Discussing the statement, It is thought that the value of damages for a breach of a duty in tort and a breach of contract should be similar.

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Ian Wright                 BSc (Hons) Quantity Surveying PT3

Damages

In discussing the statement, “It is thought that the value of damages for a breach of a duty in tort and a breach of contract should be similar.”, it would be prudent to look at the obligations of the different parties under the two forms of law, to decide the validity of the statement.  Due to the nature of law and the importance of making correct and reasonable judgements, there are always going to be decisions, rulings and judgements that will not satisfy all parties. In order to justify these decisions, the ruling party has to possess not only a thorough understanding of the law but also the full circumstances surrounding the actions brought by the plaintiff and also knowledge of any relevant cases brought beforehand which may set a binding precedence. It is therefore, bearing these last two points in mind, that no two cases where damages are seeking to be awarded are the same, whether it is under contract law or tort.

Damages are said to be,

A sum of money awarded by a court as compensation for a tort or a breach of contract.”        A Dictionary of Law, Oxford University Press

the effect of which is to compensate the plaintiff in full for their losses (Restitutio in integrum). What affects the principal of damage claims is whether or not the obligations between the defendant and the plaintiff were entered into voluntarily (Contract) or involuntarily (Tort), as this will affect the reasoning behind the award of any damages and possibly the extent of any award.

Under contract law, damages are supposed to compensate the plaintiff by placing them in the same position as though the contract had been performed. This is governed by what is known as the Hadley v Baxendale rule, which stipulates that the innocent party should receive such damages as may

"…fairly and reasonably be considered either arising naturally…from such breach…or such as may be supposed to have been in the contemplation of the parties at the time they made the contract as the probable result of the breach of it." Baron Alderson 1854

In this case Hadley was owner of a mill whose crankshaft had broken thereby stopping production. Hadley employed Baxendale to transport the broken crankshaft to and from the manufacturers for repair. A delay was encountered whilst Baxendale was in receipt of the broken crankshaft, which caused a delay in the crankshaft being returned to Hadley. This delay meant that Hadley lost the income, which the mill would have generated if they would have had the new shaft delivered on time. Initially the plaintiff was awarded £50, which the defendant then appealed. Baron Anderson granted the defendant leave to appeal and stipulated that the judge in charge of the appeal should inform the jury not to take the loss of profits into consideration at all in estimating the damages. Due to the amount of mills in use it was construed that it was foreseeable that mills would have a spare crankshaft due to the importance of this item in milling. Recovery of damages is limited by the rules of remoteness of damage that stipulates the extent to which the defendant is liable for their wrong doings. The defendant only compensates for damage that was within their reasonable contemplation at the time of the contract. If they have contemplated it at the time of the contract then they are liable for damages, which result from a breach of the contract. In the Hadley v Baxendale case, as the plaintiff had not communicated to the defendant that they had no spare crankshaft (special circumstances), the defendant could not reasonably have considered the loss of profits that the plaintiff incurred at the time of the contract.

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Within construction, the amount of damages to be paid should the contract period over-run, is usually stated in the contract as liquidated damages. Liquidated damages are a set amount to be paid should there be a breach of contract. They are agreed before the contract and are to be based upon a fair pre-estimate of the likely consequences of a breach and cannot be imposed as a form of penalty (Dunlop Pneumatic Tyre Co v New Garage and Motor Co [1915]). The alternative to liquidated damages is un-liquidated damages, these are set by the courts and so considerable evidence needs to ...

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