Contract Law Fundamentals Flashcards

What is the purpose of 'damages' in contract law?

Answer: To put the innocent party in the position they would have been in had the contract been performed

The aim of damages in contract law (expectation damages) is to put the claimant in the position they would have been in if the contract had been properly performed (Robinson v Harman [1848]).

What is the rule on 'remoteness of damage' in contract law?

Answer: Losses must be within the reasonable contemplation of the parties at the time of contracting

Under Hadley v Baxendale [1854], losses are recoverable only if they were within the reasonable contemplation of the parties at the time of contracting as a probable result of breach.

What duty does an innocent party have following a breach of contract?

Answer: A duty to take reasonable steps to mitigate their loss

The innocent party has a duty to take reasonable steps to mitigate their loss following a breach of contract. They cannot recover for losses that could have been avoided by taking reasonable steps (Payzu v Saunders [1919]).

What is 'anticipatory breach'?

Answer: One party indicates before the time for performance that they will not perform the contract

Anticipatory breach occurs when one party indicates, before performance is due, that they will not be performing their contractual obligations. The innocent party may treat this as an immediate breach and sue at once (Hochster v De La Tour [1853]).

What does 'quantum meruit' mean in contract law?

Answer: A reasonable sum for work done where no price has been agreed

Quantum meruit means 'as much as he has earned' and refers to a claim for a reasonable sum for work done or services rendered, particularly where no price was agreed or a contract has been partially performed before frustration or breach.

What is a 'liquidated damages' clause?

Answer: A genuine pre-estimate of loss agreed by the parties to be payable on breach

A liquidated damages clause is an agreed genuine pre-estimate of the loss likely to be suffered on breach. It is enforceable, unlike a penalty clause (which is a deterrent rather than a genuine estimate), following Cavendish Square Holding v Makdessi [2015].