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It seems to me that Esso Petroleum v Niad is another example of a 'bad decision' to get a 'bad defendant'.

The 'useful guide' declared by Lord Nicholls in Blake was ambiguous in the extreme. The legitimate interest requirement is open to extremely wide interpretation contrary to Lord Nicholls's assertions that an account of profits remedy should only be 'exceptionally' available. I doubt that facts such as Esso Petroleum v Niad were in the mind of Lord Nicholls when devising his 'useful guide'.

Morritt V-C presented a number of circumstances which supported an account of profits including: inadequacy of damages, fundamental nature of obligation, previous complaints of Esso. However, once again no coherent framework for awarding an account of profits was established.

More worryingly, Morritt V-C returned to speaking about Niad doing the 'very thing it contracted not to do' (a test rejected by the HL in Blake).

The law concerning profits for breach of contract lacks coherency or consistency. Steve Hedley's suggestion that the Blake remedy in practice fades into an award of exemplary damages is correct. However, the uncertainty caused by this in a commercial context should not be accepted. It is essential that a coherent framework is established for awarding account of profits for breach of contract.

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Mr Ralph Cunnington
Department of Law
University of Durham
50 North Bailey
Durham DH1 3ET

Tel +44 (0)191 374 1667
Fax +44 (0)191 374 2044
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