Damages for Breach of Contract

Abstract

We have already noted that a breach of contract gives rise to an action for damages, whether the term broken is a condition, a warranty or an innominate term. In this chapter we shall discuss the principles which are applied by the courts when assessing the damages payable on a breach of contract. The principles applied by the courts are of great significance to the debate about the basis of the law of contract, to which we referred in Chapter 1. The claim that contract law can be separated from the law of tort and the law of restitution rests, to a large extent, on the proposition that the law of contract seeks to fulfil the expectations engendered by a binding promise (see 1.4). In this chapter we shall put that claim to the test by asking ourselves the fundamental question: does the law of contract really fulfil the expectations engendered by a binding promise? But before we seek to answer that question we must define the ‘expectation interest’ with greater precision and we must also examine the question whether the law of contract protects either the ‘reliance interest’ or the ‘restitution interest’.