In contract law, when we talk about liability, we mean liability to pay damages (ie compensation). Here are some key principles:
- Courts will award compensation designed to place the innocent party in the position they would have been in if the contract had been performed.
- In the absence of a contractual limitation of liability the defaulting party’s liability for a breach of contract is unlimited. This is perhaps a slight exaggeration as the courts have developed a few “restraints” on the extent of liability as follows: