LECTURE 18 - MITIGATION, CONTRIBUTORY NEGLIGENCE, AGREEED REMEDIES, SPECIFIC PERFORMANCE AND INJUCTION - CONTRACT Mitigation - Following a breach of contract, the innocent party should act reasonably in order to mitigate his loss. - British Westinghouse Electric & Manufacturing v Underground Electric Railways Co of London (1912) o Per Viscount Haldane -this obligation to mitigate ... imposes on a plaintiff the duty of taking all 'reasonable steps' to mitigate the loss consequent on the breach and debars him from claiming ay part of the damage which is due to his negligent to take such steps. - Payzu Ltd v Saunders (1919) o Defendants insistence on cash with each order (in breach of contract) should have been accepted. - It is important to remember that the burden of proof on the issue of mitigation is on the defendant. (see Borealis AB v Geogas Trading SA [2011]) - Mitigation and anticipatory breach o White & Carter (Councils) Ltd v McGregor (1962) - party not in breach is entitled to perform, and claim full cost of performance Contributory Negligence - Section 1(1) of the Law Reform (Contributory Negligence) Act 1945 states that: o Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant's share in the responsibility for the damage ... - It is now clear that in some cases contributory negligence will be a defence to breach of contract. - In Forsikringsaktieselskapet Vesta v Butcher [1986] - the discussion of contributory negligence was strictly obiter but has been very influential; There are three categories of cases. o 1 - arises where defendant is in breach of strict a contractual duty. o 2 - where the defendant is in breach of a contractual duty of care. o 3 - concerns situations where the defendant is in breach of a contractual duty of care and would also be liable in the tort of negligence. " Contributory negligence is a defence only to Category 3. - This approach has since been supported by the Court of Appeal in UCB Bank Plc v Hepherd Winstanley & Pugh [1999]. - In Barclays Bank Ltd v Fairclough Building Ltd [1995] the Court of Appeal rejected any suggestion that contributory negligence could apply in Category 1
Liquidated Damages and Penalty Clauses - Genuine pre-estimate of loss - enforceable - Penalty clause - unenforceable because they impose a detriment on the contract breaker out of all proportion to the legitimate interest of the innocent party in the enforcement of the primary obligation. Dunlop Pneumatic Tyre Co. Ltd v New Garage & Motor Co (1915) - "Lord Dunedin said that in assessing whether a clause was a penalty or not