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Damages in Contract Law
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Lecture Twenty Eight- (2) Measure of Damages (continued)
o Generally damages are awarded on the expectation interest, which is the
position you would have been in had the contract not have been breached.
o Reliance Interest
However, some damages are awarded on reliance interest.
This is backwards looking, compensation for the loss suffered in
reliance upon a contract.
It is awarded where the expectation loss is too speculative.
Anglia Television v Reed 1972
o Impossible to establish the profit they would have
made so the award of damages were made in order to
represent their wasted expenditure.
Although the loss may be difficult to assess, this doesn’t prevent
damages from being awarded in this way.
Chaplin v Hicks 1911
o Loss of opportunity even though the actual loss was
speculative.
o Damages for Disappointment/Injured Feelings
Non-pecuniary losses
Generally not available in commercial contracts
Bliss v South East Thames RHA 1985
However if the contract is on the provision of a service designed to
lead the claimant to a pleasurable experience or relief from anxiety
then the damages may be awarded to reflect that lost expectation.
Jarvis v Swans Tours 1973
o Holiday promised to provide a ‘great time’, but nothing
materialised. £125 was recovered for the claimant’s
disappointment.
According to the House of Lords, it is sufficient if one of the major
objects of the contract is to provide pleasure or relieve anxiety. The
whole contract need not be for that purpose.
Farley v Skinner (No 2) 2001
Damages for Loss caused by Third Parties
Contracts (Rights of Third Parties) Act 1999
o Generally claimant can recover no more than nominal
damages for loss caused to a third party, who is a
stranger to the contract.
o However, Jackson v Horizon Holidays Ltd 1975 stated
that the claimant could recover for his own distress
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