Restitutionary Damages to Deter Breach of Contract

Extract

“The essence of contract is performance”. So argued Professor Daniel Friedmann in discussing the rationale of remedies for breach of contract ((1995) 111 L.Q.R. 628, 629). The House of Lords’ decision in Attorney-General v. Blake [2000] 3 W.L.R. 625 lends new support to this view. It holds that a claimant’s interest in performance of his contractual rights may, exceptionally, entitle him to recover restitutionary damages from the defaulting party. Measured by the defendant’s gain from the breach, rather than the claimant’s expectation or reliance loss, restitutionary damages transfer to the claimant the profit that the defendant makes by his wrong. Failing any other adequate remedy for the claimant, liability to restitutionary damages encourages the defendant to perform his duty by depriving him of the monetary incentive to commit a breach.