Contract law traditionally focused on measuring how much you had actually lost in monetary terms. An important trend in consumer law in recent years has been the willingness of the court to award compensation for other types of loss, most notably loss of amenity. The reason for this is that the cost of cure and difference in value measures of expectation loss fail to take account of the real source of consumers’ grievances where they feel they have received a lower standard of service than they had bargained for. Damages for loss of amenity are a response to a feeling that the law of damages should respond to the actual harm done to consumers.
In the modern context, damages for loss of amenity are awarded in a wide range of contexts, ranging from swimming pools (Ruxley Electronics v Forsyth  AC 344 (HL)) to building surveyors who fail to spot a particular source of aggravation (Farley v Skinner  2 AC 732). The origins, however, lie in contracts for holidays (Jarvis v Swan Tours  1 QB 233 (CA)), and holidays remain the best illustration of why these damages are often the only way a consumer can be properly compensated.
The video below is an excerpt from a programme originally broadcast in the UK in 1999, and features several examples of holidays that fell far below expectations. Watch the video, and consider why the standard measures of damages for breach at the common law do not sufficiently remedy the harm suffered by consumers in situations like this.
1. In principle, a consumer could sue for expectation damages in a situation like this, measured either on a ‘cost of cure’ or a ‘difference in value’ basis. As a starting point in assessing why (or whether) loss of amenity damages are necessary, it is useful to examine how the ‘cost of cure’ and ‘difference in value’ measures will actually work in a situation like this.
- The cost of cure is the cost of remedying the breach. The difficulty is that it is only rarely possible to remedy the breach where a holiday has been completed (which it almost always will have been by the time an action is brought).
- The difference in value is the difference between the value of the performance contracted for and the performance received. However, it is difficult to see how one can compute the ‘market value’ of a room with broken fittings and mould (to take an example from the video).
The recognition of loss of amenity damages reflects these limitations.
2. A second factor underlying the move to grant loss of amenity damages is the nature of the harm suffered by consumers in cases involving family holidays, and other transactions concerned with what we might broadly term ‘lived experiences’. In cases like these, loss of amenity damages are a more appropriate response to the consumer’s actual grievance is in connection with a breach by the supplier. The video at the following link, which deals with a consumer who had a family holiday cancelled by the tour operator, instantiates how consumers react to breaches, and the manner in which they perceive the harm occasioned to them by the breach:
As this video shows, it was the disappointment caused to the family, and the sadness at the inability to embark on the proposed holiday, that were felt particularly keenly by the consumer, far more than the monetary consequences of the cancellation. An understanding of this is what primarily underlies the growing judicial willingness to award damages for non-monetary loss in consumer transactions.