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Legal Aspects of Business

AWARD OF DAMAGES
Group 4
Section B

BREACH OF CONTRACT

TERMINATION CLAUSE
IS NOT PRESENT

CONDITION

WARRANTY

RIGHT TO
TERMINATE

NO RIGHT TO
TERMINATE

RIGHT TO CLAIM
DAMAGES

MODES OF REMEDY
Specific
Performance

Actual carrying out of


the contract as agreed
Awarded in the case of
immovable properties

Monetary
Compensatio
n

The monetary value


corresponding to the
breach of contract
Eg: Loss of profit,
incurred expenditures

CONSEQUENTIAL DAMAGE &


INDIRECT LOSSES
Taxi not on
time

Flight Missed

Conferences
Missed

BREACH IN CONTRACT

ACCORDING TO
CONTRACT IF
MENTIONED

COURT IMPLIES FROM


EXPLORING PRACTICES

In case of only direct losses, no


further investigation is done by
the court

MEASURES OF DAMAGES
MEASURES OF
DAMAGES

LOSS OF PROFIT

AS IF
CONTRACT
NOT
BREACHED

EXPENDITURE OF
WASTED RESOURCES

AS IF
CONTRACT
NOT MADE

LIQUIDATED DAMAGES
Contract provides monetary value of for the damages
In case of breach, issue can be settled on terms of contract rather than
contesting in court

Eg : Liquidated damages as per contract = 3 lakh


Actual Damage = 2 lakh (< 3
lakh)

Actual Damage = 4 lakh (> 3


lakh)

Injured party claims 3 lakh


Court assess the damage to be 2
lakh
Damages to be paid = 2 lakh
Penalty = 1 lakh

Injured party claims 4 lakh


Court orders payment of 3 lakh

NON PECUNIARY LOSSES


Initially, as per contract
law, no damages to be
awarded for mental
agony, pain and
suffering

Now, awarding damages in case of contracts


whose very purpose is to provide comfort,
peace of mind, joy physical convenience,
protection, safety or entertainment
e.g. contracts for holiday

CASE 1: RUXLEY CONSTRUCTION LTD


V/S FORSYTH
Contract Requirement: Pools depth should be
76
Actual Execution: Pools depth was 69
Damages Awarded
TRIAL
COURT
2500
(loss of
amenity)

COURT OF
APPEAL
21560
(cost of cure)

HOUSE OF
LORDS
??

IN THE HOUSE OF LORDS


Punishing the violator v/s Recompensing the affected party
Failure to achieve precise objective v/s Total Failure
Damages awarded based on end-use?
Reasonableness of correcting the flaw?
APPROPRIATE MEASURE
OF DAMAGES?

Difference in
Commercial
Value

Difference in
Convenience
or Amenity

JUDGEMENT
Difference in commercial value is zero
Only loss is the loss of amenity to Forsyth
Decision of Trial Court restored: 2500 awarded as
damages
TRIAL
COURT
2500
(loss of
amenity)

COURT OF
APPEAL
21560
(cost of cure)

HOUSE OF
LORDS
2500
(loss of
amenity)

CASE 2: FARLEY v/s SKINNER


CASE FACTS
Farley wanted to buy a country
residence
Crucial Reason: Needed Peace and
Tranquillity
Interested in a property in Sussex; 15 miles from
Airport
Concerns: Property should be noise
free
Farley
engaged
a
surveyor,
Skinner to
specifically investigate aircraft
noise
Skinner forgot to take noise into
consideration and gave assurance for the
property
Farley experienced noise and went to
court

CASE 2 : COURT JUDGEMENT


Should he be awarded damages for the discomfort faced?
Non Pecuniary Losses
General principle of contract law
Exception

Grounds for award in favour of

THANKS

Any Questions?