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Types of damages Essay

According to the S. 74 damages which is the cash compensation by a court or another’s fault or negligence in suffering, the rules for damages can and frequently do vary based on the type of claim which is presented. There are many types of damages. Special damages are those which actually were caused by the injury and include medical and hospital bills, ambulance charges, loss of wages, property repair or replacement costs, or loss of money due on a contract.

There are presumed to be a result of the other party’s actions is general damages, but are subjective both in nature and determination of value of damages. These damages include distress, future problems of our life and crippling effect of an injury, loss of ability to perform various acts, shortening of life span, mental anguish, loss of companionship, loss of reputation, humiliation from scars, loss of anticipated business and other harm. The third damage is exemplary damages which combines punishment and the setting of public example.

Punitive damages may be awarded when the defendant acted in a malicious, violent, oppressive, fraudulent, wanton, or grossly reckless way in causing the special and general damages to the plaintiff. On occasion punitive damages can be greater than the actual damages. Although the innocent asked for compensation, they are seldom awarded. Nominal damages are those given when the actual harm is minor and an award is warranted under the circumstances.

For example, the most famous case was when Winston Churchill was awarded a shilling against author Louis Adamic who had written that the British Prime Minister had been drunk at a dinner at the White House. Liquidated damages are those pre-set by the parties in a contract to be awarded in case one party defaults as in breach of contract. This is similar to the measure of damages payable under common law as established in the case of Hadley v Baxendale (1854).

In Tham Cheow Toh1, the appellant sold a metal melting furnace to the respondent. The appellant’s undertaking to the respondent that the melting furnace would have a temperature of no lower than 2,600 degrees F was not satisfied. The respondent alleged that the appellant had breached the contract and claimed damages of RM29,301. 38. The trial judge held that the melting furnace did not meet with the specifications thereby constituting a breach of the condition of the contract. A sum of RM7,501. 8 was awarded as damages for loss of profits. Abdul Hamid J: In the circumstances, I am of the view that the failure on the part of the defendants to supply a furnace which would meet the required temperature, constituted a breach of the condition of the contract entitling the plaintiffs to treat such breach as a breach of warranty. For the reasons which I have stated above, it is my judgment that the defendants are liable for the breach of the condition of the agreement and the plaintiffs’ claim should therefore succeed.

The Federal Court said that it is true that the amount awarded in this case was merely conjectural but there was at least some evidence before the court which might support the award. It is because that the case fell within the provisions of s 74(1) of the Contracts (Malay States) Ordinance, that is, when damages arising were such as might reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it.

This is indeed the principle in Hadley v Baxendale (1854) . Case: Aruna Mills Ltd v Dhanrajmal Gobindram [1968] In Aruna Mills Ltd v Dhanrajmal Gobindram2, goods were to be shipped from India and the contract expressly stated that the buyers would take the risk of any devaluation of the rupee. The rupee was devalued and the price payable by the buyers was increased accordingly. However, a portion of that increase arose as a result of late shipment by the sellers, and it was held that the resultant loss could be recovered by the buyers.

The ‘devaluation’ clause demonstrated that the parties had turned their minds to the impact of exchange losses. Lord Reid observed: “I am satisfied that the court [in Hadley v Baxendale] did not intend that every type of damage which was reasonably foreseeable by the parties when the contract was made should either be considered as arising naturally, in the usual course of things, or be supposed to have been in the contemplation of the parties.

Indeed the decision makes it clear that a type of damage which was plainly foreseeable as a real possibility but which would only occur in a small minority of cases cannot be regarded as arising in the usual course of things or be supposed to have been in the contemplation of the parties: the parties are not supposed to contemplate as grounds for the recovery of damage any type of loss or damage which on the knowledge available to the defendant would appear to him as only likely to occur in a small minority of cases.

In cases like Hadley v Baxendale or the present case it is not enough that in fact the plaintiff’s loss was directly caused by the defendant’s breach of contract. It clearly was so caused in both. The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realized that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation. Here, Lord Reid saw the law as applying an objective test, and one which reflects the realities of the business transaction entered into by the contracting parties. In the light of the decision of our court the law on remoteness of damage in contract is therefore as laid down in Hadley v Baxendale (1854) and restated in Victoria Laundry [1949] s 74 which provides that compensation is not to be given for any remote or indirect loss sustained is superfluous in view of the limits.

Case: Tan Chin Kim Sawmill & Factory Sdn Bhd v Lindeteves-Jacoberg (M) Sdn Bhd3 [1982] In Tan Chin Kim Sawmill, it is clear from these three clauses and from the terms contained in MIMB’s letter dated 2 June 1975, which terms were accepted by both the appellant and the respondent that the intention of the parties was that MIMB was to be compensated not only for all sums of money which would become due and payable by the appellant but also for “all losses, damages costs and expenses” suffered by MIMB.

The letter and these three clauses by stipulating that sums other than rentals due are recoverable therefore make the financing case inapplicable to the case under the present appeal, and as such the amount of $527,039. 37 which the respondent paid as a cash price settlement for the equipment on 11 February 1977 was in fact the amount which the appellant itself was bound to pay under the lease agreement.

In fact the appellant was informed of this fact by MIMB in its letter to the appellant dated 22 March 1976 and the respondent was offered back the equipment on the stated cash price settlement only in the event that the appellant was unable to pay MIMB the said cash price settlement by 1 April 1976.

Abdoolcader J: In the circumstances on a consideration of the evidence adduced both oral and documentary and for the reasons I have stated, I find no substance whatsoever in the contention of the plaintiffs that the first plaintiff was at any time the owner of the machinery in question or that the arrangement entered into to provide finance to the first plaintiff was otherwise than what the documents produced tales quales show it to be, namely, the provision of lease financing to the first plaintiff by the second defendant by way of a lease of the machinery to the former by the latter which had purchased it from the first defendant.

The crux of the plaintiffs claim to the effect that the documents are a sham because they were a device to cover a transaction whereby goods were given as security for a loan must accordingly fail. Cadit quaestio, and it follows that the plaintiffs ancillary claims for damages and other relief must necessarily succumb, and it is perhaps only necessary for me to observe that in the matter of the plaintiffs claim for damages Mr. Rajah himself had to admit that the y have not satisfactorily proved every item of the damages sought.

The Federal Court said that, in order to make a particular loss recoverable it is not necessary for the plaintiff to prove that the defendant could, as a reasonable man, foresee that a breach must necessarily result in that particular loss. Rescind S. 76 means that it is exercising the right to terminate the contract that communicated clearly by a party revocable contract. If the contract never existed, it is an irrevocable step that frees the other party as well from its contractual obligations.

Rescission may be on mutual consent, by either party for reasonable cause such as a material misrepresentation. The second definition is unmaking of a contract by a court in the interests of justice. However, both parties are not possible to reinstate their original positions. Furthermore, rescind a contract defined as to affirm a contract void in its inception and to put an end so further defined as to terminate it and release parties from further obligations to each other and restore parties to relative positions which they would have occupied had no contract ever been made.

Case: Lam Gow & Anor V. Maju-Tekno Sdn Bhd & Anor 4 [ 1994] In the present case, the plaintiffs had, on 27 June 1990 contracted to purchase land with a building thereon measuring 258 square meters. They did not discover that the said land only measured 193 square meters until July 1992. Immediately upon such discovery, they wrote to the defendant, complaining of the matter. The circumstances and the plaintiffs’ conduct indicate that there was no acceptance of the reduction in the size of the land by the plaintiffs.

Ranita Hussein JC: “In my view, the reduction by 25. 19% in the size of the land alone can be regarded as having transformed the subject matter of the sale into one which the purchasers would not have purchased had they known of the true position at the time of the signing of the agreement. In other words, the difference aforesaid would not give the purchasers substantially ‘what they bargained for’. ” For the reason above, I find that the plaintiffs have the right to rescission.

Judgment is given to the plaintiffs for rescission and it is ordered that the sum of RM14,659 paid by the plaintiffs to the defendants be refunded with interest at the rate of 8% and costs. The interest is, as agreed by the parties, to take effect from 3 January 1991 to date of realization. It is also ordered that the plaintiffs be entitled to damages on account of the non fulfillment of the agreement, the amount of such damages to be assessed by the senior assistant registrar.

The Federal Court said that the plaintiffs for rescission and it is ordered that the sum of RM14,659 amount paid by the plaintiffs to the defendants be refunded with interest at the rate of 8% and costs. The interest is, as agreed by the parties, to take effect from 3 January 1991 to date of realization. It is because that the plaintiffs be entitled to damages on account of the non fulfillment of the agreement, the amount of such damages to be assessed by the senior assistant registrar.


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