Remedies 227The rule of the common law is that where a party sustains a loss by
reason of a breach of contract he is, so far as money can do it, to be
placed in the same situation with respect to damages as if the contract
had been performed.This supports the view that the idea behind the law of contract is to uphold
agreements where possible.
In some circumstances damages are awarded on a reliance basis. This is
the basis used normally in tort, restoring the injured party to the position
which would have existed if the contract had not been formed. This applied
when damages are given for misrepresentation, both fraudulent and under
the Misrepresentation Act 1967.
The ‘market rule’ is that for non-delivery a person can claim the
difference between what would have been paid and what the item would
now cost to buy on the open market.
Contributory negligence
While it is established that in tort damages can be apportioned by the court on
the grounds of contributory negligence under the Law Reform (Contributory
Negligence) Act 1945, this does not extend to breach of contract. This was
made clear in the case of Basildon D C v J E Lesser (Properties) Ltd (1985).
However, the Law Commission have reported that this could be a useful
measure for the future. Note also that sometimes apportionment can be
achieved via a different route, for example in capacity and frustration, by
giving the courts discretion in awarding damages under a statute.
Mental distress and non-pecuniary loss
The situation has traditionally been that damages could not be recovered in
contract for mental distress, the court requiring something tangible to be
shown, such as pain and suffering from personal injury, or physical
inconvenience. However, there are some contracts where the very nature of
the contract indicates that the benefit is not of a tangible nature. The loss
from a breach will then be non-pecuniary, or not a direct financial loss,
such as loss of enjoyment of a holiday. Damages can in some circumstances
be recovered for disappointment, vexation and mental distress, and the
following are examples.
Jarvis v Swann Tours (1973)
The plaintiff was the only person in the holiday accommodation, when
the holiday had been advertised as a ‘houseparty’. Damages were given
for loss of the enjoyment expected, and on appeal Mr Jarvis received
twice the value of his holiday as compensation.