RESTITUTION FOR BREACH OF CONTRACT

GENERAL PRINCIPLES

Where the defendant has breached a contract the orthodox remedial response is that the claimant can obtain damages which are assessed by reference to any loss or injury which he or she has suffered as a consequence.^[1] Usually the purpose of such damages is to place the claimant in the position he or she would have been in had the contract not been breached.^[2] This involves the protection of what has been called the ‘expectation interest’.^[3] Sometimes, where it is not possible to ascertain what position the claimant would have occupied had the contract not been breached, the purpose of the award of damages is to place the claimant in the position which he or she would have occupied had the contract not been entered into. In such cases the claimant will be reimbursed for the expenditure which he or she had incurred before the contract was breached.^[4] This involves the protection of the so-called ‘reliance interest’.^[5]

What we need to consider in this chapter is whether there is a third interest which should be protected by the award of damages where the defendant has breached a contract, namely the ‘restitution interest’.^[6] In other words, in those cases where the claimant did not suffer any loss as a result of the breach of contract but the defendant obtained a benefit, or where the value of the defendant’s benefit arising from the breach exceeds any loss suffered by the claimant, should it be possible for the remedy which is awarded for the breach of contract to be ascertained by reference to the value of the benefit which had been obtained by the defendant?

• [1] Attorney-General v Blake [2001] 1 AC 268, 278 (Lord Nicholls).
• [2] Robinson v Harman (1848) 1 Ex 850, 855; 154 ER 363 (Parke B).
• [3] It is more accurately described as the ‘performance interest’: D Friedmann, ‘The Performance Interest inContract Damages’ (1995) 111 LQR 628.
• [4] Anglia Television Ltd v Reed [1972] 1 QB 60.
• [5] See LL Fuller and WR Perdue, ‘The Reliance Interest in Contract Damages’ (1936-37) 46 Yale LJ 52.
• [6] This was recognized by Steyn LJ in Surrey CC v Bredero Homes Ltd [1993] 1 WLR 1361, 1369. See alsoFuller and Perdue, ‘The Reliance Interest in Contract Damages’, 54.