LAWS6991 Chap.10 Damages, Estoppel and Vitiating Factors
Damages, Estoppel and Vitiating Factors
This chapter covers what the law gives an injured party and when consent fails. Damages place the plaintiff where performance would have left it, through identifying loss, causation, remoteness and mitigation. Bellgrove v Eldridge tests reinstatement, and Commonwealth v Amann allows reliance damages for wasted expenditure. Estoppel, as in Waltons v Maher, protects reliance on a clear assumption.
Vitiating factors make contracts voidable: undue influence in Johnson v Buttress and Thorne v Kennedy, duress under Crescendo, and unconscionable dealing under Amadio.
What this chapter covers
- 01
Expectation damages
- 02
Diminution in value and reinstatement
- 03
Reliance damages and wasted expenditure
- 04
Remoteness and mitigation
- 05
Equitable estoppel
- 06
Undue influence
- 07
Duress and illegitimate pressure
- 08
Unconscionable dealing in equity
Worked example · free
Reliance damages after a cancelled supply deal
- 1Expectation damages are the presumed measure, but the dairy cannot prove its lost profits with any confidence.
- 1Commonwealth v Amann allows reliance damages for expenditure reasonably incurred in reliance on the promise, on the assumption it would have been recouped if the contract had been performed.
- 1Wasted expenditure is the cost less what can be recovered by resale: $90,000 minus $20,000 is $70,000.
- 1The dairy can claim $70,000 as reliance damages, subject to the bakery proving that the contract would not have recouped that outlay.
Key terms
- Expectation damages
- Damages that put the plaintiff in the position it would have been in had the contract been performed.
- Reliance damages
- Damages for expenditure wasted in reliance on the contract, also called wasted expenditure.
- Reinstatement cost
- The cost of making defective work conform to the contract, awarded when necessary and reasonable.
- Equitable estoppel
- A doctrine preventing a party from departing from a clear assumption it induced another to rely on to its detriment.
- Undue influence
- Improper use of a position of ascendancy so that the weaker party's consent is not a free act.
- Special disadvantage
- A condition seriously affecting a person's ability to judge their own interests, exploited in unconscionable dealing.
Damages, Estoppel and Vitiating Factors FAQ
What are the steps in a contract damages claim?
The seminar's simplified method is to identify a loss, prove it was caused by the breach, show it is not too remote, and show the plaintiff took steps to mitigate. Consequential loss can be added if those limits do not exclude it.
When is the cost of rebuilding awarded instead of loss of value?
Bellgrove v Eldridge asks whether the work is needed to make the building match the contract and whether doing it is reasonable. Tabcorp v Bowen is the later High Court authority on the same question.
Must a plaintiff choose between expectation and reliance damages?
No. Amann treated both as applications of the compensatory principle from Robinson v Harman, and Cessnock City Council confirmed that the court, not the plaintiff, decides the basis of assessment.
What makes an assurance clear enough for estoppel?
It must be clear enough to found a reasonable assumption. In Crown v Cosmopolitan a promise that tenants would be looked after at renewal was too vague, whereas in Waltons v Maher the conduct around an imminent lease supported the assumption.
How is duress different from undue influence?
Duress requires illegitimate pressure that induced the contract. Undue influence needs no threat; it concerns a relationship of influence that prevents free judgment. Thorne v Kennedy noted the boundaries are blurred and the victims behave differently.
What must be shown for unconscionable dealing in equity?
A special disadvantage seriously affecting the weaker party's judgment, the stronger party's knowledge of it, and unconscientious exploitation, after which the stronger party must show the transaction was fair, just and reasonable.
Exam move
Split revision into remedies and consent. For remedies, practise calculations that compare diminution in value, reinstatement cost and wasted expenditure, and always explain why the chosen measure fits. For estoppel, learn the elements and the contrast between Waltons and Austotel.
For vitiating factors, build a table of undue influence, duress and unconscionable dealing with the core idea, the elements and one case each, so you can choose the right doctrine quickly. Ask Sia to give you short fact patterns and check whether you named the correct doctrine.
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