Date: Fri, 30 Mar 2007 17:17

From: Charlie Webb

Subject: The Golden Victory

I agree with Robert that, while a contracting party clearly has a right to be compensated for losses caused by breach, this is not the only right or interest he has. He also has a right to performance of the defendant’s (primary) contractual obligations, a right distinct from the right to compensation, and on which the notion of breach of contract is predicated. This can usefully be called the performance interest. There is no reason why responses to breach of contract should be confined to “vindication” of the right to be compensated for losses. In other words, a claimant should be able to argue that, irrespective of what loss the breach may have caused him, he has a right to have the contract performed and that he is entitled to an award which gives him this.

What I don’t see is how such an assertion or vindication of a claimant’s performance interest entitles the claimant to damages measured by the difference in value between the promised performance and what the claimant actually received. There is simply no necessary connection between the two. Even if it is correct to say that a claimant is entitled to damages which are “substitutive” of the right to performance (though I don’t think the language of substitution is particularly helpful), we need to explain why and in what way a particular sum properly reflects (or is substitutive of) the right to performance.

Remedies/responses for breach of contract (and elsewhere) can be justified where they give effect to the claimant’s rights. A claimant has a right not to be left worse off by a breach of contract. This entitles him to compensatory damages since such claims seek to ensure that no such loss is suffered. Necessarily a claim cannot be justified on this basis if it does not compensate a genuine loss suffered by the claimant. A claimant also has a right to have the contract performed. This will justify an award of damages where, but only where, this gives the claimant, or enables him to obtain, that performance. On this basis there is a strong argument for saying that cost of cure damages should be available as of right, where, but only where, performance is still possible and the damages are indeed so used, since in such cases the award enables the claimant to obtain the performance he is entitled to. I don’t think Robert’s suggested damages award can be justified on either basis.

Charlie.

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