Advanced Contract Law Lecture 9/10 25/11/19
Remedies
Damages: Types
• Compensatory damages- a compensation for the loss not the moral effrontery
• Performance interest- Put the plaintiff in the same position as he would have
occupied if the contract was performed- easy to create another contract elsewhere
with the money received
• Reliance interest- Undoing the harm which is caused by relying on the promise: put
the plaintiff in the position before the promise was made- not always possible to put
forward
• Restitution interest- Make the defendant disgorge the value he received from the
plaintiff- benefit might need to be returned
• Non-pecuniary interest- Claimant suffers physical inconvenience or mental distress
because of the breach- does not fit with idea of contract law, more tort- recognition
in this area that the loss does go beyond financial
• Punitive damages- to punish- very rare not what contract is about
1. Compensatory Damages
Performance interest
We provide the claimant with money so that he can obtain the performance itself.
“[…] where a party sustains a loss by reason of a breach of contract, he is, so far money can do it, to
be placed in the same situation, with respect to damages, as if the contact has been performed.”
Robinson v Harman (1848) 1 Ex 850
o WL Thompson v Robinson (Gunmakers) Ltd [1955] Ch 177- highlight the fact that in differing
commercial scenarios the problem may be different- a commodity you are selling in short
supply with a contract to buy a unit of this from you- if they fail to accept delivery you might
argue that you have loss the profit on the unit but the courts might say that due to the
shortage you can think yay you can resell it meaning the profit isn’t loss and can go to
someone else VS failure to accept delivery on a popular item makes it harder to find a
replacement purchasers therefore courts must look at the facts of the case
o Charter v Sullivan [1957] 2 QB 117
o The Golden Victory [2007] UKHL 12- endorsing compensation principals but must look at
facts of case to work out how much the compensation should be – Lord Scoff ‘…no less but
also no more’
o Surrey CC v Bredero Homes Ltd (1993)- the amount may be nominal- the developer had
planning permission for a number of houses- builder built 5 more houses than what was
planned so went beyond their permission. More benefit and the council have not suffered
any loss makes no difference- damages awarded on a nominal amount to give a legal point
Ruxley Electronics and Constructions Ltd v Forsyth [1996] AC 344 HL
o Loss of amenity: damages for disappointment “law must cater for those occasions where the
value of the promise to the promisee exceeds the financial enhancement of his position
which full performance would secure.”
o Reasonableness – cost of reconstruction is inappropriate if expenditure is disproportionate
to the benefit
, Advanced Contract Law Lecture 9/10 25/11/19
- Specific depth and length agreed for the making of a swimming pool. The contractors did
not stick to the dimensions- 6 inches too shallow which might make a difference to
divers etc. No indication that the owner of this pool planned to dive. A loss was not
quantifiable- could dig deeper which would require all new materials- expensive-
£21, 500 would be absurd- builders may argued difference in value of property with the
pool and a deeper pool- would place damages at zero. Sends builders a message that it
is okay not to do the proper job- might be other issues involved- damages for
disappointment
• Intention of the claimant
• Claimant must show that they are worse off either physically or financially as a result of
defendant’s breach of contract to claim more than nominal damages.
• Alfred McAlpine Construction Ltd V Panatown Ltd [2001] AC 518 HL- emphasis on courts
was on reasonableness, proportionality and intention, complications of case with a deed and
movement within a company of moving the benefit- identify when circumstances may arrive
to give the exact amount or nominal etc
Criticism: contractors may not provide full performance interest if there is no financial difference.
Court cannot dictate how you spend the money some may choose not to put it right. Zero was too
little- £2500- imagination do not want to see overcompensation or give the wrong message
Damages to provide compensation not as a bonus for gratification has the contract objective been
achieved by the damages- if the property has not been depreciated in value. Test of reasonableness
plays a key role.
Reliance Interest
• Enable the claimant to recover expenditure incurred in the course of performance of the
contract- not just about the contract itself but reliance may cause peripheral issues
• Where there is no objective basis for award of damages for performance interest.
• Where performance interest is difficult to quantify
Chaplin v Hicks [1911] 2 KB 786- loss of chance- the claimant was an actress who entered into a
beauty contest with newspaper involvement, only a certain number made the final, this woman was
not informed she made the final. 1 in 50 chance of her winning, courts recognised there is a loss so
awarded a nominal amount of damages.
Anglia Television v Reed [1972] 1 QB 60 CA- illustrates that when in reliance of a contract you may
have involved yourself in further costs- relates to a contract with an actor (defendant), negotiation
with AT and planning of a film- the actor was engaged by AT to star in film and in reliance upon this
AT went ahead with arrangements of location, director, designer, costumes etc during negotiations
this is expenditure before the contract fully confirmed. The actor agreed he will be available on a
certain date 9th Sept- 11th oct. A few days later he discovered he is fully booked- AT was unable to get
a replacement due to short notice from 3 rd Sept. They had already paid for the arrangements -
courts felt this expenditure could be claimed if it was in reasonable contemplation of the parties and
because the time period was so short it was- can see reliance
Remedies
Damages: Types
• Compensatory damages- a compensation for the loss not the moral effrontery
• Performance interest- Put the plaintiff in the same position as he would have
occupied if the contract was performed- easy to create another contract elsewhere
with the money received
• Reliance interest- Undoing the harm which is caused by relying on the promise: put
the plaintiff in the position before the promise was made- not always possible to put
forward
• Restitution interest- Make the defendant disgorge the value he received from the
plaintiff- benefit might need to be returned
• Non-pecuniary interest- Claimant suffers physical inconvenience or mental distress
because of the breach- does not fit with idea of contract law, more tort- recognition
in this area that the loss does go beyond financial
• Punitive damages- to punish- very rare not what contract is about
1. Compensatory Damages
Performance interest
We provide the claimant with money so that he can obtain the performance itself.
“[…] where a party sustains a loss by reason of a breach of contract, he is, so far money can do it, to
be placed in the same situation, with respect to damages, as if the contact has been performed.”
Robinson v Harman (1848) 1 Ex 850
o WL Thompson v Robinson (Gunmakers) Ltd [1955] Ch 177- highlight the fact that in differing
commercial scenarios the problem may be different- a commodity you are selling in short
supply with a contract to buy a unit of this from you- if they fail to accept delivery you might
argue that you have loss the profit on the unit but the courts might say that due to the
shortage you can think yay you can resell it meaning the profit isn’t loss and can go to
someone else VS failure to accept delivery on a popular item makes it harder to find a
replacement purchasers therefore courts must look at the facts of the case
o Charter v Sullivan [1957] 2 QB 117
o The Golden Victory [2007] UKHL 12- endorsing compensation principals but must look at
facts of case to work out how much the compensation should be – Lord Scoff ‘…no less but
also no more’
o Surrey CC v Bredero Homes Ltd (1993)- the amount may be nominal- the developer had
planning permission for a number of houses- builder built 5 more houses than what was
planned so went beyond their permission. More benefit and the council have not suffered
any loss makes no difference- damages awarded on a nominal amount to give a legal point
Ruxley Electronics and Constructions Ltd v Forsyth [1996] AC 344 HL
o Loss of amenity: damages for disappointment “law must cater for those occasions where the
value of the promise to the promisee exceeds the financial enhancement of his position
which full performance would secure.”
o Reasonableness – cost of reconstruction is inappropriate if expenditure is disproportionate
to the benefit
, Advanced Contract Law Lecture 9/10 25/11/19
- Specific depth and length agreed for the making of a swimming pool. The contractors did
not stick to the dimensions- 6 inches too shallow which might make a difference to
divers etc. No indication that the owner of this pool planned to dive. A loss was not
quantifiable- could dig deeper which would require all new materials- expensive-
£21, 500 would be absurd- builders may argued difference in value of property with the
pool and a deeper pool- would place damages at zero. Sends builders a message that it
is okay not to do the proper job- might be other issues involved- damages for
disappointment
• Intention of the claimant
• Claimant must show that they are worse off either physically or financially as a result of
defendant’s breach of contract to claim more than nominal damages.
• Alfred McAlpine Construction Ltd V Panatown Ltd [2001] AC 518 HL- emphasis on courts
was on reasonableness, proportionality and intention, complications of case with a deed and
movement within a company of moving the benefit- identify when circumstances may arrive
to give the exact amount or nominal etc
Criticism: contractors may not provide full performance interest if there is no financial difference.
Court cannot dictate how you spend the money some may choose not to put it right. Zero was too
little- £2500- imagination do not want to see overcompensation or give the wrong message
Damages to provide compensation not as a bonus for gratification has the contract objective been
achieved by the damages- if the property has not been depreciated in value. Test of reasonableness
plays a key role.
Reliance Interest
• Enable the claimant to recover expenditure incurred in the course of performance of the
contract- not just about the contract itself but reliance may cause peripheral issues
• Where there is no objective basis for award of damages for performance interest.
• Where performance interest is difficult to quantify
Chaplin v Hicks [1911] 2 KB 786- loss of chance- the claimant was an actress who entered into a
beauty contest with newspaper involvement, only a certain number made the final, this woman was
not informed she made the final. 1 in 50 chance of her winning, courts recognised there is a loss so
awarded a nominal amount of damages.
Anglia Television v Reed [1972] 1 QB 60 CA- illustrates that when in reliance of a contract you may
have involved yourself in further costs- relates to a contract with an actor (defendant), negotiation
with AT and planning of a film- the actor was engaged by AT to star in film and in reliance upon this
AT went ahead with arrangements of location, director, designer, costumes etc during negotiations
this is expenditure before the contract fully confirmed. The actor agreed he will be available on a
certain date 9th Sept- 11th oct. A few days later he discovered he is fully booked- AT was unable to get
a replacement due to short notice from 3 rd Sept. They had already paid for the arrangements -
courts felt this expenditure could be claimed if it was in reasonable contemplation of the parties and
because the time period was so short it was- can see reliance
