British westinghouse electric and manufacturing co

British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of
London Ltd [1912] AC 673
• Viscount Haldane LC
• ‘I think that there are certain broad principles which are quite well settled. The first is that, as
far as possible, he who has proved a breach of a bargain to supply what he contracted to get
is to be placed, as far as money can do it, in as good a situation as if the contract had been
performed. … but this first principle is qualified by a second, which imposes on a plaintiff the
duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars
him from claiming any part of the damage which is due to his neglect to take such steps.’
• Only reasonable steps to mitigate are required. If the loss is exacerbated by the plaintiff taking
reasonable steps to mitigate damage, that extra damage is also claimable from the defendant
Simonius Vischer & Co v Holt & Thompson [1979]
Anticipatory breach
• No duty to mitigate until the plaintiff accepts an anticipatory breach and ends the contract
( White & Carter (Councils) Ltd v McGregor [1962])
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Contributory Negligence
A plaintiff’s own negligence that is also a cause of the loss caused by the defendant’s breach of the
contract might reduce or eliminate the liability of the defendant, if it can be said that the plaintiff’s own
negligence breaks the chain of causation .
• Lambert v Lewis [1982]
(Not covered in this course )
• Law Reform (Miscellaneous Provisions) Act 1965 (NSW)
• See also: Civil Liability Act 2002 (NSW)
B) FIXED SUMS AND DEBT
Liquidated damages clause
The courts will enforce a term providing for liquidated damages in the event of a breach if it represents a
reasonable and genuine pre estimate of the expected loss.
Penalties
• A penalty is a term that:
• Provides for a payment on breach that bears little relationship to the anticipated loss; it is usually
an extravagant amount or provides for complete deprivation of accrued property rights;
• Attempts to ensure performance by holding a party in fear of a breach rather than to be a proper
compensation for the breach: (‘ in terrorem ’)
Determining if the term is a penalty:
Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] Lord Dunedin
1. If the agreed sum "is extravagant and unconscionable in amount in comparison with the greatest
loss that could conceivably be proved to have followed from the breach” then it is a penalty.
2. If the breach consists of a failure to pay money and the agreed amount is greater than the sum
originally required to be paid then it is a penalty.
3. If the agreed sum is payable on the occurrence of any breach of the contract, whether serious or
trifling in its consequences, there is a presumption that the sum is a penalty.
4. An agreed amount can be a genuine pre-estimate of the damages despite the pre-estimate being
impossible to calculate
Penalties
• If term = penalty: term is void.