Breach of Contract and the Expectation Deficit: Inconvenience and Disappointment

Abstract

One of the most controversial aspects of the assessment of damages for breach of contract is the extent to which there can be recovery for 'intangible' losses such as disappointment and inconvenience. In Watts v Morrow, Bingham LJ assumed that public policy generally proscribed contractual liability for such losses, unless the object of the contract was to provide pleasure and/or peace of mind, or the breach caused foreseeable physical inconvenience to the victim. Unfortunately, Watts, and its associated case-law, offered scant guidance on the underlying rationale for either the general rule or its two exceptions. Consequently, more recent judicial pronouncements on this issue, particularly from the House of Lords, are to be welcomed insofar as they demonstrate a greater preparedness to eschew the use of arbitrary policy constraints in favour of focusing upon a claimant's expected benefits as contained within the contract. In so doing, disappointment and inconvenience appear to be subject to the same rules of recovery. This paper will seek to justify and encourage this trend, arguing that a logical application of the principles contained within Hadley v Baxendale and Robinson v Harman dispenses with any need to use 'policy' as a means of limiting the recovery of damages for disappointment and inconvenience, more properly takes account of a claimant's known preferences, and ensures that all forms of inconvenience and disappointment are subject to the same rules; in short, that damages properly reflect the full range of the claimant's expectation deficit.