Money Awards in Contract Law

370 Pages·2015·1.83 MB·English

by  David Winterton

HART STUDIES IN PRIVATE LAW
MONEY AWARDS
IN CONTRACT
LAW
David Winterton

MONEY AWARDS IN CONTRACT LAW
The quantifi cation of contractual money awards is a topic of both signifi cant the-
oretical interest and immense practical importance. Recent debates have ranged
from the availability of gain-based relief to the basis for principles of remoteness
and mitigation. While these and other important issues, such as the recovery of
damages for non-pecuniary loss, are touched upon, the book’s principal objec-
tive is to challenge the conventional interpretation of the principle generally
acknowledged to govern this area of the law, which Parke B famously laid down in
Robinson v Harman . According to this conventional interpretation, the objective
of all money awards given in accordance with the Robinson v Harman principle
is simply to ‘ compensate ’ the promisee for the ‘ loss ’ that can be attributed to the
promisor ’ s failure to perform as promised.
After challenging this orthodoxy, Dr Winterton proposes a new understand-
ing of the Robinson v Harman principle, which draws an important distinction
between money awards that substitute for the performance promised and money
awards that aim to make good certain detrimental factual consequences that can
be attributed to a promisor ’ s breach. In exploring the signifi cance of this distinc-
tion, the different principles underpinning the quantifi cation and restriction of
each kind of award are explored in addition to some important theoretical issues
such as the effect that the occurrence of a breach has on the rights generated by
contract formation. The book ’ s unifying objective is to outline a coherent picture
of the law of contractual money awards. It will be of interest to judges, practition-
ers and academics alike.
Volume 13 in the series Hart Studies in Private Law

Money Awards in
Contract Law
David Winterton

OXFORD AND PORTLAND, OREGON
2015
Published in the United Kingdom by Hart Publishing Ltd
16C Worcester Place , Oxford , OX1 2JW
Telephone: + 44 (0)1865 517530
Fax: + 44 (0)1865 510710
E-mail: [email protected]
Website: h ttp://www.hartpub.co.uk
Published in North America (US and Canada) by
Hart Publishing
c/o International Specialized Book Services
920 NE 58th Avenue, Suite 300
Portland , OR 97213-3786
USA
Tel: + 1 503 287 3093 or toll-free: (1) 800 944 6190
Fax: + 1 503 280 8832
E-mail: [email protected]
Website: http://www.isbs.com
© David Winterton 2015
David Winterton has asserted his right under the Copyright, Designs and Patents Act 1988, to be
identifi ed as the author of this work.
Hart Publishing is an imprint of Bloomsbury Publishing plc.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system,
or transmitted, in any form or by any means, without the prior permission of Hart Publishing, or
as expressly permitted by law or under the terms agreed with the appropriate reprographic rights
organisation. Enquiries concerning reproduction which may not be covered by the above
should be addressed to Hart Publishing Ltd at the address above.
British Library Cataloguing in Publication Data
Data Available
I SBN: 978-1-84946-457-4
I SBN (ePDF): 978-1-78225-295-5
FOREWORD
BY
JUSTICE STEPHEN GAGELER
High Court of Australia
It is now almost 170 years since Baron Parke enunciated his ‘ ruling principle ’ 1 with
respect to damages for breach of contract at common law. The theoretical diffi cul-
ties inherent in the outworking of that longstanding principle did not need to be
addressed while common law procedure left damages to be determined by juries.
The theoretical diffi culties began to emerge as procedural reforms transferred
questions of the quantifi cation of damages increasingly to judges whose processes
of reasoning were required to be articulated in their reasons for judgment. Despite
signifi cant common law developments in principles of contractual liability, the
law of contract damages long remained largely un-theorised. Just over 100 years
ago it could still be said that ‘ [t]he quantum of damage is a question of fact, and
the only guidance the law can give is to lay down general principles which afford
at times but scanty assistance in particular cases ’ . 2
Fuller and Perdue took an important step in the identifi cation and articula-
tion of intermediate principles of contract damages in their highly infl uential
taxonomy of measures of fi nancial loss which may fl ow from a breach of con-
tract. 3 Yet just under 20 years ago it could still be remarked that a simple ques-
tion of contract damages could result in a wide variety of judicial opinion. 4 More
recent divisions of opinion as to the appropriate method of quantifying damages
in novel but uncomplicated fact situations, in cases in the House of Lords5 and in
the High Court of Australia, 6 serve to illustrate the depth of the theoretical issues
that remain.
1 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd ( 2009 ) 236 CLR 272, 286 , quoting Wertheim v
Chicoutimi Pulp Co [ 1911 ] AC 301 (PC) 307 .
2 British Westinghouse Electric & Manufacturing Co v Underground Electric Railways Co of London
[ 1912 ] AC 673 (HL) 688 .
3 L. Fuller and W. Perdue , ‘ The Reliance Interest in Contract Damages ’ ( 1936 ) 46 Yale Law
Journal 52 .
4 Ruxley Electronics & Construction Ltd v Forsyth [ 1996 ] AC 344 (HL) 361 .
5 Golden Strait Corporation v Nippon Yusen Kubishika Kaisha (The Golden Victory) [ 2007 ] UKHL
12 , [2007] 2 AC 353.
6 Clark v Macourt ( 2013 ) 88 ALJR 190 , [2013] HCA 56.
vi Foreword
David Winterton in this book grapples with those deep philosophical issues.
His contribution to the theorisation of contract damages is bold and ambitious.
Critiquing Fuller and Perdue philosophically and analytically, Winterton provides
an alternative theoretical explanation of the burgeoning mass of existing case law.
His explanation is based on a conceptual framework within which the fundamen-
tal distinction is between damages which substitute for performance of a contract
and damages which compensate for loss caused by non-performance.
The thesis presented is developed through the application of what is helpfully
identifi ed in explicit terms as an ‘ interpretative ’ methodology, in which ‘ principle ’
is given primacy over ‘ policy ’ , and in which ‘ principle ’ is charted as the line of most
rational fi t with the data provided by the decided cases. It is inevitable in the appli-
cation of such a methodology that some aspects of the existing case law will be
elevated, and other aspects of the existing case law de-emphasised, so as to achieve
a rational fi t with the conceptual distinction propounded. It is also inevitable that
the distinction itself will require qualifi cation and refi nement so as to accommo-
date those aspects of the existing case law which the premises of the methodology
require to be accepted. There will inevitably be fl ow-on effects to related doctrines.
Not all aspects of all of the decided cases can be expected to survive unquestioned.
Not every required qualifi cation or refi nement of the conceptual framework, nor
every fl ow-on effect, can be expected to be recognised and articulated. No concep-
tual framework, new or old, can be expected to provide all answers to all problems;
at best it can bring a measure of structure and consistency to the analysis of those
problems, and a measure of predictability to the outcomes of that analysis. A new
conceptual framework brings its own novel set of issues to be worked through,
and tested, from case to case.
Conscious of those ramifi cations of the ambitiousness of his project, David
Winterton has done much to explain how many principles, including those of
remoteness and mitigation, are to be fi tted into his new conceptual framework, to
anticipate some major objections to the framework, and to suggest how it might
prove useful in practice in shedding new light on problems which have shown
themselves to be diffi cult to resolve in the past. Economic and social consequences
of adopting the new conceptual framework, including the systemic impact of the
incentives it might create for contracting parties, are left for future exploration. The
book is a welcome addition to the literature in a fi eld for too long under-theorised.
ACKNOWLEDGEMENTS
This book is a revised and updated version of the doctoral thesis I defended in
Oxford in October, 2011. Its production has depended heavily on assistance from
numerous sources. In Justice James Edelman and Professor John Gardner, I had
the benefi t of two dedicated and inspirational DPhil supervisors who guided me
carefully along the path to completion. From each of them I learned a great deal
and I am extremely grateful for the support they provided during my time in
Oxford. I also wish to express my deep gratitude to both the Rhodes Trust and
Magdalen College for the generous support, fi nancial and otherwise, that each
institution afforded me during the course of my studies, as well as to Richard Hart
for backing the project, and to his fantastic team for their hard work in helping to
bring it to fruition.
Via written comments, conversations, or simply friendship, numerous others
also contributed to this book ’ s production. In this regard, I would particularly
like to thank Scott Ralston, Carmine Conte, Fred Wilmot-Smith, Andrew Dyson,
Andrew Lodder, Eli Ball and Tatiana Cutts for astute comments on earlier drafts
and for their general willingness to engage in fruitful discussion on the topic. Ben
Spagnolo deserves special praise in this regard; in addition to providing me with
me a plethora of insightful comments, he was also instrumental in the very prac-
tical task of producing the fi nal thesis document itself. I also wish to express my
appreciation to Gageler J for kindly agreeing to write a foreword to the book and
for his willingness to engage with me in discussion about some of its central con-
cerns following publication of the High Court ’ s reasons in Clark v Macourt [2013]
HCA 56. My fi nal debt of gratitude is to my parents. Without my father ’ s encour-
agement and example of fi ne scholarship I may never have embarked upon this
project and without my mother ’ s support and understanding I may never have
fi nished it.