Breach of Contract and the New Remedy of Account of Profits

19 Pages Posted: 23 Dec 2002

See all articles by Maree C. Chetwin

Maree C. Chetwin

University of Canterbury

David Round

University of South Australia - Division of Business and Enterprise - Centre for Applied Economics

Abstract

This paper outlines the general loss-based damages rule when a breach of contract is established, in light of the competing policy objectives of enhancing contract rights v. efficient breach. The economic premises behind the theory of efficient breach are briefly discussed. The paper then summarizes the legal background to the House of Lords decision [2000] 3 WLR 625 where it was ruled that in exceptional cases the plaintiff who has suffered no loss as a result of the breach may recover the resultant profits that the defendant has gained. The court was reluctant to specify fixed rules as to when the discretion should be exercised. The article concludes that the remedy was specifically devised for Blake's case and will have extremely limited application.

Keywords: account of profits, Coase theorem, compensatory damages, restitutionary damages, transaction costs

Suggested Citation

Chetwin, Maree C. and Round, David K., Breach of Contract and the New Remedy of Account of Profits. Available at SSRN: https://ssrn.com/abstract=336825

Maree C. Chetwin (Contact Author)

University of Canterbury ( email )

School of Commercial Law
Ilam Road
Christchurch 1
New Zealand

David K. Round

University of South Australia - Division of Business and Enterprise - Centre for Applied Economics ( email )

Australia
61-8-8302-0760 (Phone)
61-8-8302-0512 (Fax)

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