Contractual Remedies in UK Law

It is important to remember that any clause in a contract must be construed in the context in which one finds it, both the immediate context of the other terms and the wider context of the transaction as a whole. The court is unlikely to be satisfied that a party to a contract has abandoned valuable rights arising by operation of law unless the terms of the contract make it sufficiently clear that that was intended. The more valuable the right, the clearer the language will need to be.

If a construction contract is abandoned or terminated, the employer is in new territory for which the liquidated damages clause may not have made provision. It may be more logical and more consonant with the parties' bargain to assess the employer's total losses flowing from the abandonment or termination, applying the ordinary rules for assessing damages for breach of contract.

The phrase “fraud, negligence, gross negligence, or wilful misconduct” is describing unusual or extreme conduct, such that Triple Point should forfeit the protection of the cap. If the engineers did so deliberately, that would be both a breach of contract and wilful misconduct. In those two examples Triple Point would be liable for the full consequences of the engineers' negligent conduct, alternatively their wilful misconduct, without the Article 12.3 cap limiting the financial liability.

Both counsel accept that there are difficulties with the second and third sentences of Article 12.3, whichever interpretation is correct. I have come to the conclusion that the appellant's construction is preferable. Sentence 3 is dealing with specific remedies for individual breaches. Accordingly sentence 3 of Article 12.3 contains a specific exclusion for delay breaches.

Take the example of a contractor who has wholly failed to comply with the contract, is in considerable delay, and is facing a notice of termination. If the defendant was right, the contractor would be better off not coming back on site to carry out the works because, if he refused to do so, the contract would then be terminated and his liability to pay liquidated damages would automatically come to an end.

In a proper case damages for mental distress can be recovered in contract, just as damages for shod: can be recovered in tort. One such case is a contract for a holiday, or any other contract to provide entertainment and enjoyment. If the contracting party breaks his contract, damages can be given for the disappointment, the distress, the upset and frustration caused by the breach.

(3) Is C also liable to A in respect of that damage or some of it?