Breach of contract – Repudiation and associated damages

Barry Riley

The High Court has held that, despite establishing a repudiatory breach of a development contract by the counterparty, a claimant was only entitled to nominal damages as it had failed to prove that, but for the breach, the development would have proceeded.

For a breach of contract to entitle the innocent party to repudiate the contract, it must be a breach of a fundamental term of the contract. For example, failure to adhere to time constraints will only be repudiatory, if time is of the essence to the contract.

Where there has been a breach of contract, the burden of proof lies on the claimant to show that the breach caused a loss. Where such a breach of contract is an omission on the part of the defendant, the claimant must show what would have happened if the wrong had not been committed. If the claimant’s loss depends on external parties, then the claimant must show that he had a substantial chance, rather than a speculative one, of avoiding the losses caused as a result of the breach.

This decision is a helpful example of the pragmatic approach of the courts in determining a party’s entitlement to damages, despite a repudiatory breach of contract. With the economic climate playing a key part as a catalyst to the facts of the case, it is interesting that the court scrutinised the events surrounding the breach and was particularly practical in the analysis of the evidence put forward by both parties.

Multi Veste 226 BV v NI Summer Row Unitholder BV and others (2011)

Barry Riley
briley@metcalfes.co.uk
DDI – 0117 9453 042

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