REMEDIES AND DAMAGES ( PART 1)

There are a number of different remedies under English law. The next chapter will cover all of these, but this chapter will focus solely on the most common and sought after remedy – damages. Damages in contract law can be defined as a sum of money paid to the innocent party in compensation for a breach of contract.

As you will know by now, contract law is based upon the freedom of the contracting parties. This concept is difficult to apply to the remedies and damages. When the parties make the agreement, they will hope that they both fulfil their obligations. Therefore, the intentions of the parties cannot usually be used in order to calculate an amount of damages that should be awarded under the contract. Instead, the amount of damages will be awarded based on the value of the interest the innocent party has in the contract. This may well be more than the value of the actual contract, as you will begin to understand as you progress through this chapter.

The case of Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 explained the basis of the remedy of damages. Lord Diplock stated that every contracting party has a secondary obligation to pay monetary compensation to the other party in the event they breach the contract.

The different types of damages

Before we begin examining the law behind damages, you should understand the two different types of damages:

  1. Compensatory damages
  2. Non-compensatory damages

Compensatory damages are an award of a sum of money which aims to compensate the claimant for his loss under the contract. This need not be limited to loss from the contract itself, and may compensate the innocent party for losses relating to subsequent contracts, which will be covered later in the chapter.

Non-compensatory damages are an award of a sum of money not only to compensate the claimant for his contractual losses, but also aim to compensate the claimant in relation to any bad conduct of the other party.

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