Damages Notes (1)


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Unformatted text preview: DAMAGES FOR BREACH OF CONTRACT INTRODUCTION When a contract is breached by one of the parties (the defendant), there are various remedies available to the party not in breach (the plaintiff). Entry into a contract creates obligations or promises to be carried out by the respective parties which are referred to as primary obligations. The contract also creates a secondary obligation on each party to pay damages for breach of primary obligations: Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at 849. In making a claim for damages a plaintiff must first establish that the defendant has breached the contract. Second, a plaintiff must also show that he or she is ready willing and able to perform his or her contractual obligations before the right to damages arises. This is implied and is only an issue in court proceedings if made so by the defendant: Foran v Wight (1989) 168 CLR 385. NOMINAL AND SUBSTANTIAL DAMAGES A plaintiffs right to pursue a claim for damages arises for losses suffered as result of the defendants breach of contract. Once a plaintiffs right to damages is established the plaintiffs only obligation is to prove his or her loss, the relevant standard of proof being on the balance of probabilities: The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80. A failure to prove any loss does not mean that the plaintiffs action fails. Rather, it means that he or she will only be awarded nominal damages. This contrasts with substantial damages that are awarded where a plaintiff establishes that he or she has suffered real and quantifiable losses. The word substantial does not mean that a significant sum of money will be awarded. The concept of nominal damages was explained in Owners of SS Mediana v Owners of SS Comet [1900] AC 113 at 116, where Lord Halsbury said: Nominal damages is a technical phrase which means that you have negatived anything like real damage, but that you are affirming by your nominal damages that there is an infraction of a legal right which, though it gives you no right to any real damages at all, yet gives you a right to the verdict of judgment because your legal right has been infringed. The sum awarded as nominal damages is a token amount. It will usually be an amount of $10: Timpar Nominees Pty Ltd v Archer [2001] WASCA 430 at [111]. THE COMPENSATORY NATURE OF DAMAGES The compensatory nature of damages is confirmed in the often cited statement of principle in Robinson v Harman (1848) 154 ER 363 at 365, where Baron Parker said: [W]here a party sustains loss by breach of a contract, he is, so far as money can do it, to be placed in the same position, with respect to damages, as if the contract had been performed....
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This note was uploaded on 04/13/2011 for the course FINANCE 101 taught by Professor Richard during the Spring '11 term at UCLA.

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