The claimant sought damages for repudiation of a charterparty. The charterpary had been intended to continue until 2005. The charterer repudiated the contract and that repudiation was accepted, but before the arbitrator could set his award, the Iraq war broke out, under which the charterer could have terminated the charter as of right. The defendant asked that the damages be reduced even though this event occurred after the repudiation.
Held: Awards of damages for breach of contract are compensatory. The damages were to be assessed to make allowance for events after the repudiation which reduced them.
Lord Bingham (dissenting) said that the later events should not be taken account of: ‘contracts are made to be performed, not broken. It may prove disadvantageous to break a contract instead of performing it. [I]f, on their repudiation being accepted, the charterers had promptly honoured their secondary obligation to pay damages, the transaction would have been settled well before the Second Gulf War became a reality.’ and ‘the owners were, as the arbitrator held, entitled to be compensated for the value of what they had lost on the date it was lost, and it could not be doubted that what the owners lost at that date was a charterparty with slightly less than four years to run.’ Lord Walker agreed.
Lord Scott of Foscote dismissed the owners appeal and said: ‘The assessment at the date of breach rule is particularly apt to cater for cases where a contract for the sale of goods in respect of which there is a market has been repudiated. The loss caused by the breach to the seller or the buyer, as the case may be, can be measured by the difference between the contract price and the market price at the time of the breach. The seller can re-sell his goods in the market. The buyer can buy substitute goods in the market. Thereby the loss caused by the breach can be fixed.’ but ‘where the contract for sale of goods is not simply a contract for a one-off sale, but is a contract for the supply of goods over some specified period, the application of the general rule may not be in the least apt.’ ‘Certainty is a desideratum and a very important one, particularly in commercial contracts. But it is not a principle and must give way to principle. Otherwise incoherence of principle is the likely result. The achievement of certainty in relation to commercial contracts depends, I would suggest, on firm and settled principles of the law of contract rather than on the tailoring of principle in order to frustrate tactics of delay to which many litigants in many areas of litigation are wont to resort.’
Lord Carswell said that ‘considerations of certainty and finality have in this case to yield to the greater importance of achieving an accurate assessment of the damages based on the loss actually incurred.’
Lod Brown of Eaton-Under-Heywood said: ‘the breach date rule does not require contingencies-such as the likely effect of a suspensive condition-to be judged prior to the date when damages finally come to be assessed.’ and ‘the owners’ argument here seeks to extend the effect of the available market rule well beyond its proper scope and to do so, moreover, at the plain expense of Lord Blackburn’s fundamental principle: to restore the injured party to the same position he would have been in but for the breach, not substantially to improve upon it. It is one thing to say that the injured party, mitigating his loss as the breach date rule requires him to do, thereby takes any future market movement out of the equation and to that extent crystallises the measure of his loss; it is quite another to say, as the owners do here, that it requires the arbitrator or court when finally determining the damages to ignore subsequent events (save where the defendants can demonstrate that at the date of breach some suspensive condition would inevitably-and immediately-have operated to cancel the contract). There is no warrant for giving the rule so extended an application. ‘
Judges:
Lord Bingham of Cornhill, Lord Scott of Foscote, Lord Walker of Gestingthorpe, Lord Carswell, Lord Brown of Eaton-under-Heywood
Citations:
[2007] UKHL 12, Times 30-Mar-2007, [2007] 2 Lloyds Rep 164, [2007] Bus LR 997, [2007] 3 All ER 1, [2007] 2 AC 353, [2007] 1 CLC 352, [2007] 2 WLR 691, [2007] 2 All ER (Comm) 97
Links:
Jurisdiction:
England and Wales
Citing:
Appeal from – Golden Strait Corporation v Nippon Yusen Kubishika Kaisha; ‘the Golden Victory’ CA 18-Oct-2005
Measurement of damages for repudiatory breach.
The parties had entered into a charter which was intended to last seven years. The charterers broke the charterparty. A war later occurred which would have cut the contract short in any event.
Cited – B S and N Limited (BVI) v Micado Shipping Limited (Malta) (‘The Seaflower’) 19-Apr-2000
A time charterparty was dated 20 October 1997 for a period of 11 months, maximum 12 months at charterers’ option. It referred to various major oil company approvals, including that of Mobil, all on the point of expiring, and provided that if, during . .
Cited – Jamal v Moolla Dawood, Sons and Co PC 3-Nov-1915
The plaintiff claimed damages from the buyer for his failure to accept shares contracted to be taken on a particular date. Two months after that date the sellers began to re-sell the shares on a rising market.
Held: Damages for breach of . .
Cited – Miliangos v George Frank (Textiles) Ltd HL 1975
The issue was whether an English court was able to award damages in Sterling only.
Held: The House distinguished clearly between the substance of the debtor’s obligations and the effect of English procedural law when a debt in a foreign . .
Cited – Johnson v Agnew HL 1979
The seller had obtained a summary order for specific performance of a contract for the sale of land against the buyer.
Held: The breach was continuing and was still capable of being remedied by compliance with the order for specific . .
Cited – Dodd Properties (Kent) Ltd v Canterbury City Council CA 21-Dec-1979
The defendants had, in the course of building operations, caused nuisance and damage to the plaintiff’s building. The dispute was very lengthy, the costs of repair increased accordingly, and the parties now disputed the date at which damages fell to . .
Cited – Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co HL 1903
A coalmine owner claimed statutory compensation against a water undertaking which had, under its statutory authority, prevented him mining his coal over a period during which the price of coal had risen. The House was asked whether the coal should . .
Cited – In re Bradberry; National Provincial Bank Ltd v Bradberry ChD 1942
The parties disputed the date of valuation of an annuity during the course of the administration of an estate.
Held: The principle in Bwlfa was applied: ‘where facts are available they are to be preferred to prophecies’, and ‘Why should the . .
Cited – County Personnel (Employment Agency) Ltd v Alan R Pulver and Co (a Firm) CA 1987
The claimant sought damages after his negligent solicitors had saddled him with a ruinous underlease. They had had to buy themselves out of the lease. The court considered the date at which damages were to be calculated.
Held: The starting . .
Cited – Carslogie Steamship Co Ltd v Royal Norwegian Government HL 1952
The plaintiff’s vessel had been damaged in a collision, and underwent temporary repairs at Port Glasgow. It was certified as authorised ‘to be confirmed in her present class without fresh record of survey, subject to certain permanent repairs at the . .
Cited – Re Thoars (Dec’d); Reid v Ramlort Ltd ChD 15-Nov-2002
The deceased had a valuable life insurance policy. Before an operation he wrote it in trust with no consideration. He died in the operation. He was insolvent. The issue was as to when the policy was to be valued.
Held: The property was to be . .
Cited – Curwen v James CA 1963
An appeal court had a discretion to hear relevant evidence of events after the date of judgment, in this case a change in circumstances of the victim’s widow, when considering a claim for damages for personal injury, where that evidence would . .
Cited – Murphy v Stone-Wallwork (Charlton) Ltd HL 1969
It had been assumed at the trial and in the Court of Appeal that the defendants would continue to employ the plaintiff and the assessment of future loss had been based upon that assumption. Shortly after the decision of the case by the Court of . .
Cited – Chapman v Hearse, Baker v Willoughby HL 26-Nov-1969
The plaintiff, a pedestrian had been struck by the defendant’s car while crossing the road. The plaintiff had negligently failed to see the defendant’s car approaching. The defendant had a clear view of the plaintiff prior to the collision, but was . .
Cited – Jobling v Associated Dairies HL 1980
The claimant suffered an accident at work which left him with continuing disabling back pain. Before the trial of his claim he was diagnosed as suffering from a disease, in no way connected with the accident, which would in any event have wholly . .
Cited – Aitchison v Gordon Durham and Company Limited CA 30-Jun-1995
A joint venture agreement to develop land had been broken. The parties disputed the date at which damages were to be assessed.
Held: The court took account of what actually happened later to decide what the claimant’s profit would have been. . .
Cited – Dudarec v Andrews and others CA 22-Mar-2006
In a claim for negligence against his former solicitors, the claimant sought damages for the loss of a chance of success in a personal injuries action struck out for want of prosecution seven years earlier.
Held: If the evidence were the same . .
Cited – McKinnon and another v E Survey Ltd (formerly known as GA Valuation and Survey Ltd) ChD 14-Jan-2003
The claimants purchased a house relying upon a survey by the defendants. Although the defendants reported long standing movement of the property, the defendants failed to report that to be saleable, a long investigation would be required, reducing . .
Cited – Radford v De Froberville 2-Jan-1977
A contract was made for the sale of a plot of land adjoining a house belonging to the plaintiff (the vendor) but occupied by his tenants, under which the defendant (the purchaser) undertook to build a house on the plot and also to erect a wall to a . .
Cited – Jobling v Associated Dairies HL 1980
The claimant suffered an accident at work which left him with continuing disabling back pain. Before the trial of his claim he was diagnosed as suffering from a disease, in no way connected with the accident, which would in any event have wholly . .
Cited – Platt Site Services Ltd, Barkin Construction Ltd v Re-Source America International Ltd CA 8-Feb-2005
The plaintiff was the bailee of spools which were used to carry optic fibre cables which it was to refurbish. The spools were destroyed by fire.
Held: The company was entitled to recover the cost of replacing the spools, subject to a deduction . .
Cited – Wertheim v The Chicoutimi Pulp Company PC 18-Mar-1910
(Quebec) The buyer sought damages for late delivery of goods calculated on the difference between the market price at the place of delivery when the goods should have been delivered and the market price there when the goods were in fact delivered. . .
Cited – Maredelanto Compania Naviera SA v BergbauHandel GmbH (The Mihalis Angelos) CA 1-Jul-1970
The parties had agreed a charterparty. The ship was to sail to Haiphong to load a cargo for delivery in Europe. The charterer had a right to cancel if the vessel was not ready on a certain date, but a few days earlier they repudiated the charter. . .
Cited – Woodstock Shipping Co v Kyma Compania Naviera SA (‘The Wave’) 1981
There was a time charter for 24 months, 3 months more or less at charterers’ option. The owners repudiated the charter and the charterers accepted their repudiation on 2 August 1979.
Held: Assessing the charterers’ loss, and allowing for their . .
Cited – SIB International SRL v Metallgesellschaft Corporation (‘The Noel Bay’) CA 1989
The Noel Bay was let on a charterparty to carry oil between ports in Europe, with demurrage provisions. The owners treated the charterer’s failure to nominate a port, as a repudiation. The owners found alternative employment for the ship and sought . .
Cited – Kaines (UK) Ltd v Osterreichische Warrenhandelsgesellschaft Austrowaren Gesellschaft mbH CA 1993
In June 1987 the defendants repudiated a contract to sell the claimant’s crude oil for lifting in September 1987 and for payment in October 1987. The claimants thereupon contracted to buy the oil at a higher price, again for lifting in September . .
Cited – North Sea Energy Holdings Nv (Formerly Midland and Scottish Holdings Nv) v Petroleum Authority of Thailand CA 16-Dec-1998
The buyers repudiated an oil purchase agreement and the sellers accepted their repudiation. The sellers could not show that they would have been able to obtain the oil to sell.
Held: They were not entitled to substantial damages. . .
Cited – B S and N Limited (BVI) v Micado Shipping Limited (Malta) (‘The Seaflower’) 19-Apr-2000
A time charterparty was dated 20 October 1997 for a period of 11 months, maximum 12 months at charterers’ option. It referred to various major oil company approvals, including that of Mobil, all on the point of expiring, and provided that if, during . .
Cited – Dampskibsselskabet ‘Norden’ A/S v Andre and Cie S A ComC 30-Jan-2003
A forward freight swap agreement was treated as terminated because of the defendants’ breach of solvency guarantees. The parties agreed that the injured party’s loss was to be measured by the difference between the contract rate and the market rate . .
Cited – Vallejo v Wheeler 1774
Lord Mansfield said: ‘In all mercantile transactions the great object should be certainty: and therefore, it is of more consequence that a rule should be certain, than whether the rule is established one way or the other. Because speculators in . .
Cited – Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana (The Scaptrade) CA 1983
Charterers of a ship sought relief from forfeiture of the charterparty on equitable grounds.
Held: No jurisdiction existed to grant such a relief. In a commercial agreement between commercial parties, the court had no jurisdiction to relieve a . .
Cited – Homburg Houtimport BV v Agrosin Private Ltd (the ‘Starsin’) HL 13-Mar-2003
Cargo owners sought damages for their cargo which had been damaged aboard the ship. The contract had been endorsed with additional terms. That variation may have changed the contract from a charterer’s to a shipowner’s bill.
Held: The specific . .
Cited – Jindal Iron and Steel Co Ltd and others v Islamic Solidarity Shipping Company Jordan Inc (‘The Jordan II’) HL 25-Nov-2004
Cargo was damaged by rough handling during loading and/or discharging, and/or inadequate stowage due to failure to provide dunnage, failure to secure the coils and/or stacking them so that the bottom layers were excessively compressed. The House was . .
Cited – Robinson v Harman 18-Jan-1848
Damages for breach of contract should compensate the victim of the breach for the loss of his contractual bargain. Baron Parke said: ‘The next question is: What damages is the plaintiff entitled to recover? The rule of the common law is, that where . .
Cited – Miliangos v George Frank (Textiles) Ltd HL 1975
The issue was whether an English court was able to award damages in Sterling only.
Held: The House distinguished clearly between the substance of the debtor’s obligations and the effect of English procedural law when a debt in a foreign . .
Cited – Jindal Iron and Steel Co Ltd and others v Islamic Solidarity Shipping Company Jordan Inc (‘The Jordan II’) HL 25-Nov-2004
Cargo was damaged by rough handling during loading and/or discharging, and/or inadequate stowage due to failure to provide dunnage, failure to secure the coils and/or stacking them so that the bottom layers were excessively compressed. The House was . .
Cited – Lavarack v Woods of Colchester Ltd CA 1967
Damages for wrongful dismissal could not confer on an employee extra benefits that the contract did not oblige the employer to confer. There is a clear distinction between expectations, however reasonable, and contractual obligations.
Diplock . .
Cited – Koch Marine Inc v D’Amica Societa Di Navigazione ARL (The Elena d’Amico) QBD 1980
The ship owners wrongfully repudiated a charterparty in March 1973, 14 months after its inception. The charterers did not hire a substitute but claimed damages for the loss of profits they would have made between January and April 1974, during which . .
At First Instance – Golden Strait Corporation v Nippon Yusen Kubishika Kaisha; ‘the Golden Victory’ TCC 15-Feb-2005
The parties had agreed a charterparty. The defendant repudiated the charter, but the Gulf War in 2003 meant that the the contract would have been frustrated in any event shortly afterwards.
Held: The assessment of damages for repudiation of a . .
Cited by:
Cited – Richmond Adult Community College v McDougall CA 17-Jan-2008
The claimant had been offered and had accepted a job subject to satisfactory health clearance. When that was not received her offer was withdrawn. She had suffered a condition which would affect her daily activities, but had recovered from that . .
Cited – Omak Maritime Ltd v Mamola Challenger Shipping Co Ltd ComC 4-Aug-2010
Lost Expenses as Damages for Contract Breach
The court was asked as to the basis in law of the principle allowing a contracting party to claim, as damages for breach, expenditure which has been wasted as a result of a breach. The charterer had been in breach of the contract but the owner had . .
Cited – McDougall v Richmond Adult Community College EAT 13-Jul-2007
EAT Disability discrimination – Disability
Compulsory admission of a patient under the Mental Health Act is not automatically a disability under the DDA 1995. In the circumstances of this case the severity . .
Cited – Force India Formula One Team Ltd v Etihad Airways PJSC and Another QBD 4-Nov-2009
The parties had entered into a sponsorship agreement, with the claimants undertaking to display the name of the defendants on their car. After the agreement, the claimant company had been taken over by parties with interests competing with those of . .
Cited – Bunge Sa v Nidera Bv SC 1-Jul-2015
The court considered the effect of the default clause in a standard form of contract which is widely used in the grain trade. On 10 June 2010 the respondents, Nidera BV, whom I shall call ‘the buyers’, entered into a contract with the appellants, . .
Cited – Fulton Shipping Inc of Panama v Globalia Business Travel SAU (Formerly Travelplan SAU) of Spain ComC 21-May-2014
The former owners of the ‘New Flameno’ appealed from an arbitration award. A charter of the vessel had been repudiated with two years left to run. The owners chose to sell. They made a substantial profit over the price they would have received after . .
Cited – Fulton Shipping Inc of Panama v Globalia Business Travel Sau CA 21-Dec-2015
The charter of the ship ‘New Flameno’ was repudiated two years early. The owners sold it, making rather more profit than they would have if sold after the end of the term. The court was now asked how the profit should affect the loss claim on the . .
Cited – Fulton Shipping Inc of Panama v Globalia Business Travel SAU (Formerly Travelplan SAU) of Spain ComC 21-May-2014
The former owners of the ‘New Flameno’ appealed from an arbitration award. A charter of the vessel had been repudiated with two years left to run. The owners chose to sell. They made a substantial profit over the price they would have received after . .
Cited – Fulton Shipping Inc of Panama v Globalia Business Travel Sau CA 21-Dec-2015
The charter of the ship ‘New Flameno’ was repudiated two years early. The owners sold it, making rather more profit than they would have if sold after the end of the term. The court was now asked how the profit should affect the loss claim on the . .
Cited – Morris-Garner and Another v One Step (Support) Ltd SC 18-Apr-2018
The Court was asked in what circumstances can damages for breach of contract be assessed by reference to the sum that the claimant could hypothetically have received in return for releasing the defendant from the obligation which he failed to . .
Cited – Edwards v Hugh James Ford Simey Solicitors SC 20-Nov-2019
The claimant sought damages saying that the defendant solicitors had failed to secure the incremental award of compensation under the vibration white finger scheme. The central issue was whether evidence which only became available later, but which . .
Lists of cited by and citing cases may be incomplete.
Damages, Contract
Leading Case
Updated: 09 May 2022; Ref: scu.251021