Part B The law of obligations 6: Breach of contract and remedies 95
C & P Haulage v Middleton 1983
The facts: The claimants granted to the defendant a 6-month renewable licence to occupy premises as an
engineering workshop. He incurred expenditure in doing up the premises, although the contract provided
that he could not remove any fixtures he installed. He was ejected in breach of the licence agreement 10
weeks before the end of a 6-month term. He sued for damages.
Decision: The defendant could only recover nominal damages. He could not recover the cost of equipping
the premises (as reliance loss) as he would not have been able to do so if the contract had been lawfully
terminated.
If a contract is speculative, it may be unclear what profit might result.
Anglia Television Ltd v Reed 1972
The facts: The claimants engaged an actor to appear in a film they were making for television. He pulled
out at the last moment and the project was abandoned. The claimants claimed the preparatory
expenditure, such as hiring other actors and researching suitable locations.
Decision: Damages were awarded as claimed. It is impossible to tell whether an unmade film will be a
success or a failure and, had the claimants claimed for loss of profits, they would not have succeeded.
The general principle is to compensate for actual financial loss.
Thompson Ltd v Robinson (Gunmakers) Ltd 1955
The facts: The defendants contracted to buy a Vanguard car from the claimants. They refused to take
delivery and the claimants sued for loss of profit on the transaction. There was at the time a considerable
excess of supply of such cars over demand for them and the claimants were unable to sell the car.
Decision: The market price rule, which the defendants argued should be applied, was inappropriate in the
current market as demand for such cars was so low as to effectively mean that no market for them
existed. The seller had lost a sale and was entitled to the profit.
Charter v Sullivan 1957
The facts: The facts were the same as in the previous case, except that the sellers were able to sell every
car obtained from the manufacturers.
Decision: Only nominal damages were payable.
5.1 Market price rule
The measure of damages for breaches of contract for the sale of goods is usually made in relation to the
market price of the goods. Where a seller fails to sell the goods, the buyer can go into the market and
purchase equivalent goods instead. The seller would have to compensate the buyer for any additional cost
the buyer incurred over the contract cost. The situation is reversed when the buyer fails to purchase the
goods. The seller can sell the goods on the open market and recover any loss of income incurred by
having to sell the goods at a lower price than what they contracted to.
5.2 Non-financial loss
In some cases, damages have been recovered for mental distress where that is the main result of the
breach. It is uncertain how far the courts will develop this concept. Contrast the following cases.