Advanced Breach
Damages for breach of contract:
The ‘Reliance interest’/Expectation interest Boundary in
damages for breach of contract.
Cullinane v British ‘rema’ Manufacturing [1954]
Clay pulverising machine. Warranted machine would produce clay at
6 tons per hour.
Damages claimed £7,370 damages for capital thrown away, plus
interest and £8,913 loss of profit.
Relationship between reliance and expectation interest?
“A claim of that kind puts the plaintiff in the same position as
though he had never made the contract at all. In other words, he is
back where he started; and, if it were shown that the profit-earning
capacity was in fact very small, the plaintiff would probably elect so
to base his claim”.
“… he was not, in my judgment, then entitled to claim both for loss
of capital and for loss of profit”.
Net profit can be recovered, but not gross profits. – can’t have both.
Anglia Television v Reed [1982]
Robert Reed, well-known actor.
Agrees contract to make TV play.
Fails to appear. No substitute available. Production abandoned.
What is measure of damages?
“Anglia Television do not claim their profit. They cannot say what
their profit would have been on this contract if Mr. Reed had come
here and performed it. So. instead of claim for loss of profits, they
claim for the wasted expenditure… It comes in all to £2,750”.
Per Lord Denning…
“he can either claim for loss of profits; or for his wasted
expenditure. But he must elect between them. He cannot claim
both. If he has not suffered any loss of profits - or if he cannot prove
what his profits would have been - he can claim in the alternative
the expenditure which has been thrown away, that is, wasted, by
reason of the breach”
C&P Haulage v Middleton [1983]
Vehicle repair business.
Licence to use garage terminated without notice.
No loss of profit, as moved to own premises.
Where expectation interest was nil, could wasted expenditure be
claimed?
Held: No.
Per Ackner LJ
“Lord Denning M.R. was not contemplating what has been referred
to subsequently as the ‘bad bargain’ case, a case in which a plaintiff
has entered into a loss-making contract… He was considering a
case where it would not be possible to establish any loss of profits
Damages for breach of contract:
The ‘Reliance interest’/Expectation interest Boundary in
damages for breach of contract.
Cullinane v British ‘rema’ Manufacturing [1954]
Clay pulverising machine. Warranted machine would produce clay at
6 tons per hour.
Damages claimed £7,370 damages for capital thrown away, plus
interest and £8,913 loss of profit.
Relationship between reliance and expectation interest?
“A claim of that kind puts the plaintiff in the same position as
though he had never made the contract at all. In other words, he is
back where he started; and, if it were shown that the profit-earning
capacity was in fact very small, the plaintiff would probably elect so
to base his claim”.
“… he was not, in my judgment, then entitled to claim both for loss
of capital and for loss of profit”.
Net profit can be recovered, but not gross profits. – can’t have both.
Anglia Television v Reed [1982]
Robert Reed, well-known actor.
Agrees contract to make TV play.
Fails to appear. No substitute available. Production abandoned.
What is measure of damages?
“Anglia Television do not claim their profit. They cannot say what
their profit would have been on this contract if Mr. Reed had come
here and performed it. So. instead of claim for loss of profits, they
claim for the wasted expenditure… It comes in all to £2,750”.
Per Lord Denning…
“he can either claim for loss of profits; or for his wasted
expenditure. But he must elect between them. He cannot claim
both. If he has not suffered any loss of profits - or if he cannot prove
what his profits would have been - he can claim in the alternative
the expenditure which has been thrown away, that is, wasted, by
reason of the breach”
C&P Haulage v Middleton [1983]
Vehicle repair business.
Licence to use garage terminated without notice.
No loss of profit, as moved to own premises.
Where expectation interest was nil, could wasted expenditure be
claimed?
Held: No.
Per Ackner LJ
“Lord Denning M.R. was not contemplating what has been referred
to subsequently as the ‘bad bargain’ case, a case in which a plaintiff
has entered into a loss-making contract… He was considering a
case where it would not be possible to establish any loss of profits
