Chapter 21
Damages for breach of contract
21.1 Introduction:
Breach gives rise to an action for damages whether the term is broken is a condition, a
warranty or an innominate term.
Does the law of contract really fulfil the expectations engendered by a binding promise?
21.2 Compensation and the different ‘interests’:
The aim of an award of damages is to compensate the claimant for the loss which he has
suffered as a result of the D’s breach of contract.
Aim isn’t to punish the defendant.
Breach of contract as a civil wrong; not a criminal offence.
For what is it that the claimant is entitled to be compensated?
A claimant could claim the protection of his expectation interest.
Expectation interest-> claimant’s expectation has not been fulfilled and that damages should
compensate his disappointed expectations by putting him in as good a position as he would
have occupied had the D performed his promise.
Reliance interest= as a result of the D’s promise to perform his contractual obligations, the
claimant has acted to his detriment in entering into the contract and the award of damages
should compensate him to the extent that he has relied to his detriment upon the promise
of the D.
Reliance-> aim is to put the claimant in as good a position as he was in before the D’s
promise was made.
Restitution interest-> claimant does not wish to be compensated for the loss which he has
suffered; rather, he wishes to deprive the D of a gain which he has made at the claimant’s
expense.
Important factor= the amount of damages.
Where the claimant has made a bad bargain that he will want to claim the reliance measure;
in other cases, the expectation measure will be more advantageous.
21.3 The expectation interest:
General rule is expectation interest.
Robinson v Harman [1848] -> reasserts ^.
Element of ambiguity; the identification of the loss and the measure of that loss.
Do we mean financial loss or do we take into account a broader range of factors?
When one refers to a loss in the context of a breach of contract, one is referring to the
incidence of some personal or patrimonial damage.
White Arrow Express Ltd v Lamey’s Distribution Ltd [1996]
Tabcorp Holdings Ltd v Bowen Instruments Pty Ltd [2009]
In many cases it will suffice to take account of the financial position of the parties because
the contract will have been entered into with a view to making a profit and the protection of
that expectation of profit will adequately protect the interests of the innocent party.
Modern world parties often enter into contracts for reasons other than to make a profit.
Ruxley-> recognition of a consumer surplus.
Specific performance has traditionally been seen as a secondary remedy and the reluctance
to compel specific performance is carried through to the damages remedy.
Damages for breach of contract
21.1 Introduction:
Breach gives rise to an action for damages whether the term is broken is a condition, a
warranty or an innominate term.
Does the law of contract really fulfil the expectations engendered by a binding promise?
21.2 Compensation and the different ‘interests’:
The aim of an award of damages is to compensate the claimant for the loss which he has
suffered as a result of the D’s breach of contract.
Aim isn’t to punish the defendant.
Breach of contract as a civil wrong; not a criminal offence.
For what is it that the claimant is entitled to be compensated?
A claimant could claim the protection of his expectation interest.
Expectation interest-> claimant’s expectation has not been fulfilled and that damages should
compensate his disappointed expectations by putting him in as good a position as he would
have occupied had the D performed his promise.
Reliance interest= as a result of the D’s promise to perform his contractual obligations, the
claimant has acted to his detriment in entering into the contract and the award of damages
should compensate him to the extent that he has relied to his detriment upon the promise
of the D.
Reliance-> aim is to put the claimant in as good a position as he was in before the D’s
promise was made.
Restitution interest-> claimant does not wish to be compensated for the loss which he has
suffered; rather, he wishes to deprive the D of a gain which he has made at the claimant’s
expense.
Important factor= the amount of damages.
Where the claimant has made a bad bargain that he will want to claim the reliance measure;
in other cases, the expectation measure will be more advantageous.
21.3 The expectation interest:
General rule is expectation interest.
Robinson v Harman [1848] -> reasserts ^.
Element of ambiguity; the identification of the loss and the measure of that loss.
Do we mean financial loss or do we take into account a broader range of factors?
When one refers to a loss in the context of a breach of contract, one is referring to the
incidence of some personal or patrimonial damage.
White Arrow Express Ltd v Lamey’s Distribution Ltd [1996]
Tabcorp Holdings Ltd v Bowen Instruments Pty Ltd [2009]
In many cases it will suffice to take account of the financial position of the parties because
the contract will have been entered into with a view to making a profit and the protection of
that expectation of profit will adequately protect the interests of the innocent party.
Modern world parties often enter into contracts for reasons other than to make a profit.
Ruxley-> recognition of a consumer surplus.
Specific performance has traditionally been seen as a secondary remedy and the reluctance
to compel specific performance is carried through to the damages remedy.
