NEGLIGENCE

Negligence (Lat. negligentia, from neglegere, to neglect, literally "not to pick up something") is a failure to exercise the care that a reasonably prudent person would exercise in like circumstances. The area of tort law known as negligence involves harm caused by carelessness, not intentional harm.

According to Jay M. Feinman of the Rutgers University School of Law, "The core idea of negligence is that people should exercise reasonable care when they act by taking account of the potential harm that they might foreseeably cause harm to other people."

"those who go personally or bring property where they know that they or it may come into collision with the persons or property of others have by law a duty cast upon them to use reasonable care and skill to avoid such a collision."

Through civil litigation, if an injured person proves that another person acted negligently to cause their injury, they can recover damages to compensate for their harm. Proving a case for negligence can potentially entitle the injured plaintiff to compensation for harm to their body, property, mental well-being, financial status, or intimate relationships. However, because negligence cases are very fact-specific, this general definition does not fully explain the concept of when the law will require one person to compensate another for losses caused by accidental injury. Further, the law of negligence at common law is only one aspect of the law of liability. Although resulting damages must be proven in order to recover compensation in a negligence action, the nature and extent of those damages are not the primary focus of negligence cases.

Negligence suits have historically been analyzed in stages, called elements, similar to the analysis of crimes (see Element (criminal law)). An important concept related to elements is that if a plaintiff fails to prove any one element of his claim, he loses on the entire tort claim. For example, assume that a particular tort has five elements. Each element must be proven. If the plaintiff proves only four of the five elements, the plaintiff has not succeeded in making out his claim.

Common law jurisdictions may differ slightly in the exact classification of the elements of negligence, but the elements that must be established in every negligence case are: duty, breach, causation, and damages. Each is defined and explained in greater detail in the paragraphs below. Negligence can be conceived of as having just three elements - conduct, causation and damages. More often, it is said to have four (duty, breach, causation and pecuniary damages) or five (duty, breach, actual cause, proximate cause, and damages). Each would be correct, depending on how much specificity someone is seeking. "The broad agreement on the conceptual model", writes Professor Robertson of the University of Texas, "entails recognition that the five elements are best defined with care and kept separate. But in practice", he goes on to warn, "several varieties of confusion or conceptual mistakes have sometimes occurred.

The case of Donoghue v. Stevensonillustrates the law of negligence, laying the foundations of the fault principle around the Commonwealth. The Pursuer, Donoghue, drank ginger beer given to her by a friend, who bought it from a shop. The beer was supplied by a manufacturer, a certain Stevenson in Scotland. While drinking the drink, Donoghue discovered the remains of an allegedly decomposed slug. She then sued Stevenson, though there was no relationship of contract, as the friend had made the payment. As there was no contract the doctrine of privity prevented a direct action against the manufacturer, Andrew Smith.

In his ruling, justice Lord MacMillan defined a new category of delict (the Scots law nearest equivalent of tort), (which is really not based on negligence but on what is now known as the "implied warranty of fitness of a product" in a completely different category of tort--"products liability") because it was analogous to previous cases about people hurting each other. Lord Atkin interpreted the biblical passages to 'love thy neighbour,' as the legal requirement to 'not harm thy neighbour.' He then went on to define neighbour as "persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions that are called in question." Reasonably foreseeable harm must be compensated. This is the first principle of negligence.

In England the more recent case of Caparo v. Dickman [1990] introduced a 'threefold test' for a duty of care. Harm must be

(1) reasonably foreseeable

(2) there must be a relationship of proximity between the plaintiff and defendant and

(3) it must be 'fair, just and reasonable' to impose liability. However, these act as guidelines for the courts in establishing a duty of care; much of the principle is still at the discretion of judges.

Once it is established that the defendant owed a duty to the plaintiff/claimant, the matter of whether or not that duty was breached must be settled. The test is both subjective and objective. The defendant who knowingly (subjective) exposes the plaintiff/claimant to a substantial risk of loss, breaches that duty. The defendant who fails to realize the substantial risk of loss to the plaintiff/claimant, which any reasonable person [objective] in the same situation would clearly have realized, also breaches that duty.

Breach of duty is not limited to professionals or persons under written or oral contract; all members of society have a duty to exercise reasonable care toward others and their property. A person who engages in activities that pose an unreasonable risk toward others and their property that actually results in harm, breaches their duty of reasonable care. An example is shown in the facts of Bolton v. Stone, a 1951 legal case decided by the House of Lords which established that a defendant is not negligent if the damage to the plaintiff was not a reasonably foreseeable consequence of his conduct. In the case, a Miss Stone was struck on the head by a cricket ball while standing outside her house. Cricket balls were not normally hit a far enough distance to pose a danger to people standing as far away as was Miss Stone. Although she was injured, the court held that she did not have a legitimate claim because the danger was not sufficiently foreseeable. As stated in the opinion, 'Reasonable risk' cannot be judged with the benefit of hindsight. As Lord Denning said in Roe v. Minister of Health, the past should not be viewed through rose coloured spectacles. Therefore, there was no negligence on the part of the medical professionals in a case faulting them for using contaminated medical jars because the scientific standards of the time indicated a low possibility of medical jar contamination. Even if some were harmed, the professionals took reasonable care for risk to their patients.

For a defendant to be held liable, it must be shown that the particular acts or omissions were the cause of the loss or damage sustained. Although the notion sounds simple, the causation between one's breach of duty and the harm that results to another can at times be very complicated. The basic test is to ask whether the injury would have occurred but for, or without, the accused party's breach of the duty owed to the injured party. Even more precisely, if a breaching party materially increases the risk of harm to another, then the breaching party can be sued to the value of harm that he caused.

Asbestos litigations which have been ongoing for decades revolve around the issue of causation. Interwoven with the simple idea of a party causing harm to another are issues on insurance bills and compensations, which sometimes drove compensating companies out of business.

Sometimes factual causation is distinguished from 'legal causation' to avert the danger of defendants being exposed to, in the words of Cardozo, J., "liability in an indeterminate amount for an indeterminate time to an indeterminate class."It is said a new question arises of how remote a consequence a person's harm is from another's negligence. We say that one's negligence is 'too remote' (in England) or not a 'proximate cause' (in the U.S.) of another's harm if one would 'never' reasonably foresee it happening. Note that a 'proximate cause' in U.S. terminology (to do with the chain of events between the action and the injury) should not be confused with the 'proximity test' under the English duty of care (to do with closeness of relationship). The idea of legal causation is that if no one can foresee something bad happening, and therefore take care to avoid it, how could anyone be responsible? For instance, in Palsgraf v. Long Island Rail Road Co. the judge decided that the defendant, a railway, was not liable for an injury suffered by a distant bystander. The plaintiff, Palsgraf, was hit by scales that fell on her as she waited on a train platform. The scales fell because of a far-away commotion. A train conductor had run to help a man into a departing train. The man was carrying a package as he jogged to jump in the train door. The package had fireworks in it. The conductor mishandled the passenger or his package, causing the package to fall. The fireworks slipped and exploded on the ground causing shockwaves to travel through the platform. As a consequence, the scales fell. Because Palsgraf was hurt by the falling scales, she sued the train company who employed the conductor for negligence.

The defendant train company argued it should not be liable as a matter of law, because despite the fact that they employed the employee, who was negligent, his negligence was too remote from the plaintiff's injury. On appeal, the majority of the court agreed, with four judges adopting the reasons, written by Judge Cardozo, that the defendant owed no duty of care to the plaintiff, because a duty was owed only to foreseeable plaintiffs. Three judges dissented, arguing, as written by Judge Andrews, that the defendant owed a duty to the plaintiff, regardless of foreseeability, because all men owe one another a duty not to act negligently.

Such disparity of views on the element of remoteness continues to trouble the judiciary. Courts that follow Cardozo's view have greater control in negligence cases. If the court can find that, as a matter of law, the defendant owed no duty of care to the plaintiff, the plaintiff will lose his case for negligence before having a chance to present to the jury. Cardozo's view is the majority view. However, some courts follow the position put forth by Judge Andrews. In jurisdictions following the minority rule, defendants must phrase their remoteness arguments in terms of proximate cause if they wish the court to take the case away from the jury.

Remoteness takes another form, seen in The Wagon Mound (No. 1). The Wagon Mound was a ship in Sydney harbour. The ship leaked oil creating a slick in part of the harbour. The wharf owner asked the ship owner about the danger and was told he could continue his work because the slick would not burn. The wharf owner allowed work to continue on the wharf, which sent sparks onto a rag in the water which ignited and created a fire which burnt down the wharf.

The UK House of Lords determined that the wharf owner 'intervened' in the causal chain, creating a responsibility for the fire which canceled out the liability of the ship owner.

In Australia, the concept of remoteness, or proximity, was tested with the case of Jaensch v. Coffey. The wife of a policeman, Mrs Coffey suffered a nervous shock injury from the aftermath of a motor vehicle collision although she was not actually at the scene at the time of the collision. The court upheld in addition to it being reasonably foreseeable that his wife might suffer such an injury, it also required that there be sufficient proximity between the plaintiff and the defendant who caused the collision. Here there was sufficient causal proximity.

Even though there is breach of duty, and the cause of some injury to the defendant, a plaintiff may not recover unless he can prove that the defendant's breach caused a pecuniary injury. This should not be mistaken with the requirements that a plaintiff prove harm to recover. As a general rule, a plaintiff can only rely on a legal remedy to the point that he proves that he suffered a loss. It means something more than pecuniary loss is a necessary element of the plaintiff's case in negligence. When damages are not a necessary element, a plaintiff can win his case without showing that he suffered any loss; he would be entitled to nominal damages and any other damages according to proof.

Negligence is different in that the plaintiff must prove his loss, and a particular kind of loss, to recover. In some cases, a defendant may not dispute the loss, but the requirement is significant in cases where a defendant cannot deny his negligence, but the plaintiff suffered no loss as a result. If the plaintiff can prove pecuniary loss, then he can also obtain damages for non-pecuniary injuries, such as emotional distress.

The requirement of pecuniary loss can be shown in a number of ways. A plaintiff who is physically injured by allegedly negligent conduct may show that he had to pay a medical bill. If his property is damaged, he could show the income lost because he could not use it, the cost to repair it, although he could only recover for one of these things.

DAMAGE

The damage may be physical, purely economic, both physical and economic (loss of earnings following a personal injury), or reputational (in a defamation case).

In English law, the right to claim for purely economic loss is limited to a number of 'special' and clearly defined circumstances, often related to the nature of the duty to the plaintiff as between clients and lawyers, financial advisers, and other professions where money is central to the consultative services.

Emotional distress has been recognized as an actionable tort. Generally, emotional distress damages had to be parasitic. That is, the plaintiff could recover for emotional distress caused by injury, but only if it accompanied a physical or pecuniary injury.

A claimant who suffered only emotional distress and no pecuniary loss would not recover for negligence. However, courts have recently allowed recovery for a plaintiff to recover for purely emotional distress under certain circumstances. The state courts of California allowed recovery for emotional distress alone – even in the absence of any physical injury, when the defendant physically injures a relative of the plaintiff, and the plaintiff witnesses it.

On the other hand, nominal damages are very small damages awarded to show that the loss or harm suffered was technical rather than actual. Perhaps the most famous nominal damages award in modern times has been the $1 verdict against the National Football League (NFL) in the 1986 antitrust suit prosecuted by the United States Football League. Although the verdict was automatically trebled pursuant to antitrust law in the United States, the resulting $3 judgment was regarded as a victory for the NFL. Historically, one of the best known nominal damage awards was the farthing that the jury awarded to James Whistler in his libel suit against John Ruskin. In the English jurisdiction, nominal damages are generally fixed at £2.

Many times a party that has been wronged but is not able to prove significant damages will sue for nominal damages. This is particularly common in cases involving alleged violations of constitutional rights, such as freedom of speech.

Damages place a monetary value on the harm done, following the principle of restitutio in integrum (Latin for "restoration to the original condition"). Thus, for most purposes connected with the quantification of damages, the degree of culpability in the breach of the duty of care is irrelevant. Once the breach of the duty is established, the only requirement is to compensate the victim.

One of the main tests that is posed when deliberating whether a claimant is entitled to compensation for a tort, is the "reasonable person". The test is self-explanatory: would a reasonable person (as determined by a judge or jury) be damaged by the breach of duty. Simple as the "reasonable person" test sounds, it is very complicated. It is a risky test because it involves the opinion of either the judge or the jury that can be based on limited facts. However, as vague as the "reasonable person" test seems, it is extremely important in deciding whether or not a plaintiff is entitled to compensation for a negligence tort.

Damages are compensatory in nature. Compensatory damages addresses a plaintiff/claimant's losses (in cases involving physical or mental injury the amount awarded also compensates for pain and suffering). The award should make the plaintiff whole, sufficient to put the plaintiff back in the position he or she was before Defendant's negligent act. Anything more would unlawfully permit a plaintiff to profit from the tort.

Types of damage

Special damages - quantifiable dollar losses suffered from the date of defendant's negligent act (the tort) up to a specified time (proven at trial). Special damage examples include lost wages, medical bills, and damage to property such as one's car.

General damages - these are damages that are not quantified in monetary terms (e.g., there's no invoice or receipt as there would be to prove special damages). A general damage example is an amount for the pain and suffering one experiences from a car collision. Lastly, where the plaintiff proves only minimal loss or damage, or the court or jury is unable to quantify the losses, the court or jury may award nominal damages.

Punitive damages - Punitive damages are to punish a defendant, rather than to compensate plaintiffs, in negligence cases. In most jurisdictions punitive damages are recoverable in a negligence action, but only if the plaintiff shows that the defendant’s conduct was more than ordinary negligence (i.e., wanton and willful or reckless).

In law, damages are an award, typically of money, to be paid to a person as compensation for loss or injury;. The rules for damages can and frequently do vary based on the type of claim which is presented (e.g., breach of contract versus a tort claim).

Compensatory damages, called actual damages, are paid to compensate the claimant for loss, injury, or harm suffered as a result of (see requirement of causation) another's breach of duty. (e.g., in a negligence claim under tort law).

Expectation damages are used in contract law.

Neal Townsend signs a contract agreeing to buy 10 hours of landscaping services from Wisda's Landscaping for $50 an hour. If Neal Townsend breaks the contract and doesn't use any of Wisda's Landscaping's services, expectation damages paid to Wisda's Landscaping would be $500, which is the economic loss they suffered. If Wisda's Landscaping breaks the contract, and Neal Townsend is forced to hire another service for $60 an hour, expectation (direct) damages paid to Neal Townsend would equal $100 ($10 an hour, the difference in price between the original contract and the new contract).

Breach of contract duty - (ex contractu)

On a breach of contract by a defendant, a court generally awards the sum that would restore the injured party to the economic position they expected from performance of the promise or promises (known as an "expectation measure" or "benefit-of-the-bargain" measure of damages).

When it is either not possible or not desirable to award the victim in that way, a court may award money damages designed to restore the injured party to the economic position s/he occupied at the time the contract was entered (known as the "reliance measure"), or designed to prevent the breaching party from being unjustly enriched ("restitution") (see below).

Parties may contract for liquidated damages to be paid upon a breach of the contract by one of the parties. Under common law, a liquidated damages clause will not be enforced if the purpose of the term is solely to punish a breach (in this case it is termed penal damages). The clause will be enforceable if it involves a genuine attempt to quantify a loss in advance and is a good faith estimate of economic loss. Courts have ruled as excessive and invalidated damages which the parties contracted as liquidated, but which the court nonetheless found to be penal.

Expectation damages are damages recoverable from a breach of contract by the non-breaching party. It originates from an injured party's interest in realizing the value of the expectancy that was created by the promise of the other party.

The purpose of expectation damages is to put the non-breaching party in the position he would have occupied had the contract been fulfilled. Expectation damages can be contrasted to reliance damages and restitution damages, which are remedies that address other types of interests of parties involved in enforceable promises.

The default for expectation damages are monetary damages which are subject limitations or exceptions (see below)

Expectation damages are measured by the diminution in value, coupled with consequential and incidental damages.

Reliance damages is the measure of compensation given to a person who suffered an economic harm for acting in reliance on a party who failed to fulfill their obligation.

Reliance damages are valued by a party's reliance interest for the foreseeable amount. They put the injured party in the same dollar position as if the contract had never been formed.

Under contract law, in a bilateral contract two or more parties owe obligations to each other. Each party acts in reliance that the other party will fulfill their respective obligation. If one party fails to respect their obligation, then the other party or parties may suffer an economic harm. Reliance damages compensate the harmed party/ies for the amount of damages they suffered for acting in reliance on the other party's contractual obligations. They are most often rewarded when the aggrieved party's damages are not capable of accurate estimation, and ordering Specific Performance would be inappropriate.

Reliance damages are the type of damages awarded in promissory estoppel claims, although they can also be awarded in traditional contract breaches. This is appropriate because even there is no bargain principle in the agreement, one party has relied on a promise and thus is damaged to the extent of their reliance. These damages must be proven with reasonable certainty. It is not enough that one party simply guess as to how much they are actually damaged.

In a losing contract, reliance damages will be reduced because the aggrieved party cannot be put in a better position had the contract been performed. Here, the losses from the contract will be subtracted from the reliance damages.

Neal Townsend and Matt Wisda formed a bilateral contract. Neal spent $100 in reliance on the contract, which was foreseeable. However, Matt breached the contract.

Reliance damages protect a party's reliance interest. Neal spent $100 in reliance on the contract, which constituted Neal's reliance interest.

Since reliance damages equal to the value of the reliance interest of the injured party, Matt owes Neal $100. This puts Neal in the same economic position as if the contract never happened.

The law of restitution is the law of gains-based recovery. It is to be contrasted with the law of compensation, which is the law of loss-based recovery. Obligations to make restitution and obligations to pay compensation are each a type of legal response to events in the real world. When a court orders restitution it orders the defendant to give up his gains to the claimant. When a court orders compensation it orders the defendant to compensate the claimant for his or her loss.

This type of damages restores the benefit conferred to the non-breaching party (the plaintiff). Simply, the plaintiff will get the value of whatever was conferred to the defendant when there was a contract. There are two general limits to recovery, which is that a complete breach of contract is needed, and the damages will be capped at the contract price if the restitution damages exceed it.

The orthodox view suggests that there is only one principle on which the law of restitution is dependent, namely the principle of unjust enrichment. However, the view that restitution, like other legal responses, can be triggered by any one of a variety of causative events is increasingly prevalent. These are events in the real world which trigger a legal response. It is beyond doubt that unjust enrichment and wrongs can trigger an obligation to make restitution. Certain commentators propose that there is a third basis for restitution, namely the vindication of property rights with which the defendant has interfered. It is arguable that other types of causative event can also trigger an obligation to make restitution.

Imagine that A commits a wrong against B and B sues in respect of that wrong. A will certainly be liable to pay compensation to B. If B seeks compensation then the court award will be measured by reference to the loss that B has suffered as a result of A’s wrongful act. However, in certain circumstances it will be open to B to seek restitution rather than compensation. It will be in his interest to do so if the profit that A made by his wrongful act is greater than the loss suffered by B.

Whether or not a claimant can seek restitution for a wrong depends to a large extent on the particular wrong in question. For example, in English law, restitution for breach of fiduciary duty is widely available but restitution for breach of contract is fairly exceptional. The wrong could be of any one of the following types:

A statutory tort

A common law tort

An equitable wrong

A breach of contract

Criminal offences

Notice that (1)-(5) are all causative events. The law responds to each of them by imposing an obligation to pay compensatory damages. Restitution for wrongs is the subject which deals with the issue of when exactly the law also responds by imposing an obligation to make restitution.

Example. In Attorney General v Blake [2001] 1 AC 268, an English court found itself faced with the following claim. The defendant had made a profit somewhere in the region of £60,000 as a direct result of breaching his contract with the claimant. The claimant was undoubtedly entitled to claim compensatory damages but had suffered little or no identifiable loss. It therefore decided to seek restitution for the wrong of breach of contract. The claimant won the case and the defendant was ordered to pay over his profits to the claimant. However, the court was careful to point out that the normal legal response to a breach of contract is to award compensation. An order to make restitution was said to be available only in exceptional circumstances.

Cases of intentional torts or breaches of fiduciary duty often allow for claims of unjust enrichment, as well as cases of statutory torts and breaches of contract. A plaintiff can even have a claim in unjust enrichment when there is no other substantive claim. The Uniform Commercial Code ("UCC") entitles a buyer who defaults restitution of the buyer's deposit to the extent it exceeds reasonable liquidated damages or actual damages. If the contract does not have a liquidated damages clause, the UCC provides a statutory sum: 20% of the price or $500, whichever is less, and the buyer who defaulted is entitled to restitution of any excess.

In expectation damages, the measure of damages is the difference between what was given and what was promised, along with consequential and incidental expenses MINUS any payments received from the breaching party and any costs saved as a result of the breach. The proper amount is that which gives the non-breaching party the "benefit of the bargain." However, it is important to note that expectation damages are not punitive; its theoretical purpose is to place the injured, non-breaching party in the same position that they would have occupied had there been full performance of the contract. In other words, it is the amount that makes the injured party indifferent to the breach.

Example: General contractor accepts an offer from a subcontractor and enters into a contract. The general contractor breaches / repudiates their contract part way through the subcontractor's performance. Generally, the subcontractor is entitled to seek an amount equal to the contract price or unrealized value of the promised performance plus costs incurred in preparing or performing under the contract (and costs incidental to the breach e.g., storage costs, restocking fees for returns; penalties or costs for canceling contracts, supply orders etc) MINUS any progress payments made by the general contractor and minus costs saved by the breach; can include anticipated profit.

Neal Townsend signs a contract agreeing to buy 10 hours of landscaping services from Wisda's Landscaping for $50 an hour. If Neal Townsend breaks the contract and doesn't use any of Wisda's Landscaping's services, expectation damages paid to Wisda's Landscaping would be $500, which is the economic loss they suffered. If Wisda's Landscaping breaks the contract, and Neal Townsend is forced to hire another service for $60 an hour, expectation (direct) damages paid to Neal Townsend would equal $100 ($10 an hour, the difference in price between the original contract and the new contract).

Potential Exceptions or Limitations to General Rule on Measure of Damages (expectation damages)

Duty to mitigate - the aggrieved party has a duty to take reasonable steps to mitigate damages. Failure to take such steps can cut off damages which arose from such a failure to take reasonable steps to mitigate. This is a duty of reasonable care thus no duty to take steps which are unreasonably burdensome. Example - buyer breaches contract to purchase produce; seller is expected to mitigate e.g., "cover" under the U.S. Uniform Commercial Code or resale; failure to make reasonable attempts to resell can be a ground to deny damages arising from breach e.g., spoilage. Breaching party is liable for costs which arise from an effort to take reasonable steps to mitigate. E.g., party continues to work after being notified of a breach and running up the bill. (however, this might be reasonable if the aggrieved party reasonably believed they had a better chance of selling a completed product to an alternative buyer).

Reasonable certainty - must be able to calculate the damages based on reasonably certain facts or comparable situations. Cannot have a calculation based wholly on guesses. In cases of doubt, many jurisdictions have adopted a view that the breaching party should bear the risk of doubt rather than the aggrieved party.

Foreseeability - Generally, no consequential damages unless they are known or foreseeable.e.g., No lost profits for third party transactions (e.g., Hadley v. Baxendale case below), holding that Baxendale could only be held liable for losses that were generally foreseeable, or if Hadley had mentioned his special circumstances in advance. The mere fact that a party is sending something to be repaired does not indicate that they would lose profits if it were not delivered on time. The court suggested various other circumstances under which Hadley could have entered into this contract that would not have presented such dire circumstances, and noted that where special circumstances exist, provisions can be made in the contract voluntarily entered into by the parties to impose extra damages for a breach. e.g.,

Cost of performance or a proposed measure of damage greatly exceeds market value of full performance (Peevyhouse v. Garland Coal Mining Co) E.g., land owner contract with coal company promised restoration of land after mining complete - coal company refused to comply; court found the cost of restoration (~$30k) grossly exceeded value of the property in unrestored condition ($300 price difference between condition before and after coal mining). However, this case has been widely criticized; 2nd Restatement of the Law criticized it; many courts will not follow this rule thus would decline to award damages based on market value based on view that damages should be awarded based on actual harm to injured party versus hypothetical market value - dependent on jurisdiction)

Reliance damages is the measure of compensation given to a person who suffered an economic harm for acting in reliance on a party who failed to fulfill their obligation.

Reliance damages are valued by a party's reliance interest for the foreseeable amount. They put the injured party in the same dollar position as if the contract had never been formed.

Application

Under contract law, in a bilateral contract two or more parties owe obligations to each other. Each party acts in reliance that the other party will fulfill their respective obligation. If one party fails to respect their obligation, then the other party or parties may suffer an economic harm. Reliance damages compensate the harmed party/ies for the amount of damages they suffered for acting in reliance on the other party's contractual obligations. They are most often rewarded when the aggrieved party's damages are not capable of accurate estimation, and ordering Specific Performance would be inappropriate.

Reliance damages are the type of damages awarded in promissory estoppel claims, although they can also be awarded in traditional contract breaches. This is appropriate because even there is no bargain principle in the agreement, one party has relied on a promise and thus is damaged to the extent of their reliance. These damages must be proven with reasonable certainty. It is not enough that one party simply guess as to how much they are actually damaged.

In a losing contract, reliance damages will be reduced because the aggrieved party cannot be put in a better position had the contract been performed. Here, the losses from the contract will be subtracted from the reliance damages.

Example

Neal Townsend and Matt Wisda formed a bilateral contract. Neal spent $100 in reliance on the contract, which was foreseeable. However, Matt breached the contract.

Reliance damages protect a party's reliance interest. Neal spent $100 in reliance on the contract, which constituted Neal's reliance interest.

Since reliance damages equal to the value of the reliance interest of the injured party, Matt owes Neal $100. This puts Neal in the same economic position as if the contract never happened.

Damages in tort are generally awarded to place the claimant in the position that would have been taken had the tort not taken place. Damages in tort are quantified under two headings: general damages and special damages.

In personal injury claims, damages for compensation are quantified by reference to the severity of the injuries sustained (see below general damages for more details). In non-personal injury claims, for instance, a claim for professional negligence against solicitors, the measure of damages will be assessed by the loss suffered by the client due to the negligent act or omission by the solicitor giving rise to the loss. The loss must be reasonably foreseeable and not too remote. Financial losses are usually simple to quantify but in complex cases which involve loss of pension entitlements and future loss projections, the instructing solicitor will usually employ a specialist expert actuary or accountant to assist with the quantification of the loss.

General damages, sometimes styled hedonic damages, compensate the claimant for the non-monetary aspects of the specific harm suffered. This is usually termed 'pain, suffering and loss of amenity'. Examples of this include physical or emotional pain and suffering, loss of companionship, loss of consortium, disfigurement, loss of reputation, loss or impairment of mental or physical capacity, loss of enjoyment of life, etc. This is not easily quantifiable, and depends on the individual circumstances of the claimant. Judges in the United Kingdom base the award on damages awarded in similar previous cases.

General damages are generally awarded only in claims brought by individuals, when they have suffered personal harm. Examples would be personal injury (following the tort of negligence by the defendant), or the tort of defamation.

The quantification of personal injury is not an exact science. In English law solicitors like to call personal injury claims as “general damages” for pain and suffering and loss of amenity (PSLA). Solicitors quantify personal injury claims by reference to previous awards made by the courts which are “similar” to the case in hand.

The guidance solicitors will take into account to help quantify general damages are as hereunder:

1 The age of the client

The age of the client is important especially when dealing with fatal accident claims or permanent injuries. The younger the injured victim with a permanent injury the longer that person has to live with the PSLA. As a consequence, the greater the compensation payment. In fatal accident claims, generally the younger deceased, the greater the dependency claim by the partner and children.

2 The nature and extent of the injuries sustained.

Solicitors will consider “like for like” injuries with the case in hand and similar cases decided by the courts previously. These cases are known as precedents. Generally speaking decisions from the higher courts will bind the lower courts. Therefore, judgments from the House of Lords and the Court of Appeal have greater authority than the lower courts such as the High Court and the County Court. A compensation award can only be right or wrong with reference to previous judgments. Sometimes it is a matter of opinion of how much an injury claim is worth and the skill of the solicitor is persuading the opponent and ultimately the judge that their assessment is right. Solicitors must be careful when looking at older cases when quantifying a claim to ensure that the award is brought up to date and to take into account the court of appeal case in Heil v Rankin. Generally speaking the greater the injury the greater the damages awarded.

A quick guide to assess personal injury claims is by reference to the Judicial Studies Board Guidelines for the Assessment of General Damages in Personal Injury Cases. Some case examples can also be considered

3 Gender of the client

Generally speaking damages for personal injury for males and females are the same. However where there can be a difference weighted in favour of females is where the injury results in permanent scarring to the skin. Where the scarring is clearly visible such as the face, legs, and arms, females will usually obtain a greater amount of compensation than males. The compensation reflects the general assumption that females will be affected more than males by scarring and thus will be awarded more. However each case will be decided on its own particular facts. For instance a male model who sustains a scarring tissue to his face may obtain just as much as a female.

4 Personal attributes and fortitude of the client

This heading is inextricably linked with the other points above. Where two clients are of the same age, experience and suffer the same injury, it does not necessarily mean that they will be affected the same. We are all different. Some people will recover more quickly than others. The courts will assess each claim on its own particular facts and therefore if one claimant recovers more quickly than another, the damages will be reflected accordingly. It is important to note here that “psychological injuries” may also follow from an accident which may increase the quantum of damages.

When a personal injury claim is settled either in court or out of court, the most common way the compensation payment is made is by a lump sum award in full and final settlement of the claim. Once accepted there can be no further award for compensation at a later time unless the claim is settled by provisional damages often found in industrial injury claims such as asbestos related injuries.

Special damages

Special damages compensate the claimant for the quantifiable monetary losses suffered by the plaintiff. For example, extra costs, repair or replacement of damaged property, lost earnings (both historically and in the future), loss of irreplaceable items, additional domestic costs, and so on. They are seen in both personal and commercial actions.

Special damages can include direct losses (such as amounts the claimant had to spend to try to mitigateproblems) and consequential or economic losses resulting from lost profits in a business. Special damages basically include the compensatory and punitive damages for the tort committed in lieu of the injury or harm to the plaintiff.

Damages in tort are awarded generally to place the claimant in the position in which he would have been had the tort not taken place. Damages for breach of contract are generally awarded to place the claimant in the position in which he would have been had the contract not been breached. This can often result in a different measure of damages. In cases where it is possible to frame a claim in either contract or tort, it is necessary to be aware of what gives the best outcome.

If the transaction was a "good bargain" contract generally gives a better result for the claimant.

As an example, Neal sells Mary a watch for £100. Neal tells Mary it is an antique Rolex. In fact it is a fake one and worth £50. If it had been a genuine antique Rolex, it would be worth £500. Neal is in breach of contract and could be sued. In contract, Mary is entitled to an item worth £500, but she has only one worth £50. Her damages are £450. Neal also induced Mary to enter into the contract through a misrepresentation (a tort). If Mary sues in tort, she is entitled to damages that put herself back to the same financial position place she would have been in had the misrepresentation not been made. She would clearly not have entered into the contract knowing the watch was fake, and is entitled to her £100 back. Thus her damages in tort are £100. (However, she would have to return the watch, or else her damages would be £50.)

If the transaction were a "bad bargain", tort gives a better result for the claimant. If in the above example Mary had overpaid, paying £750 for the watch, her damages in contract would still be £450 (giving him the item he contracted to buy), however in tort damages are £700. This is because damages in tort put her in the position she would have been in had the tort not taken place, and are calculated as her money back (£750) less the value of what she actually got (£50).

Various matters

Judicial remedies

Legal remedies (Damages)

Compensatory damages

Punitive damages

Incidental damages

Consequential damages

Liquidated damages

Reliance damages

Nominal damages

Statutory damages

Treble damages

Equitable remedies

Specific performance

Account of profits

Constructive trust

Injunction Restitution

Rescission Rectification

Declaratory relief

Related issues

Adequate remedy

Election of remedies

Provisional remedy

Tracing Legal costs

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Incidental and consequential losses

Special damages are sometimes divided into incidental damages, and consequential damages.

Incidental losses include the costs needed to remedy problems and put things right. The largest element is likely to be the reinstatement of property damage. Take for example a factory which was burnt down by the negligence of a contractor. The claimant would be entitled to the direct costs required to rebuild the factory and replace the damaged machinery.

The claimant may also be entitled to any consequential losses. These may include the lost profits that the claimant could have been expected to make in the period whilst the factory was closed and rebuilt.

Proximate cause

Recovery of damages is subject to the legal principle that damages must be proximately caused by the wrongful conduct of the defendant. This is known as the principle of proximate cause. This principle governs the recovery of all compensatory damages, whether the underlying claim is based on contract, tort, or both. Damages are likely to be limited to those reasonably foreseeable by the defendant. If a defendant could not reasonably have foreseen that someone might be hurt by their actions, there may be no liability.

This rule does not usually apply to intentional torts (for example, deceit), and also has stunted applicability to the quantum in negligence where the maxim Intended consequences are never too remote applies – 'never' is inaccurate here but resorts to unforeseeable direct and natural consequences of an act.

Quantifying losses in practice – expert evidence

It may be useful for the lawyers for the plaintiff and/or the defendant to employ forensic accountants or forensic economists to give evidence on the value of the loss. In this case, they may be called upon to give opinion evidence as an expert witness.

Statutory damages

Statutory damages are an amount stipulated within the statute rather than calculated based on the degree of harm to the plaintiff. Lawmakers will provide for statutory damages for acts in which it is difficult to determine the value of the harm to the victim. Mere violation of the law can entitle the victim to a statutory award, even if no actual injury occurred. These are similar to, but different from, nominal damages, in which no written sum is specified.

For example, United States Civil Code 18 USC §§2520 provides for statutory damages to victims of various wiretapping offences. The Lanham (Trademark) Act provides for minimum damages of $500 per type of item, for goods sold with unauthorized use of a trademark (15 U.S.C. § 1117(c), Lanham Act Section 35(c).). In copyright law, European directive 2004/48/EC on the Enforcement of Intellectual Property Rights bases damages on, "the amount of royalties which would have been due if the infringer has requested authorisation".

Nominal damages

On the other hand, nominal damages are very small damages awarded to show that the loss or harm suffered was technical rather than actual. Perhaps the most famous nominal damages award in modern times has been the $1 verdict against the National Football League (NFL) in the 1986 antitrust suit prosecuted by the United States Football League. Although the verdict was automatically trebled pursuant to antitrust law in the United States, the resulting $3 judgment was regarded as a victory for the NFL. Historically, one of the best known nominal damage awards was the farthing that the jury awarded to James Whistler in his libel suit against John Ruskin. In the English jurisdiction, nominal damages are generally fixed at £2.

Many times a party that has been wronged but is not able to prove significant damages will sue for nominal damages. This is particularly common in cases involving alleged violations of constitutional rights, such as freedom of speech.

Punitive damages (non-compensatory)

Punitive damages

Generally, punitive damages, which are also termed exemplary damages in the United Kingdom, are not awarded in order to compensate the plaintiff, but in order to reform or deter the defendant and similar persons from pursuing a course of action such as that which damaged the plaintiff. Punitive damages are awarded only in special cases where conduct was egregiously invidious and are over and above the amount of compensatory damages, such as in the event of malice or intent. Great judicial restraint is expected to be exercised in their application. In the United States punitive damages awards are subject to the limitations imposed by the due process of law clauses of the Fifth and Fourteenth Amendments to the United States Constitution.

In England and Wales, exemplary damages are limited to the circumstances set out by Lord Patrick Devlin in the leading case of Rookes v. Barnard. They are:

Oppressive, arbitrary or unconstitutional actions by the servants of government.

Where the defendant's conduct was 'calculated' to make a profit for himself.

Where a statute expressly authorises the same.

Rookes v Barnard has been much criticised and has not been followed in Canada or Australia or by the Privy Council.

Punitive damages awarded in a US case would be difficult to get recognition for in a European court, where punitive damages are most likely to be considered to violate order public.

Contemptuous damages

This type of damages are rarely awarded. They are given when the plaintiff's suit is trivial, used only to settle a point of honour or law. Awards are usually of the smallest amount, usually 1 cent or similar. Court costs are not awarded.

Aggravated damages

Aggravated damages are not often awarded; they apply where the injury has been aggravated by the wrongdoer's behaviour, for example, their cruelty.

Restitutionary or disgorgement damages

In certain areas of the law another head of damages has long been available, whereby the defendant is made to give up the profits made through the civil wrong in restitution. Doyle and Wright define restitutionary damages as being a monetary remedy that is measured according to the defendant's gain rather than the plaintiff's loss. The plaintiff thereby gains damages which are not measured by reference to any loss sustained. In some areas of the law this heading of damages is uncontroversial; most particularly intellectual property rights and breach of fiduciary relationship.

In England and Wales the House of Lords case of Attorney-General v. Blake opened up the possibility of restitutionary damages for breach of contract. In this case the profits made by a defecting spy, George Blake, for the publication of his book, were awarded to the British Government for breach of contract. The case has been followed in English courts, but the situations in which restitutionary damages will be available remain unclear.

The basis for restitutionary damages is much debated, but is usually seen as based on denying a wrongdoer any profit from his wrongdoing. The really difficult question, and one which is currently unanswered, relates to what wrongs should allow this remedy.

Legal costs

In addition to damages, the successful party is entitled to be awarded his reasonable legal costs that he spent during the case. This is the rule in most countries other than the United States. In the United States, a party generally is not entitled to its attorneys' fees or for hardships undergone during trial unless the parties agreed in a contract that attorney's fees should be covered or a specific statute or law permits recovery of legal fees, such as discrimination.

Date: 2015-01-29; view: 1391