plots of land to the defendants for the purposes of house construction. It was a term of the contract that the development would proceed along the lines set out in the plaintiffs’ development scheme. However, the defendants built more houses than was permitted by the development scheme, with the result that they made a substantial profit from their breach of contract. The plaintiffs were aware of the breach from an early stage but did not seek an injunction. Instead they waited until the development was complete and then sought restitutionary damages based on the profit made by the defendant. The court awarded only nominal damages on the ground that the plaintiff had suffered no loss as a result of the breach of contract: Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361, CA, p 1369

doi:10.4324/9781843141518-289

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plots of land to the defendants for the purposes of house construction. It was a term of the contract that the development would proceed along the lines set out in the plaintiffs’ development scheme. However, the defendants built more houses than was permitted by the development scheme, with the result that they made a substantial profit from their breach of contract. The plaintiffs were aware of the breach from an early stage but did not seek an injunction. Instead they waited until the development was complete and then sought restitutionary damages based on the profit made by the defendant. The court awarded only nominal damages on the ground that the plaintiff had suffered no loss as a result of the breach of contract: Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361, CA, p 1369

ABSTRACT

Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361, CA, p 1369 Steyn LJ: Dillon LJ has reviewed the relevant case law. It would not be a useful exercise for me to try to navigate through those much traveled waters again. Instead, it seems to me that it may possibly be useful to consider the question from the point of view of the application at first principles. An award of compensation for breach of contract serves to protect three separate interests. The starting principle is that the aggrieved party ought to be compensated for loss of his positive or expectation interests. In other words, the object is to put the aggrieved party in the same financial position as if the contract had been fully performed. But the law also protects the negative interest of the aggrieved party. If the aggrieved party is unable to establish the value of a loss of bargain he may seek compensation in respect of his reliance losses. The object of such an award is to compensate the aggrieved party for expenses incurred and losses suffered in reliance of the contract. These two complementary principles share one feature. Both are pure compensatory principles. If the aggrieved party has suffered no loss, he is not entitled to be compensated by invoking these principles. The application of these principles to the present case would result in an award of nominal damages only.