Relevant to LW-ENG and LW-GLO
A focus on how the law of damages operates in respect of contract law
A likely consequence of a breach of contract is a claim for damages from the injured party. This article aims to illustrate how the law of damages operates in respect of contract law.
Carlos Kickaball is the South American superstar player of the Premier League team Scouse City. As the end of another successful season draws to a close Carlos decides to treat himself to an upgrade of his Cheshire mansion. Carlos contracts with John Wayne Builders Ltd (JWB) to perform the following alterations:
During discussions between himself and John, the owner of JWB, Carlos enthused about the proposed diving pool pointing out that it would help improve his already renowned ‘diving technique’.
A total contract price of £125,000 was agreed along with a four-week deadline for completion. The parties also agreed that the contract price would be reduced by £1,000 a day in the event of late completion. During final negotiations Carlos revealed to John that he was planning to pay for the work out of a £200,000 bonus he would receive from his club for making 50 appearances that season, adding that he had played in every match so far this season and needed to play just twice more in the last six matches to qualify for payment.
Initially, construction was ahead of schedule and the pool alterations were completed within a fortnight. After checking with John that the pool was fit for use Carlos threw himself off the diving board in trademark fashion only to suffer severe head and facial injuries when he hit his head on the bottom of the pool. It transpired that JWB had not deepened the pool from its original depth of two metres when fitting the diving board, as agreed in the contract.
Unfortunately Carlos was unable to play in the Cup Final the following day due to his injuries and was advised by his doctor that he would also miss the remaining fixtures, leaving him stranded on 49 appearances for the season.
Carlos was even more upset when Goodbye magazine rang him in hospital to cancel the photo shoot planned at his mansion to celebrate the completion of his building works, saying that his face would scare its readers. The stress of the accident caused John to temporarily stop working, and as a result the remaining construction was completed five days behind the agreed schedule.
John has now received a letter from Doowe Cheetah and Howe, a legal firm representing Carlos. The letter detailed the following claims against JWB:
Advise JWB as to their liabilities in respect of the claims by Carlos.
In order to answer questions in an Corporate and Business Law exam you will need two things:
Each of these will be illustrated below.
A good way of learning legal principles is to construct diagrams and mind maps. These should contain all of the legal facts, principles and cases relevant to an area of law. Once constructed you should then practise recreating these diagrams until you can do so accurately.
At this point you should notice that jotting down one word such as ‘damages’ will trigger a lot of associated words helping you recall all of the legal facts and cases associated with a topic. An example of a diagram for damages is shown in Figure 1.
Having seen above how to learn legal facts you now need to apply these to questions in the exam. To do this we’ll work through our scenario using the ‘ISAC’ (issue, state, apply, conclusion) approach.
State the issue – state the area of law that is at issue to provide the context of your answer.
The issue here is whether or not John is liable to pay the damages being claimed by Carlos.
State the law – now transpose the relevant areas of law from your diagram into your answer. Remember, in the Corporate and Business Law exam you must write in proper English sentences, so you should not use the bullet points and notes that appear in this illustrative example.
A full answer would cover the following points:
For each relevant point of law/case you include in your answer you will be awarded one mark.
Apply the law – apply your legal knowledge to the issues in the scenario, restating the facts in legal terms. This stage will lead you towards your conclusions.
Conclusion – state your advice. This should be consistent with your earlier analysis.
JWB is likely to be liable to Carlos in respect of the claims for late completion, loss of appearance bonus and pool rectification. The other losses will not be upheld, either being non‑financial in the case of mental distress, or too remote for the magazine contract.
At the end of this article you should be able to do the following:
Dave Halford is course design specialist and tutor at BPP Professional Education