4. The factor is essential and required to be
reviewed to determine the damages in a case. Under the contract law, there is a difference
between legal causation and factual causation. Here this is to state that if losses are too remote,
then damages cannot be awarded for the same irrespective of the factual relationship between
loss and breach of contract5.
Victoria Laundry Windsor v Newman Industries6
This is a case of contract law, where the parties of the contract were two companies namely
Victoria Laundry (Windsor) Ltd. and Newman Industries Ltd. Here according to the contract
developed between these two parties, the later one was required to deliver a boiler to the prior
one, but the delivery was delayed by five months. Because of the late delivery of boiler, Victoria
laundry lost a significant contract, as the same did not have enough laundry capacity. The
company sued the defaulting company for ordinary losses. Nevertheless, the question was
whether the same could sue the other party for the extraordinary loss, which was the loss of a
new contract. It was held in the court of appeal that the company could not ask the damages for
the loss of a new contract as the defendant (Newman Industries Ltd).
In the reasoning of the decision of the case, it was provided that the defendant did not have
knowledge of such a contract. Asquith LJ stated that;-
The lead objective of damages is to put the claimant in such a situation where the same
would be if another party would have fulfilled the obligation7.
4 Vanessa M. Morgan, Contract Law Made Simple (AuthorHouse 2015).
5 Uk.practicallaw.thomsonreuters.com, ‘Remoteness’ <https://uk.practicallaw.thomsonreuters.com/4-107 7138?
transitionType=Default&contextData=(sc.Default)> accessed 21 February 2019
6 Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528
7 Swarb.co.uk. 2017 Victoria Laundry (Windsor) Ltd V Newman Industries: Ca 1949. https://swarb.co.uk/victoria-
laundry-windsor-ltd-v-newman-industries-ca-1949/ accessed 21 February 2019
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents