Liability for Damages :
The liability to pay damages is of four kinds. They are:
(i) liability for special damages
(ii) liability for exemplary damages
(iii) liability to pay nominal damages and
(iv) liability to pay damages for deterioration caused by delay.
Now let us discuss each one of them-
(i) Liability for special damages: Where it is understood between parties that in the event of breach of contract, there would be special damages also in addition to normal damages, then special damages would be payable. In our given example above if the tailor had informed about the special circumstances, special damages would have become payable.
(ii) Liability for exemplary damages: These situations may arise mainly in two cases namely (i) breach of promise to marry and (ii) wrongful dishonour of cheques of customer by bank.
In case of breach of promise to marry the damages are awarded taking into account the injury or humiliation which the aggrieved person would have suffered.
In case of wrongful dishonour of cheques the damages would depend upon the loss of credit and reputation suffered by the customer. The damages could be very heavy if loss had been suffered by a businessman, when compared to a non-businessman customer. For example Mrs. G, a non-trader paid a cheque for £90 and 16 shillings drawn on Westminster Bank to her landlord for rent. The cheque was dishonoured by the bank. But she was awarded damages of only 40 shilling as nominal damages. [Gibbons vs. Westminster Bank (1939) 2 K.B. 882]
Similarly where the value of cheque is small the damages could be very heavy in comparison to a situation where the value of cheque is heavy. This is on the theory that dishonour of a small value of cheque would cause more damages to the honour of the customer.
(iii) Liability to pay nominal damages: Nominal damages are awarded in those cases of breach of contract where no damage has been suffered. Such damages are awarded only to establish the right to decree for breach of contract. Such damages are for nominal amounts like ten rupees or even ten paise.
(iv) Damages for deterioration caused by delay: Compensation can be recovered even without notice for damages or ‘deterioration’ caused to goods on account of delay by carriers amounting to breach of contract. Here the word “deterioration” means not only physical damages but also loss of opportunity. In Wilson vs. Lancashire and Yorkshire Railway Company 50 LJCP 232, the plaintiff bought velvet with a view to making it into caps for sale during spring. But due to delay in transit, he was unable to use the velvet for making caps for sale during season.
It was held that the fall in value of sale of cloth in consequence of the same having arrived after the season amounted to deterioration. It was here held that the plaintiff is entitled for compensation without notice.