Gain-based Remedies for Breach of Contract: A Comparative Analysis of English and Polish Law

169 Pages·2023·4.022 MB·English

by  Daniel Zatorski

Daniel Zatorski
Gain-based
Remedies
for Breach
of Contract
A Comparative Analysis of English and
Polish Law
Gain-based Remedies for Breach of Contract
Daniel Zatorski
Gain-based Remedies
for Breach of Contract
A Comparative Analysis of English
and Polish Law
DanielZatorski
FrankfurtamMain,Germany
ISBN978-3-031-25451-2 ISBN978-3-031-25452-9 (eBook)
https://doi.org/10.1007/978-3-031-25452-9
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Contents
1 IntroductionandMethodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 TheMethodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 TheComparativeQuestion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 TheApproachTowardsAnsweringtheQuestion. . . . . . . . . . . . . 3
1.4 TheWork’sStructure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Articles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2 Gain-BasedRemediesforBreachofContractinGeneral. . . . . . . . . 9
2.1 IntroductiontoGain-BasedRemediesandBasicTerminology. . . . 10
2.2 AnOverviewoftheMostRelevantEnglishCaseLawon
Gain-BasedRemedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.2.1 TheWrothamParkRemedy. . . . . . . . . . . . . . . . . . . . . . . 17
2.2.2 CaseLawAfterWrothamPark. . . . . . . . . . . . . . . . . . . . . 20
2.2.3 TheBlakeRemedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.2.4 CaseLawAfterBlake. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.3 TheRelationBetweenWrothamParkandBlake. . . . . . . . . . . . . . 36
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Articles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3 FindingGain-BasedRemediesUnderCompensatoryPrinciples. . .. 43
3.1 ThePrinciplesoftheLawofDamages. . . . . . . . . . . . . . . . . . . . . 44
3.1.1 TheCompensatoryPrincipleofDamages. . . . . . . . . . . . . 45
3.1.2 TheInterestsProtectedbyanAwardofDamages. . . . . . . . 47
3.2 CriticismoftheTraditionalNotionofCompensatory
Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
3.3 AlternativeUnderstandingsofCompensation. . . . . . . . . . . . . . . . 56
3.3.1 ReparativeCompensation. . . . . . . . . . . . . . . . . . . . . . . . . 58
3.3.2 SubstitutiveCompensation. . . . . . . . . . . . . . . . . . . . . . . . 63
v
vi Contents
3.4 TheMostSuitableCompensatoryApproach. . . . . . . . . . . . . . . . . 101
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Commentaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Articles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
4 FindingGain-BasedRemediesUnderRestitutionaryPrinciples. . .. 109
4.1 TheLackofaCommonLanguageofRestitution. . . . . . . . . . . . . 110
4.2 TheInterrelationBetweenContractandRestitution. . . . . . . . . . . . 112
4.3 RestitutionaryDisgorgementforBreachofContract. . . . . . . . . . . 116
4.3.1 EstablishingaRestitutionaryInterest. . . . . . . . . . . . . . . . . 116
4.3.2 UnjustEnrichmentastheUnderlyingPrincipleof
RestitutionaryDisgorgementforBreachofContract. . . . . . 118
4.4 TheMostSuitableRestitutionaryApproach. . . . . . . . . . . . . . . . . 152
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Books. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Commentaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Articles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
5 SummaryandConclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Articles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
CaseLaw. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
EnglandandWales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Poland. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
OtherJurisdictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
OtherMaterials. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
NormativeActs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
RestatementsandMiscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Chapter 1
Introduction and Methodology
The goal of this work is to address a seemingly simple comparative question: can
Polish law facilitate the English notion of gain-based remedies for breach of con-
tract? The necessity to pose this question stems from an intense development of,
mostnotably,Englishcontractlawonthesubjectofassessingremediesforbreachof
contractbased,seemingly,onthebreachingparty’sgainsfromthebreach.Modern
English case law recognizes that classic loss-based damages are not always an
adequate remedy to protect the totality of a party’s interests when a breach of
contract occurs. Hence, in certain cases, English courts applied a more creative
approach in protecting an aggrieved party’s interests in contractual matters. This
resultedinthecreationofgain-basedremedies.Thetheoreticalprinciplesunderlying
gain-basedremediesarenotyetclearlyestablished;theycanbeeithercompensatory
or restitutionary. For this reason, the work will address and apply a comparative
analysisofbothprinciples.
On a marginal note, this is not to say that English law has settled the analyzed
problem unambiguously. To the contrary, English legal scholars do not agree on
every aspect or understanding of gain-based remedies. These uncertainties will
howeverbeclearlyunderlinedinthiswork.
ItisfirstimportanttointroducethemethodIchoseinhandlingthecomparative
law issue at hand. I will describe this in four short stages: the methodology I have
chosen (Sect. 1.1), the question I have posed (Sect. 1.2), the way in which I will
endeavor to answer that question (Sect. 1.3), and the overall structure of the work
(Sect.1.4).
©TheAuthor(s),underexclusivelicensetoSpringerNatureSwitzerlandAG2023 1
D.Zatorski,Gain-basedRemediesforBreachofContract,
https://doi.org/10.1007/978-3-031-25452-9_1
2 1 IntroductionandMethodology
1.1 The Methodology
Konrad Zweigert and Hein Kötz keenly underline that there is no one systematic
methodofcomparativelawandthatsuchamethodshouldbegraduallydiscovered
through trial and error.1 Indeed, Geoffrey Samuel points out the multitude of
difficultiescomparativelawposes,theissueofmethodologybeingaprimaryone.2
However, Zweigert’sand Kötz’sanswertothis problemisthat the“basic method-
ologicalprinciple ofall comparativelawisthat offunctionality.”3 Idonotwishto
stray from this approach, and methodologically this work draws inspiration from
Zweigert and Kötz, as well Solène Rowan’s functional analysis of remedies for
breachofcontract.4
Underafunctionalapproach“Lawistobeunderstoodintermsofwhatitdoes.”5
The method fits perfectly with this work’s topic, as it is problem-oriented, i.e. it
looksataspecificprobleminonesystemandtriestoassesshowthatproblemwould
be solved in another.6 Moreover, a functional approach “allows for the bringing
together of two quite different objects by reference to their practical uses and
purpose.”7 To achieve this I wish to apply what Esin Örücü called the functional-
institutionalapproachinordertofindfunctionalequivalentsofinstitutionsinPolish
andEnglishlaw.Thisentailsaskingquestionssuchas:“Whichinstitutioninsystem
BperformsanequivalentfunctiontotheoneundersurveyinsystemA?”8
1.2 The Comparative Question
The issue of a properly framed comparative question is of crucial importance. A
research question cannot namely be too vague or too complex.9 Thus, a properly
posedquestionisabalancingactbetweensimplicityandprecision.
Moreover,acomparativequestionshouldrefertoaspecificproblem.AsGerhard
Dannemanunderlines:“Comparativelegalenquiriesarefrequentlymadeaspartof
an effort to improve a legal rule or institution which has been suspected or
1SeeZweigertandKötz(1998);seealsoSamuel(2014).
2SeeSamuel(2014),p.9.
3ZweigertandKötz(1998),p.34;seealsoid,at65.
4SeeRowan(2012)(“Sincelegalsystemsthatfacesimilarproblemsdonotnecessarilystructure
theirsolutionsinthesameways,andmayalsoadoptdifferentterminology,comparativequestions
havebeenconsideredinfunctionalterms.”).
5Cohen(1935),p.809;seealsoSamuel(2014),p.86.
6SeegenerallySamuel(2014),p.67.
7Id.,at65.
8Id.(referringtoÖrücü(2006),p.443.
9Seeid.,at31.
1.3 TheApproachTowardsAnsweringtheQuestion 3
recognized as a source of problems.”10 Therefore, the conclusion to any research
projectincomparativelawshouldbeonethatisobtainableonlythroughthebringing
together of two or more objects of comparison and consequently the research
question should reflect this necessity.11 In other words, comparison should be a
meanswhichshedlightontoaparticularlegalproblem.
The legal problem in question is the inadequacy of traditional compensatory
damages for breach of contract. This problem—as will be shown—is clearly
evidenced in an enrichment without subtraction situation. It also pertains to Polish
law and has not been tackled in Polish legal writing thus far. It also seems to be
propertograpplethisproblemduetothefactthatlegalregulationsareundergoing
violent changes while the current Polish regulation is—as Piotr Machnikowski
pointed out—still strongly rooted in Western Europe’s late nineteenth and early
twentieth century laws.12 This begs the question whether Polish law can still
facilitatenewdevelopments.Consequently,IwishtoputPolishlawinthespotlight.
Moreover,theanalysiswillbelimitedtobreachofcontract.Whatthismeansisthat
the work will deal purely with contract law, thus excluding tort, administrative,
criminal, or company law; it will also exclude fiduciary duties or pre-contractual
duties.Thisdoesnotmeanhoweverthatcertainprovisionspertainingtothesebodies
oflawwillnotbementionedatanytime.
In opposition toPolishlaw, English law has been grapplingwith the aforemen-
tionedproblemforsometime.Ithasprovidedanswersthroughtwogroundbreaking
cases, which are at the heart of this work, i.e. Wrotham Park Estate Co. Ltd
v. Parkside Homes Ltd13 (“Wrotham Park”) and Attorney General v. Blake14
(“Blake”).Duetotherevolutionary influenceofthesejudgments,Englishlawwill
form the basis for comparison. Furthermore, other legal systems will serve as a
helpfultoolinordertoshedmorelightonmoredetailedproblems.
Takingtheaboveintoconsideration,IbelievethatthequestionIposemeetsthe
prerequisites of a properly framed comparative question, namely: can Polish law
incorporatetheEnglishnotionofgain-basedremediesforbreachofcontract?
1.3 The Approach Towards Answering the Question
An additional step—having posed a properly-framed question—is to set out the
functionofcomparison.Inotherwords,itisimportanttostatehowtheworkwilltry
to tackle the posed question. In this regard two opposing approaches to a
10Danneman(2006),p.403.
11SeeSamuel(2014),p.26.
12SeeMachnikowski(2017).
13WrothamParkEstateCoLtdvParksideHomesLtd[1974]1WLR798[hereinafterWrotham
Park].
14Attorney-Generalv.Blake,[2001]1AC268(H.L.)(Eng.)[hereinafterAGv.Blake].
4 1 IntroductionandMethodology
comparativeworkexist:Zweigert’sandKötz’spraesumptiosimilitudinisontheone
hand,andPierreLegrand’spresumptionofdissimilarityontheother.15Theformeris
connected with harmonization proposals that “suggest that one central function of
comparison is to look for similarities, and in fact this idea of similarity has been
elevatedbyZweigertandKötzintoapresumption.”16Intheiropinion:
[T]hecomparatistcanrestcontentifhisresearchesthroughalltherelevantmaterialleadto
theconclusionthatthesystemshehascomparedreachthesameorsimilarpracticalresults,
butifhefindsthattherearegreatdifferencesorindeeddiametricallyoppositeresults,he
should be warned and go back to check again whether the terms in which he posed his
originalquestionwereindeedpurelyfunctional,andwhetherhehasspreadthenetofhis
researchesquitewideenough.17
Thelatter,ontheotherhand,arguesthat“oneshouldstartoutfromapresumptionof
differencebecausepresumptionsofsimilaritycanleadtoatypeofcomparisonthat
involvesadeductiveapproachwhichpresentsthedangerofeclipsingwholesections
oftheobjectsofcomparisonandthiscanresultintheestablishmentof‘universalist
myths’.”18
As far as functional methodology is concerned, both approaches have merit.
Gerhard Danneman points out: “[C]omparing legal systems involves, at least to
somedegreeexploringbothsimilaritiesanddifferences.”19Hegoesontoague:
Thefunctionalcomparatistwillfindgreatestsatisfactioninunearthingsimilaritiesinresults
whicharehiddendeepinsideajungleofdifferentstyles,methods,procedures,andsources
oflaw–justascriticsoffunctionalismmayderivethegreatestpleasurefromuncovering
hiddendifferencesevenwherethelawappearssimilar.20
From thisitemergesthatjust asframingtherightquestionwasabalancingact,so
too is an approach towards similarity and dissimilarity. In this regard Danneman
points out that “the proper balance between discovering common features and
detecting contrasting features depends on the purpose of the enquiry, or the
Erkenntnisinteresse.”21
As I have mentioned, the problem of this work comes from the inadequacy of
traditional compensatory damages under Polish law. Hence, a need to tackle this
problem arises. As I have also mentioned, English law—having responded to this
problem—willserveasabasisforcomparison.Therefore,thepurposeoftheenquiry
istofindasolutiontotheinadequacyofcompensatorydamagesbyaskingwhether
PolishlawcanincorporateEnglishsolutions.
I believe that the best approach for such a purpose of enquiry is a cautious
presumption of similarity. This means that I will not presume similarity from the
15SeeSamuel(2014),pp.53–54.
16Id.,at53.
17ZweigertandKötz(1998),p.40;seealsoid.,at53–54.
18Samuel(2014),p.55(referringtoHeidmann(2006)).
19Danneman(2006),p.384.
20Id.,at395.
21Id.,at400.