The second problem which arises 4 days before the end of the voyage is the death of a crew member, Tess, who, at the time of her death, is owed 2 months wages and she had worked a further 3 weeks which she has not yet been paid for. The fact that Lou had not paid Tess for 2 months is a breach of contract, because Lou was obliged to pay each crew member £300 per month in arrears. Although there is a breach of contract, unless the whole crew are in the same position having not been paid for 2 months, then only a trustee of Tess is able to bring action against Lou on Tess’s behalf. The most likely solution would be for Lou to pay the owed wages to Tess’s beneficiaries or next
-of-kin, or as stated in her will if she has one.
There still remains the major issue of Lou’s contract with the magazine, Tall Ships, and whether she is liable for damages arising under a breach of contract. Once the voyage has ended, Lou informs Tall Ships that she is unable to fulfil performance of the contract, to write the account of her voyage.
Lou has breached the contract because she only has notes relating to less than half of the voyage and she cannot remember other details to remedy the missing parts of the account. To make matters worse, Lou has refused to work on the account for a minimum of 2 months after the voyage, so the prospect of tall ships being able to publish the account of Lou’s voyage is unlikely.
So far, Tall Ships have spent £30000 paying Lou in advance, and a further £15000 on promoting the magazine with the account. The extra £15000 for promotion was spent in reliance upon the account boosting the magazine’s sales and profits, so it would be probable that Tall Ships would try to claim reliance damages from Lou.
Despite the fact that the actual performance of the contract has not yet been fulfilled, Tall Ships would still be able to claim reliance damages. In Anglia Television Ltd v Reed (1971), Anglia had spent money in preparation for a film which was to star Christopher Reed; yet when Reed pulled out at the last minute, Anglia had no choice but to abandon the production. Because they could not have accurately estimated the expected profits had Reed have gone through with the contract, Anglia claimed reliance damages to cover the wasted expenditure on preparations for the production. Similarly, therefore, in this case, Tall Ships had spent £15000 in preparation for Lou’s account to be published in their magazine- all of which was wasted expenditure because Lou was unable to produce an account. Since tall Ships would not be able to assess their expected profits made from the magazine with the account, they would have no choice of claiming expectation damages, so the reliance damages would not only include the £15000 spent on promotional activity, but the £30000 paid to Lou in advance of the actual performance of the contract.
The Anglia case established that if the plaintiff claims wasted expenditure (reliance loss), he is not limited to the expenditure incurred after the contract was concluded. He can claim also the expenditure incurred before the contract, provided that it was such as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken. Since Tall ships would not have spent the £15000 promoting the magazine unless the contract with Lou was to be fulfilled, they can claim for the full cost of wasted expenditure, £45000, in order to put them back in the financial position they would have been in prior to any negotiations on the contract.
Another option that tall Ships could take is to insist on performance of the contract and hopefully claim the profits that were originally expected. However, Lord Reid said in White and Carter (Councils) Ltd v McGregor (1962), that there were two exceptions to a party’s right to do this: (i) where the contractual performance required co-operation from the party in breach, the guilty party cannot be forced to fulfil the performance, and (ii) if the innocent party has “no legitimate interest” in performing the contract rather than claiming damages for breach of contract. These two conditions are fulfilled; Lou, the party in breach, is required to co-operate in order to perform the contract by writing the account of her voyage, and Tall Ships would not have any legitimate interest in performing the contract because the account would only cover a proportion of the voyage and there would be no way to remedy the lost notes- Tall Ships would benefit more from claiming damages than insisting that Lou fulfil her performance of the contract.
An option that Lou may wish to consider is causation as a limit to the damages she may be liable for. An independent act of a third party may break the chain of causation between the defendant’s breach and the claimant’s loss, unless the defendant has actually promised to guard against that particular loss which happens. In this case, it was the crew member’s clumsiness or negligence which led to her damaging Lou’s laptop and consequently all the work that was on it, rather than Lou making a deliberate choice to breach the contract; therefore, Lou may be able to argue that the causal chain was broken and thus she would not be liable for the damages claimed against her.
However, in this case it is difficult to establish fault, and although prima facie it seems that the chain of causation was broken when the crew member smashed the laptop, looking deeper it appears that the fault element remains with Lou for not saving the work. In Monarch Steamship Co Limited v Karlshamns Oljefabriker (A/B) (1949), the defendant’s breach of contract was the failure to find a sea-worthy ship, which caused a delay in the voyage. The intervening act was the outbreak of war, which resulted in the ship being ordered to an alternative port for the ship to be changed before it could sail to its contracted destination. The claimants had to pay the cost of the transfer and sought to recover damages from the breach of contract
When the defendants argued that the outbreak of war broke the chain of causation between their breach of contract and the claimant’s loss of having to pay for the transfer, the House of Lords rejected their argument on the grounds that the outbreak of war was a likelihood which the defendants ought to have contemplated, therefore, there was no break in the causal chain.
In this case, however, the breach of contract was the failure to produce the full account of the voyage for the magazine, as a result of an independent, intervening act of the laptop being smashed. Therefore, the link between the breach and the claimant’s loss is unbroken. However, if Lou had promised Tall Ships that she would take reasonable care to prevent the loss or damage to the account, then the breach of contract would be the failure to save the work. If this latter situation was the case, then although the independent act of damaging the laptop breaks the causal link, because Lou had promised to ensure her work would be protected, then the chain of causation must be considered as unbroken.
This does seem unfair, that Lou would be liable for damages up to £45000 even though it was the crew member who damaged the laptop through negligence, however, because Lou failed to mitigate her loss by saving the notes onto disk, or if she broke her promise to protect her work, then she cannot limit her liability by arguing a break in the causal chain. Realistically, Lou ought to have contemplated that on a sea voyage around the world, damage to the laptop could easily occur, and therefore she was acting negligently by failing to mitigate this loss by saving the account onto a disk.
In conclusion, therefore, I would advise Lou to claim damages against the crew member who broke the laptop in tort, to cover the cost of the laptop, which was £2500; I would then advise Lou not to attempt any further action towards this crew member, because she was just as negligent and hence blameworthy for not saving the account, and not contemplating that such a loss could occur at some point during the voyage.
Tall ships would probably attempt to claim reliance damages from Lou, for a total of £45000. This does seem unfair that Lou may have to pay for the whole amount as a result of failing to save her work from damage or loss, unless it was stated in the contract that Lou had a duty of care to protect her work from such damage, whereby she would have breached her contract and would be undoubtedly liable for the whole amount of £45000.
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