Compensatory Damages (OCR A-Level Law): Flashcards

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Compensatory damages
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Purpose of compensatory damages

Place injured party where they'd be if contract performed

Two categories of compensatory damages

Liquidated damages and unliquidated damages

Liquidated damages

Pre-agreed sum fixed by parties at time of contracting

Penalty clauses

Unenforceable clauses that punish rather than compensate

Unliquidated damages

Court-determined amount based on actual loss suffered

Three tests for unliquidated damages (CRM)

Causation, Remoteness, Mitigation

Hadley v Baxendale (1854) test

Recoverable losses must be reasonably foreseeable

Two limbs of Hadley v Baxendale

Losses arising naturally & losses in parties' contemplation

Duty to mitigate

Take reasonable steps to minimise loss from breach

Burden of proof for failure to mitigate

On defendant to prove claimant failed to mitigate reasonably

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