Damages
Igor Sterzhantov©2011
Damages
By Igor Sterzhantov©2011
www.lawandsea.net
Introduction .................................................................................................................................................. 1
Mitigation ...................................................................................................................................................... 1
Introduction
Damages are the pecuniary [monetary] recompense given by process of law to a person for the
actionable wrong that another has done him. Damages may, on occasion, be awarded where the
plaintiff has suffered no ascertainable damage: damage may be presumed.
Every breach of contract gives rise to a claim for damages, even when the claimant has not suffered any
loss as a result of the breach, he is still entitled to recover damages, such damages are nominal
damages. The legal meaning of damages is to compensate the innocent party for the breach of the
contract by the guilty party. The relevant criteria for damages is the actual suffered loss of the innocent
party, i.e. the innocent party shall not be better off with the damages than it would have been off if the
contract would have been fulfilled properly.
The rule of the common law is, that where a party sustains a loss by reason of a breach of
contract, he is, so far as money can do it, to be placed in the same situation, with respect to
damages, as if the contract had been performed.1
Thus the basic principle is that compensation for pecuniary loss naturally flowing from the breach and
the damages awarded should represent no more than the value of the contractual benefits of which the
claimant has been deprived2. This principle is however qualified by another one, to take all reasonable
steps to mitigate the loss consequent on the breach.
Mitigation
The basic principle stated in British Westinghouse Electric and Manufacturing Co. Ltd. v. Underground
Electric Railways Company of London Ltd., [1912] A.C. 673, is that compensation for pecuniary loss
naturally flowing from the breach. This principle is however qualified by another one, to take all
reasonable steps to mitigate the loss consequent on the breach. Moreover, the injured party is debarred
from claiming any part of the damage which is due to his neglect to take mitigating steps, but it does not
impose him an obligation to take any step which a reasonable and prudent man would not ordinarily
take in the course of his business. But when in the course of his business he has taken action
1
Robinson v Harman (1848) 1 Exch 850 per Parke B at p.855
2
Glory Wealth Shipping Pte Ltd. v Korea Line Corporation [2011] EWHC 1819 (Comm) by Mr Justice Blair at para
34.
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Damages
Igor Sterzhantov©2011
arising out of the transaction, which action has diminished his loss, the effect in actual diminution of the
loss he has suffered may be taken into account even though there was no duty on him to act3.
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http://www.lawandsea.net/Contract/Contract_Mitigation.html
3
Per Viscount Haldane, L.C., in British Westinghouse Electric and Manufacturing Co. Ltd. v. Underground Electric
Railways Company of London Ltd., [1912] A.C. 673 at p.689
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