AuthorJulian Bailey
Introduction 1143
Damages for breach of contract 1144
(i) Purpose of an award of damages 1144
(ii) Constraints on recovery 1145
Categories of contractual damages 1146
(i) Introduction 1146
(ii) Expectation damages 1146
(iii) Reliance damages 1147
Specic heads of loss or damage 1147
(i) Defective works 1147
(ii) Delay costs 1147
(iii) Overhead costs and management time 1148
(iv) Loss of prot 1149
(v) Wasted expenditure 1153
(vi) Interest and nance charges 1154
(vii) Depreciation 1157
(viii) Consequential loss 1158
(ix) Damages owing from termination 1159
(x) Mental distress 1160
(xi) Inconvenience and loss of amenity 1161
(xii) Legal costs 1164
(xiii) Damaged or destroyed property 1164
Damages in tort 1165
(i) Purpose 1165
(ii) Negligence 1166
(iii) Other torts 1166
Causation 1167
(i) Generally 1167
(ii) e “but for” test 1168
(iii) Intervening acts and events 1170
(iv) More than one cause of loss 1173
(v) Proof of causation 1175
(vi) No loss 1176
(vii) Loss avoided 1181
Punitive (or exemplary) damages 1181
Remedies for breach of section 18 of the Australian Consumer Law (Cth) 1182
(i) Introduction 1182
(ii) Damages 1182
Assessment of damages 1186
(i) Approach 1186
(ii) Proof 1186
(iii) Time in respect of which damages are assessed 1188
(iv) Currency 1190
(v) Once-and-for-all assessment 1190
(vi) Dealing with a multitude of smaller claims 1190
(vii) Assessment of loss under a contractual mechanism 1191
(viii) Tax 1191
General constraints on the assessment of damages 1191
Remoteness 1192
(i) Introduction 1192
(ii) Remoteness in contract 1192
(iii) Remoteness in tort 1198
(iv) Type of loss or damage 1199
Mitigation of loss 1199
Liquidated damages 1202
(i) Generally 1202
(ii) Circumstances in which liquidated damages are payable 1204
(iii) Calculation of liquidated damages 1207
(iv) Exclusive remedy 1209
(v) Loss or damage that liquidated damages are intended to cover 1211
Defences to claims for liquidated damages 1213
(i) Contract does not permit recovery 1213
(ii) Inability to deduct or set o liquidated damages 1214
(iii) Prevention of performance 1215
(iv) Penalty 1224
(v) Evidence of penal operation 1234
(vi) Recovery of general damages where liquidated damages are
irrecoverable 1235
(vii) Waiver 1236
Exclusion clause 1236
(i) Generally 1236
(ii) Interpretation 1237
(iii) Repugnancy, “fundamental breach”, deliberate breach and
overriding undertakings 1240
(iv) ird parties and exclusion or limitation clauses 1242
(v) Unfair Contract Terms legislation (United Kingdom, Hong Kong
and Singapore) 1242
(vi) Burden of proof 1250
Limitation clause 1250
(i) Generally 1250
(ii) Indirect and consequential losses 1251
(iii) Net contribution clause 1252
(iv) Interpretation 1253
(v) ird parties 1254
(vi) Time bar 1254
(vii) Eect of statute 1254
Plurality of liability 1254
(i) Introduction 1254
(ii) Joint liability 1254
(iii) Several liability 1255
(iv) Joint and several liability 1256
(v) No greater recovery than actual loss 1256
Australian proportionate liability legislation 1257
(i) Introduction 1257
(ii) General proportionate liability legislation 1257
(iii) Construction-specic legislation 1262
Contribution 1263
(i) Introduction 1263
(ii) Availability 1264
(iii) e “same damage” 1265
(iv) e amount recoverable by way of contribution 1268
(v) Limitation periods 1270
Small or trivial claims 1271
Loss of reputation 1271
13.01 An award of damages is an order, by a court or tribunal, that one party is to pay a
sum of money to another party for the purpose of compensating that other party for the
rst party’s breach of obligation. Damages represent the principal means by which the
law provides a remedy to a person who suers loss or harm as a consequence of another’s
breach of contract or tort.1 An obligation to pay damages for breach of contract arises
by operation of law,2 although it is equally permissible for a contract to stipulate that
damages are payable in the event of a breach of the contract.3
13.02 Money payable as damages is to be distinguished from money that is payable for
other juridical reasons. By way of illustration, when a person performs work for another
pursuant to a contract, and has obtained a right to payment, the right is in the nature
of a debt, and a claim to enforce such an entitlement to payment is a debt claim, not a
1 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 at [46] (concerning the pos-
ition in relation to damages for breach of contract). Damages are a conventional remedy at common law for breach
of contract or tort. Damages may also be sought in equity pursuant to Lord Cairns’ Act and its statutory ospring
(as to which see paragraph 8.68), in circumstances where equity could order an injunction for the particular breach
of obligation or transgression of rights, but not generally: see, eg, Dixson v Tange (1891) 12 LR (NSW) Eq 204.
2 Mann v Paterson Constructions Pty Ltd [2019] HCA 32 at [83], per Gageler J; at [195] and [197], per Nettle,
Gordon and Edelman JJ.
3 Indeed, this is commonly provided for in construction and engineering contracts in relation to the obligation of
a contractor to complete its works within a particular period of time. Liquidated damages, in a specied or readily
calculable amount, are usually payable if the contractor is late in completing the works.

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