1911 Encyclopædia Britannica/Damages

​DAMAGES (through O. Fr. damage, mod. Fr. dommage, fromLat. damnum, loss), the compensation which a person who hassuffered a legal wrong is by law entitled to recover from the personresponsible for the wrong. Loss caused by an act which is nota legal wrong (damnum sine injuria) is not recoverable, e.g.where a father loses a young child by the negligence of a thirdparty.

The principle of compensation in law makes its first appearanceas a substitute for personal retaliation. In primitive law somethingof the nature of the Anglo-Saxon wer-gild, or the ποινήof the Iliad, appears to be universal. It marks out with greatminuteness the measure of the compensation appropriate toeach particular case of personal injury. And there is a resemblancebetween the legal compensation, as it may be called, andthe compensation which an injured person, seeking his ownremedy, would be likely to exact for himself. In such a systemthe two entirely different objects of personal satisfaction andcriminal punishment are not clearly separated, and in fact,criminal and civil remedies were administered in the sameproceeding.

Under modern systems of law, the object of legal compensationis to place the injured person as nearly as possible in the situationin which he would have been but for the injury; and the controllingprinciple is that compensation should be determined sofar as possible by the actual amount of the loss sustained. InEngland, civil proceedings for reparation and criminal proceedingsfor punishment are with few exceptions carefully keptseparate. In Scotland, pursuit of the two kinds of remedies inthe same proceeding is possible but very rare; but in France andother European states it is lawful and usual in the case of thosedelicts which are also punishable criminally.

In the law of England the two historical systems of commonlaw and equity viewed compensation or reparation from twodifferent points of view. The principle of the common law wasthat the amount of every injury might be estimated by pecuniaryvaluation. The idea was no doubt derived from the old tariffsof were, bot and wite, in which the valuations were elaborate.Until 1858 (Cairns’ Act) courts of equity had no direct jurisdictionto award damages, and their business was to place theinjured party in the actual position to which he was entitled(restitutio ad integrum). This difference comes out most clearlyin cases of breach of contract. The common law, with a fewpartial exceptions, could do no more than compel the defaulterto make good the loss of the other party, by paying him an ascertainedsum of money as damages. Equity, recognizing the factthat complete satisfaction was not in all cases to be obtained bymere money payment, compelled those who broke certain classesof contracts specifically to perform them, and in the case of actsor defaults not amounting to breach of contract, on satisfactoryproof that a wrong was contemplated, would interfere to preventit by injunction; while at common law no action could bebrought until the injury was accomplished, and then onlypecuniary damages could be obtained. Since the JudicatureActs this distinction has ceased and the appropriate remedy maybe awarded in any division of the High Court of Justice.

Under the common law damages were always assessed by ajury. Under the existing procedure in England they may beassessed (1) by a jury under the directions of a judge; (2) by ajudge alone or sitting with assessors; (3) by a referee, official orspecial, or officer of the courts with or without the assistance ofmercantile or other assessors; (4) by a consensual tribunal suchas an arbitrator or valuer selected by the parties. Whatever themode of assessment, it is subject to review if the assessors haveclearly mistaken the proper measure of damage.

In the case of assessment by a jury, the verdict may be setaside because the damages are clearly excessive or palpablyinsufficient, or arrived at by some irregular conduct, e.g. bysetting down the sum which each juryman would give and dividingthe result by twelve. The appellate court, however, cannot,without the consent of the parties, itself fix the amount ofdamages in a case which has been submitted to a jury (Watt v.Watt, 1905, Appeal Cases 115).

The courts have gradually evolved certain rules or principlesfor the proper assessment of damages, although extreme difficultyis found in their application to concrete cases. Adistinction is drawn between general and specialdamages. (1) General damage is that implied by lawMeasure of damages.as necessarily flowing from the breach of right, andrequiring no proof. (2) Special damage is that in fact caused bythe wrong. Under existing practice this form of damage cannotbe recovered unless it has been specifically claimed and proved,or unless the best available particulars or details have beenbefore trial communicated to the party against whom it isclaimed.

Contracts.—“The law imposes or implies a term that uponbreach of contract damages must be paid.” The general tendencyof legal decisions in cases of contract is (i.) to make theamount of damages which may be awarded a matter of legalcertainty, (ii.) to leave to a jury or like tribunal little more to dothan find the facts, (iii.) and to revise the assessment if it isclear that it has been made in disregard of the terms of thecontract or of the natural and direct consequences of the breach.The measure of damage, general speaking, is the sum necessaryto place the aggrieved party in the same position so far as moneywill do it as if the contract had been performed. If the breachis proved, but the person complaining has suffered no realdamage, he is entitled to have his legal right recognized by anaward of what are called nominal damages, i.e. a sum just sufficientto carry a judgment in his favour on the infraction of hisrights. Nominal damages, it will therefore be seen, are not thesame as “small damages.” He is, however, also entitled toprove and recover the special or particular damage lawfullyattributable to the breach. Where the contract is to pay afixed sum of money or liquidated amount, the measure ofdamages for non-payment is the sum agreed to be paid andinterest thereon at the rate stipulated in the contract or recognizedby law.

The law is the same in Scotland and in France (Civil Code, art. 1153). In some contracts the parties themselves fix the sum to be paid as damages if the contract is not fulfilled. These damages are described as liquidated, in Scots law stipulated or estimated. It would be supposed that the sum thus fixed would be the proper damages to be awarded. And under the French ​Civil Code (arts. 1152, 1153, 1780) the stipulation of the partiesas to the damages to be paid for breach of a stipulation otherthan for paying a sum of money is binding on the courts. Butin England, Scotland and the United States, courts disregard thewords used, and inquire into the real nature of the transaction inorder to see whether the sum fixed is to be treated as ascertaineddamage or as a penalty to be held in terrorem over the defaulter,and in the latter case, notwithstanding the stipulation, willrequire proof of the actual loss. In Kemble v. Farren (1829, 6Bingham, 141), a contract between a manager and an actorprovided that for a breach of any of the stipulations therein, thesum of £1000 should be payable by the defaulter, not as apenalty, but as liquidated and ascertained damages. Yet, thecourt, observing that under the stipulations of the contract thesum of £1000, if it were taken to be liquidated damages, mightbecome payable for mere non-payment of a trifling sum, heldthat it was not fixed as damages, but as a penalty only. Thecase in which an agreed sum is most usually treated as a penaltyis a bond to pay a fixed sum containing a condition that it shallbe void if certain acts are done or a certain smaller sum paid.Another case is where a single lump sum is fixed as the liquidatedamount of damage to be paid for doing or failing to do a numberof different things of very varying degrees of importance (Elphinstonev. Monkland Iron Co., 1887, 11 A.C. 333). But the courtshave accepted as creating a contractual measure of damage astipulation to finish sewerage works by a given day (Law v.Redditch Local Board, 1892, 1 Q.B. 127); or to completetorpedo boats within a limited time for a foreign government(Clydebank Engineering Co. v. Yzquierda, 1905, A.C. 6). Inthis last case the law lords indicated that the provision of anagreed sum was peculiarly appropriate in view of the difficulty ofshowing the exact damage which a state sustains by non-deliveryof a warship. Where the damage is not liquidated or agreedit is assessed to upon evidence as to the actual loss naturally anddirectly flowing from the breach of contract.

In contracts for the sale of goods the measure of damages isfixed by statute. Where the buyer wrongfully refuses or neglectsto accept and pay for, or the seller wrongfully neglects or refusesto deliver the goods, the measure is the estimated loss directlyand naturally resulting in the ordinary course of events fromthe buyer’s or seller’s breach of contract. Where there is anavailable market for the goods in question, the measure ofdamages is prima facie to be ascertained by the difference betweenthe contract price and the market or current price at the timeor times when the goods ought to have been accepted or delivered,or if no such time was fixed for acceptance or delivery, then atthe time of refusal to accept or deliver (Sale of Goods Act 1893,§§ 50, 51).

Where there is no market, the value is fixed by the price of thenearest available substitute. Where the sufferer, at the requestof the person in default, postpones purchase or sale, any increasedloss thereby caused falls on the defaulter. If the buyer,before the time fixed for delivery, has resold the goods to a sub-vendor,he cannot claim against his own vendor any damageswhich the sub-vendor may recover against him for breach ofcontract, because he ought to have gone into the market andpurchased other goods. But this is subject to modification incases falling within the rule in Hadley v. Baxendale (1854, 9Exchequer, 341). But trouble and expense incurred by the sellerof finding a new purchaser or other goods may be taken accountof in assessing the damages.

Where the goods delivered are not as contracted the buyermay as a rule sue the seller for a breach of warranty, or set itup as reduction of price. Where the warranty is of quality theloss is prima facie the difference between the value of the goodsdelivered when delivered and the value which they would havethen had if they had answered to the warranty (Sale of GoodsAct 1893, § 53). In an American case, where a person had agreedwith a boarding-house keeper for a year, and quitted the housewithin the time, it was held that the measure of damages was notthe price stipulated to be paid, but only the loss caused by thebreach of contract. In contracts to marry, a special class ofconsiderations is recognized, and the jury in assessing damageswill take notice of the conduct of the parties. The social positionand means of the defendant may be given in evidence to showwhat the plaintiff has lost by the breach of contract.

On a breach of contract to replace stock lent, the measure ofdamages is the price of the stock on the day when it ought tohave been delivered, or on the day of trial, at the plaintiff’soption.

In contracts for the sale of realty, the measure of damage forbreach by the vendor is the amount of any deposit paid by thewould-be purchaser and of the expenses thrown away. But thepurchaser may, in a proper case, obtain specific performance,and if he has been cheated may obtain damages in an action fordeceit.

Breaches of trust are in a sense distinct from breaches ofcontract, as they fell under the jurisdiction of courts of equityand not of the common law courts. The rule applied was torequire a defaulting trustee to make good to the beneficiariesany loss flowing from a breach of trust and not to allow him toset off against this liability any gain to the trust fund resultingfrom a different breach of trust or from good management(Lewin on Trusts, ed. 1904, 1146).

In estimating the proper amount to be assessed as damagesfor a breach of contract, it is not permissible to include everyloss caused by the act or default upon which the claim fordamages is based. The damage to be awarded must be thatfairly and naturally arising from the breach under ordinarycircumstances or the special circumstances of the particularcontract, or in other words, which may reasonably be supposedto have been in the contemplation of the parties at the time ofmaking the contract. The chief authority for this rule is thecase of Hadley v. Baxendale (1854, 9 Exch. 341), which hasbeen accepted in Scotland and the United States and throughoutthe British empire, and often differs little, if at all, from therule adopted in the French civil code (art. 1150). In that casedamages were sought for the loss of profits caused by a steam millbeing kept idle, on account of the delay of the defendants insending a new shaft which they had contracted to make. Thecourt held the damage to be too remote, and stated the properrule as follows:—

The rule is, however, only a general guide, and does notobviate the necessity of inquiring in each case what are thenatural or contemplated damages. In an action by the proprietorof a theatre, it was alleged that the defendant hadwritten a libel on one of the plaintiff’s singers, whereby she was ​deterred from appearing on the stage, and the plaintiff lost hisprofits; such loss was held to be too remote to be the groundof an action for damages. In Smeed v. Foord (1 Ellis and Ellis,602), the defendant contracted to deliver a threshing-machineto the plaintiff, a farmer, knowing that it was needed to threshthe wheat in the field. Damages were sought for injury done tothe wheat by rain in consequence of the machine not havingbeen delivered in time, and also for a fall in the market beforethe grain could be got ready. It was held that the first claimwas good, as the injury might have been anticipated, but thatthe second was bad. When, through the negligence of a railwaycompany in delivering bales of cotton, the plaintiffs, having nocotton to work with, were obliged to keep their workmen unemployed,it was held that the wages paid and the profits lostwere too remote for damages. On the other hand, where thedefendant failed to keep funds on hand to meet the drafts ofthe plaintiff, so that a draft was returned dishonoured, and hisbusiness in consequence was for a time suspended and injured,the plaintiff was held entitled to recover damage for such loss.

The rule that the contract furnishes the measure of thedamages does not prevail in the case of unconscionable, i.e.unreasonable, absurd or impossible contracts. The old school-bookjuggle in geometrical progression has more than oncebeen before the courts as the ground of an action. Thus, whena man agreed to pay for a horse a barley-corn per nail, doublingit every nail, and the amount calculated as 32 nails was 500quarters of barley, the judge directed the jury to disregard thecontract, and give as damages the value of the horse. And whena defendant had agreed for £5 to give the plaintiff two grains ofrye on Monday, four on the next Monday,^[2] and so on doubling itevery Monday, it was contended that the contract was impossible,as all the rye in the world would not suffice for it; but one of thejudges said that, though foolish, it would hold in law, and thedefendant ought to pay something for his folly. And when aman had promised £1000 to the plaintiff if he should find his owl,the jury were directed to mitigate the damages.

Interest is recoverable as damages at common law only uponmercantile securities, such as bills of exchange and promissorynotes or where a promise to pay interest has been made in expressterms or may be implied from the usage of trade or other circumstances[Mayne, Damages (7th ed.) 166]. Under the CivilProcedure Act 1833, the jury is allowed to give interest by wayof damages on debts or sums payable at a certain time, or if notso payable, from the date of demand in writing, and in actionson policies of insurance, and in actions of tort arising out ofconversion or seizure of goods.

In the United States, interest is in the discretion of the court,and is made to depend on the equity of the case. In bothEngland and America compound interest, or interest on interest,appears to have been regarded with the horror that formerlyattached to usury. Lord Eldon would not recognize as validan agreement to pay compound interest. And Chancellor Kentheld that compound interest could not be taken except upon aspecial agreement made after the simple interest became due.

In Scotland compound interest is not allowed by way ofdamages.

Torts.—In actions arising otherwise than from breach ofcontract (i.e. of tort, delict or quasi-delict), the principles appliedto the assessment of damage in cases arising ex contractu aregenerally applicable (The Notting Hill, 1884, 9 P.D. 105); butfrom the nature of the case less precision in assessment is attainable.The remoteness of the damage claimed is a ground forexcluding it from the assessment. In some actions of tort thedamages can be calculated with exactness just as in cases ofcontract, e.g. in most cases of interference with rights of propertyor injury to property. Thus, for wrongful dispossession from aplantation (in Samoa) it was held that the measure of damagewas the annual value of the produce of the lands when wrongfullyseized, less the cost of management, and that the wilful characterof the seizure did not justify the infliction of a penalty over andabove the loss to the plaintiff (McArthur v. Cornwall, 1892,A.C. 75). Where minerals are wrongfully severed and carriedaway, the damage is assessed by calculating the value of themineral as a chattel and deducting the reasonable expense ofgetting it. But where the interference with property, whetherreal or personal, is attended by circumstances of aggravationsuch as crime or fraud or wanton insult, it is well establishedthat additional damages may be awarded which in effect arepenal or vindictive. In actions for injuries to the person or toreputation, it is difficult to make the damages a matter forexact calculation, and it has been found impossible or inexpedientby the courts to prevent juries from awarding amounts whichoperate as a punishment of the delinquent rather than as atrue assessment of the reparation due to the sufferer. Andwhile a bad motive (malice) is seldom enough to give a causeof action, proof of its existence is a potent inducement to a juryto swell the assessment of damages, as evidence of bad charactermay induce them to reduce the damages to a derisory amount.In the case of injuries to the person caused by negligence, thetribunal considers, as part of the general damage, the actual painand suffering, including nervous shock (but not wounded feelings)and the permanent or temporary character of the injury, and asspecial damage the loss of time and employment during recoveryand the cost of cure. It is difficult by any arithmetical calculationto value pain and suffering; nor is it easy to value the effectof a permanent injury; and in the Workmen’s Compensation Actand Employers’ Liability Act, an attempt has been made in thecase of workmen to assess by reference to the earnings of theinjured person.

In the case of such wrongs as assault, arrest or prosecution,the motives of the defendant naturally affect the amount ofgeneral damage awarded, even when not essential elements inthe case, and the damages are “at large.” Any other rule wouldenable a man to distribute blows as he can utter curses at astatutory tariff of so much a curse, according to his rank. Thisposition was strongly asserted in the cases arising out of thecelebrated “General Warrants” (1763) in the time of LordCamden, who is reported in one case to have said, “damagesare designed not only as a satisfaction to the injured person,but as a punishment to the guilty, and as a proof of the detestationin which the wrongful act is held by the jury.” In anothercase he mentioned the importance of the question at issue,the attempt to exercise arbitrary power, as a reason why thejury might give exemplary damages. Another judge, in anothercase, said “I remember a case when the jury gave £500 damagesfor knocking a man’s hat off; and the court refused a newtrial.” And he urged that exemplary damages for personal insultwould tend to prevent the practice of duelling.

The right to give exemplary or punitive or (as they are sometimescalled) vindictive damages is fully recognized both inEngland and in the United States, and especially in the followingcases. (1) Against the co-respondent in a divorce suit. Thisright is the same as that recognized at common law in theabolished action of criminal conversation, but the damagesawarded may by the court be applied for the maintenance andeducation of the children of the marriage or the maintenanceof the offending wife. (2) In actions of trespass to land wherethe conduct of the defendant has been outrageous. (3) Inactions of defamation spoken or written, attended by circumstancesof aggravation, and the analogous action of maliciousprosecution. (4) In the anomalous actions of seduction andbreach of promise of marriage.

In actions for wrongs, as in those ex contractu, the damagesmay be general or special. In a few cases of tort, the action failswholly if special damage is not proved, e.g. slander by imputingto a man vicious, unchaste or immoral conduct, slander of titleto land or goods or nuisance.

In theory, English law does not recognize “moral or intellectual”damage, such as was claimed by the South AfricanRepublic after the Jameson Raid. The law of Scotland allows ​a solatium for wounded feelings, as does French law under thename of dommage moral, éprouvé par la partie lésée dans saliberté, sa sûreté, son honneur, sa considération, ses affectionslégitimes ou dans la jouissance de son patrimoine. Under this headcompensation is awarded to widow, child or sister, for the loss ofhusband, parent or brother, in addition to the actual pecuniaryloss (Dalloz, Nouveau Code civil, art. 1382). Claims of damagefor negligence are defeated by proof of what is known as contributorynegligence (faute commune). In other claims of tort,as already stated, the conduct of the claimant may materiallyreduce the amount of his damages.

In cases of damages to ships or cargo by collision at sea, therule of the old court of admiralty (derived from the civil lawand preserved by the Judicature Acts) is that when both or allvessels are to blame, the whole amount of the loss is dividedbetween them. The rule appears not to apply to cases wheredeath or personal injury results from the collision (“Vera Cruz,”1884, 14 A.C. 59. “Bernina,” 1888, 13 A.C. 1).

Costs.—The costs of a legal proceeding are no longer treated asdamages to be assessed by the jury, nor do they depend on anyact of the jury. The right to receive them depends on the court,and they are taxed or assessed by its officers (see Costs). In afew cases where costs cannot be given, e.g. on compulsoryacquisition of land in London, the assessing tribunal is invitedto add to the compensation price the owner’s expense in thecompensation proceedings.

Death.—In English law a right to recover damages for a tortas a general rule was lost on the death of the sufferer or of thedelinquent. The cause of action was considered not to survive.This rule differs from that of Scots law (under which the claimfor damages arises at the moment of injury and is not affectedby the death of either party). The English rule has been criticizedas barbarous, and has been considerably broken in upon bylegislation, in cases of taking the goods of another (4 Edw. III.,c. 7, 1330), and injuries to real or personal property (3 & 4Will. IV., c. 42, 1833), but continues in force as to such mattersas defamation, malicious prosecution and trespass to the person.By the Fatal Accidents Act 1846 (commonly called Lord Campbell’sAct), it is enacted that wherever a wrongful act would haveentitled the injured person to recover damages (if death had notensued), the person who in such case would have been liable“shall be liable to an action for damages for the pecuniary losswhich the death has caused to certain persons, and although thedeath shall have been caused under such circumstances as amountin law to felony.” The only persons by whom or for whosebenefit such an action may be brought are the husband, wife,parent and child (including grandchild and stepchild, but notillegitimate child) of the deceased. The right of action and themeasure of damages are statutory and distinct from the rightwhich the deceased had till he died. It was held in Osborne v.Gillett, 1873, L.R. 8 Ex. 88, and has since been approved (Clarkv. London General Omnibus Co., 1906, 2 K.B. 648), that noperson can recover damages for the death of another wrongfullykilled by the act of a third person, unless he claims through orrepresents the person killed, and unless that person in case of aninjury short of death would have had a good claim to recoverdamages.