Breach of Contract and Recoverable Losses
Few matters are so intriguing and difficult as the determination of compensation for losses incurred as a result of breach of contract. The main principle that the party affected by the breach should be put in the same financial situation as he would have been except for the breach would usually be accepted. But it is one thing to state an abstract principle and quite another matter to implement that principle in practice.1 It is difficult enough to determine hypothetically what the situation actually would have been if the contract had been duly performed. The difficulties, however, become even greater when one cannot agree on a common legal methodology for the determination of the compensation. In practical life the variety of potential losses seems to be infinite. A number of distinctions would have to be made. First, the loss or damage could be related to the very object of the contract -- for instance the goods under a contract of sale -- and, if so, the problem might be limited to determine the lost or diminished value of that object following from the breach of contract ('loss of bargain'). But the loss might go much further than this and result in the same type of loss that might occur even when there is no contract at all, e.g. personal injuries, death, damage to other property, and so forth. Further, a late or defective delivery of goods or services might create serious pecuniary loss when they are needed for particular purposes, e.g. industrial plants, ships, aircrafts and other vehicles of transportation, or for sophisticated computerized management systems ('reliance loss', 'incidental and consequential loss'). Difficulties arise because our legal concepts and theories were originally designed to cope with other and simpler problems than those which appear in contemporary society. Nevertheless, the various principles seem to be sufficiently flexible to allow appropriate solutions although, admittedly, great skill is required for their correct implementation.
It is a well-known and difficult problem in most jurisdictions to decide whether the available remedy should be regarded as a remedy in tort or____________________