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Chapter 2

Damages for loss of bargain

If a buyer bought goods for £50 which the seller refused to deliver, the buyer’s
damages would be the cost to him of acquiring the same goods from someone else.
So, if he had to pay £60 his damages would be £10.

If a buyer refused to accept the goods from the seller the seller’s damages would be
the difference between the contract price and the final selling price, if this were lower
due to market forces.

If the claimant has suffered no actual loss he will be awarded only NOMINAL
damages.

Reliance losses

These enable the claimant to recover compensation for expenses incurred in
performing his part of the contract before the breach occurred. They may be claimed
where such losses exceed any likely profit.

Illustration 27 – Damages

ANGLIA TELEVISION v REED 1972

Facts:

R was engaged to play a leading role in a T.V. play. The claimants incurred
expenses in preparing for filming and R then pulled out at the last moment and
the project was abandoned.

Held:

R was liable for the expenses. He was not liable for any projected profit since it is
impossible to tell whether the film would have been a success or a failure.

Mitigation of Loss

When calculating the level of damages to be awarded, the court will assume that the
claimant had taken all steps that could reasonably be expected to mitigate (reduce)
his loss.

Liquidated damages and Penalty clauses

Where a contract provides for the payment of a fixed sum on breach it may be either
LIQUIDATED DAMAGES or a PENALTY CLAUSE.

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