W11 – DAMAGES
THIS AFTERNOON
Limitations on compensatory damages
Disgorgement (aka restitutionary damages)
OVERVIEW
Damages are a court ordered sum of money paid by the defendant in response to a
wrong (e.g. breach of contract).
DAMAGES (secondary remedies) > Compensatory (loss-based, effect on claimant, always
available)
OR;
DAMAGES > DISGORGEMENT (gain-based, effect on defendant, rarely available; one
particular case is George Blake but it genuinely is rare to happen so no clear examples in
English law, not practically important)
WHAT WOULD YOU AWARD?
Imagine you are the judge…
Alan books and pays for an exclusive concert ticket to see his favourite band Several
Directions, available through TicketFaster for the special promotional price of £50. Alan is
really looking forward to seeing them live. He books to stay in a local hotel for £50 so that he
can stay to hear the very last song. The following week he is informed by TicketFaster that
due to an overbooking his ticket had been cancelled. Tickets for the concert are still availavle
from other suppliers but cost £150 each. THE BREACH OF CONTRACT IS CLEAR
BECAUSE ALAN DISCOVERS HIS TICKET HAS BEEN RESOLD BY TICKETFASTER
TO SOMEONE WILLING TO SPEND £150.
Fuller & Purdue, ‘The Reliance Interest in Contract Damages’ (1936) 46 Yale LJ 52, 53: “It is
convenient to distinguish three principal purposes which may be pursued in awarding
contract damages”.
A. £50 (refund ticket price) would be the restitution interest.
B. £100 (refund plus hotel cost) is the reliance interest. (legal position)
C. £150 (cost of replacement ticket) is the expectation interest.
D. £450 (profit of resale) is disgorgement.
, THE COMPENSATORY PRINCIPLE
Robinson v Harman (1848) 1 Ex 850 (Court of Exchequer) Baron Parke at 855: “The
rule of the common law is, that where a party sustains a loss by reason of a breach of
contract, he is, so far as money can do it, to be placed in the same situation with
respect to damages, as if the contract had been formed.” = EXPECTATION
INTEREST
EXPECTATION AND RELIANCE
Reliance as a proxy for expectation: sometimes courts will offer something looking
like reliance interest damages, but really just struggles to work out what happened if
contract had been performed.
o Q) WHAT IS THE RELEVANCE OF THE SO-CALLED RELIANCE
INTEREST? Films (London) Ltd v Impact Quadrant Films Ltd [1985] where
actors refuse to perform but evidential difficulty to know if show would be a
success, court gives evidential presumption that profits = costs, this looks like
reliance interest.
THIS AFTERNOON
Limitations on compensatory damages
Disgorgement (aka restitutionary damages)
OVERVIEW
Damages are a court ordered sum of money paid by the defendant in response to a
wrong (e.g. breach of contract).
DAMAGES (secondary remedies) > Compensatory (loss-based, effect on claimant, always
available)
OR;
DAMAGES > DISGORGEMENT (gain-based, effect on defendant, rarely available; one
particular case is George Blake but it genuinely is rare to happen so no clear examples in
English law, not practically important)
WHAT WOULD YOU AWARD?
Imagine you are the judge…
Alan books and pays for an exclusive concert ticket to see his favourite band Several
Directions, available through TicketFaster for the special promotional price of £50. Alan is
really looking forward to seeing them live. He books to stay in a local hotel for £50 so that he
can stay to hear the very last song. The following week he is informed by TicketFaster that
due to an overbooking his ticket had been cancelled. Tickets for the concert are still availavle
from other suppliers but cost £150 each. THE BREACH OF CONTRACT IS CLEAR
BECAUSE ALAN DISCOVERS HIS TICKET HAS BEEN RESOLD BY TICKETFASTER
TO SOMEONE WILLING TO SPEND £150.
Fuller & Purdue, ‘The Reliance Interest in Contract Damages’ (1936) 46 Yale LJ 52, 53: “It is
convenient to distinguish three principal purposes which may be pursued in awarding
contract damages”.
A. £50 (refund ticket price) would be the restitution interest.
B. £100 (refund plus hotel cost) is the reliance interest. (legal position)
C. £150 (cost of replacement ticket) is the expectation interest.
D. £450 (profit of resale) is disgorgement.
, THE COMPENSATORY PRINCIPLE
Robinson v Harman (1848) 1 Ex 850 (Court of Exchequer) Baron Parke at 855: “The
rule of the common law is, that where a party sustains a loss by reason of a breach of
contract, he is, so far as money can do it, to be placed in the same situation with
respect to damages, as if the contract had been formed.” = EXPECTATION
INTEREST
EXPECTATION AND RELIANCE
Reliance as a proxy for expectation: sometimes courts will offer something looking
like reliance interest damages, but really just struggles to work out what happened if
contract had been performed.
o Q) WHAT IS THE RELEVANCE OF THE SO-CALLED RELIANCE
INTEREST? Films (London) Ltd v Impact Quadrant Films Ltd [1985] where
actors refuse to perform but evidential difficulty to know if show would be a
success, court gives evidential presumption that profits = costs, this looks like
reliance interest.
