Primary rule in awarding damages for breach of contract set out
A lessor was unable to deliver vacant possession in a 21 year lease.
The rental agreed was lower than the market rental.
Lord Denman CJ found that the lessee was entitled to be compensated for the loss of his bargain i.e. the difference between the market rental and the agreed rental.
Parke, Alderson and Platt BB upheld Lord Denman CJ on appeal.
Parke B held as follows:
“The rule of the common law is, that where a party suffers 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”
Baron Alderson’s assent is important because it contextualizes the “test” laid down by him in Hadley v Baxendale, a case in which Parke B also sat. The intention with the “reasonable contemplation” test was to qualify, and not to supplant, the primary test.
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