Date: Fri, 30 Mar 2007 19:16

From: Charlie Webb

Subject: The Golden Victory

Robert,

Despite your constant expressions of disagreement, I don't see a huge amount of difference between us. I (like you) believe there is a right to performance and I (like you) believe that this should be protected in claims brought following breach. The question then is what sort of claim or award this right can justify. You say it can justify a difference in value damages claim. I don't think that it does, for the reasons I have given. The language of "substitution" and "taking the right to performance seriously" ducks the issue, and falling back on the case law (when what we're discussing is what the courts should be doing) takes us no further.

So as not to occupy too much time and space I'll respond in detail only to a couple of your points:

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.

I don't think that. So, I don't agree with those who say that each contracting party has "two distinct contractual interests in receiving performance and in being compensated for losses caused by non-performance." (C Webb, "Performance and Compensation ..." (2006) 26 OJLS 41. Each contracting party has one primary right: to performance. When that is breached secondary obligations arise, commonly, but not always, to make good losses suffered as a result of non-performance. So, I think it a mistake to think that the secondary obligation is always one to make compensation for consequential loss.

I'm not sure what you think the disagreement is here. I agree there is a (primary) right to performance. I agree that following breach there will be a (secondary) duty to compensate for losses caused by the breach, which correlates to a (secondary) right to such compensation. Unless one views the right to performance and the right to compensation are the same right, which I don't think you do, the only objection you may have is in calling the right to compensation (or the "interest" it reflects) "contractual". That all depends how you want to use the word. I use it only to mean that it is available when to party who enters into a contract. Clearly the difference is not one of substance. The same goes for calling specific performance etc a "response" to breach of contract. The key point is that such awards/remedies/whatever you want to call them are assertions of the (primary) right to performance. This is in contrast to claims for compensation for losses. And I haven't suggested that the only secondary right/obligation is to compensation.

If we are to protect the 'performance interest' (ie the right to performance in and of itself, as opposed to the loss consequent upon non-performance) we must value that right to performance.

This is a non-sequitur. I don't see where the notion of value comes into it. Value is relevant to the measurement of loss, but not to performance and its protection. Value (and loss) play no part, for instance, in understanding/explaining/justifying agreed sum awards. At times when you stress consequential losses, I wonder whether you are drawing a distinction between different types of loss. It certainly isn't impossible to draw a line between losses which are consequential and those which are not, but in both cases the focus of the claim is loss and not the right to performance, and the date of judgment is clearly the correct date for its measurement.

As for your appeal to the cases, as I said before, I'm not clear what you think its relevance is. We are discussing what claims can be justified where there has been a breach of contract (and, just so you don't misunderstand my argument again, whether or not such claims are properly described as arising from/a response to the breach of contract). The cases may be right; they may not be. Simply to say that this is what the courts do gets us nowhere is discussing what they should do.

Charlie.

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