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Sender:
Charles Mitchell
Date:
Mon, 22 Dec 1997 08:49:55
Re:
Restitutionary damages for breach of contract

 

Reported in The Times this morning (Mon 22nd Dec), Lord Woolf had the following observations to make in A-G v Blake:

'The court invited submissions on whether the Crown might have a private law claim to restitutionary damages for breach of contract. The Attorney decided not to advance such a claim before the CA. Since there would be no appeal, the court expressed its view, which was obiter and without benefit of argument.

'The general rule was that damages for breach of contract were compensatory not restitutionary. The time had come to recognise a restitutionary claim for profits made from a breach of contract in appropriate circumstances. The difficult question was in what circumstances they should be available.

'The basis on which damages were awarded should not depend on the defendant's moral culpability. Breach of contract enabling a defendant to enter into a more profitable contract, and by entering into a later contract putting it out of his power to perform his contract with the plaintiff were insufficient to justify an award.

'There were at least two situations where justice required the award of restitutionary damages where compensatory damages would be inadequate: skimped performance and where a defendant had obtained his profit by doing the very thing he had contracted not to do. That covered the present case exactly. Mr Blake had promised not to disclose official information and he did so for profit.

'In _Snepp_ v _United States_ (1980) 100 S Ct 763 a majority of the US Sup Ct awarded restitutionary damages for breach of contract in circumstances closely resembling the present case.

'They invoked a constructive trust impressed on the proceeds of publication without prior clearance. Their Lordships would prefer to award restitutionary damages directly for breach of contract rather than distort the equitable concepts of fiduciary duty or constructive trust to accommodate them.

'In the absence of a claim for substantial damages for breach of contract, however, the private law claim was dismissed.'

These obiter dicta constitute a very significant step down the road towards restitutionary damages for breach of contract. The MR would clearly have awarded restitutionary damages for Blake's breach of his contract with the Crown if the A-G had asked for them, and presumably he thinks that an award on this basis should also have been made in the Spycatcher case.

 

A Happy Christmas to all,
Charles

_________________________________
Dr Charles Mitchell
School of Law
King's College London
Strand
LONDON WC2R 2LS

tel: 0171 873 2290
fax: 0171 873 2465


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