Chapter 16 Guidance on questions in the book

Question

Jonty owns a vintage Bentley, which is his pride and joy. He contracts with Knightley Ltd, a company specialising in restoring and preserving vintage cars, for repairs to the engine of the car. In particular, Jonty specifies in the contract that Knightley must use authentic parts from another vintage Bentley for repairing the interior of the engine, and that the car must be ready for collection by 30 June. He mentions in general terms that he uses the Bentley for film and television work, but gives no further details. Despite strenuous efforts, Knightley find it impossible to locate authentic parts from another vintage Bentley to repair the engine, but are hugely relieved to locate a source of authentic parts from a vintage Rolls Royce, which fit perfectly into the Bentley when welded into place and which are identical to the untrained eye.

The delay in sourcing the parts means that the car is not ready for collection until 2 July. Jonty is distraught, because the delay has meant that he missed a lucrative opportunity to show his car on 1 July to a film director who was ‘auditioning’ vintage Bentleys for an exceptionally lucrative film role. Moreover he is mortified to discover that the car now contains non-authentic engine parts and believes he will never be able to show his face again at the Vintage Bentley Enthusiasts Club, of which he is chairman, a realisation that causes him to lapse into depression. Advise him as to the measure of damages he can expect for breach of contract.

Answer guidance

Remember you are asked to advise Jonty specifically about the measure of damages he can expect for breach of contract, so tailor your answer accordingly. Start by identifying the relevant breach - here there are two, Knightley has not complied with the strict contractual specification to use only vintage Bentley parts in the engine and has not returned the car on time. Jonty is automatically entitled to nominal damages for any breach of contract, but can he recover substantial damages? There are three issues to consider. First, for the first breach, can he demand the cost of cure (presumably a significant sum) or is he confined to the difference in market value (presumably nil)? The cost of cure would normally be available unless the court regards it as ‘wholly disproportionate’ (to what?). If you conclude that the cost of cure is unavailable, consider whether Jonty can recover a Ruxley ‘middle ground’ award. Do you think Lord Mustill’s ‘consumer surplus’ rationale is more likely to lead to recovery than Lord Lloyd’s ‘contracts for pleasurable amenity’ approach? Of course, the first breach has also caused Jonty to lapse into depression. So you will also need to consider whether non-pecuniary damages are available in these circumstances, applying Watts as developed by Farley v Skinner. Would such damages be available according to the approach of the majority in Farley and/or the minority approach of Lord Scott? Ideally, you should also consider the relationship between the ‘consumer surplus’ principle and damages awarded for non-pecuniary loss under Farley - could Jonty recover both?

The second breach raises the issue of remoteness of damage and loss of a chance. Loss of a lucrative opportunity to make profit is readily recoverable for breach of contract. But does the fact that Jonty mentioned ‘in general terms’ the use of the car for TV and film work bring the loss under the second limb of Hadley v Baxendale? And what difference, if any, does the more nuanced approach of Lords Hoffman and Walker in the Transfield case make to your advice?