Factual and Procedural Background
This is an appeal by the Defendant from a judgment at Aldershot County Court awarding damages to the Plaintiff, a motor car dealer, for breach of contract involving the sale of a Hillman Minx motor car. The Defendant disputed the existence of a concluded contract, but the trial Judge found that a contract was proved. The appeal concerns only the measure of damages. The contract was formed in late June 1955 when the Defendant agreed to buy a new Hillman Minx deluxe saloon car from the Plaintiff at a fixed retail price including extras, with a part-exchange vehicle offered by the Defendant. The Defendant repudiated the contract shortly after, refusing to take the car. The Plaintiff re-sold the car within about a week to another purchaser at the same price. The Plaintiff claimed damages for loss of profit resulting from the Defendant's breach, while the Defendant argued that only nominal damages were due because the resale mitigated any loss.
Legal Issues Presented
- What is the proper measure of damages for the Plaintiff when the Defendant wrongfully refuses to accept and pay for goods under contract?
- Whether there existed an "available market" for the goods within the meaning of Section 50(3) of the Sale of Goods Act 1893, affecting the calculation of damages.
- Whether the Plaintiff proved actual loss of profit beyond what was recouped by resale of the goods.
Arguments of the Parties
Defendant's Arguments
- The Defendant disputed that a concluded contract existed for the sale of the car.
- Argued that there was an available market for the car at the fixed retail price, which was the same as the contract price, meaning the Plaintiff suffered no loss beyond nominal damages under Section 50(3) of the Sale of Goods Act 1893.
- Contended that the resale of the car at the same price negated any loss of profit claim.
- Challenged the Plaintiff's Sales Manager's evidence regarding the likelihood of resale to another purchaser as hearsay and opinion.
Plaintiff's Arguments
- Claimed damages for loss of profit due to the Defendant's failure to take delivery of the car.
- Asserted that the resale to another purchaser did not eliminate the loss because but for the Defendant's default, the Plaintiff would have sold two cars and made two profits instead of one.
- Relied on the general measure of damages under Section 50(2) of the Sale of Goods Act 1893 rather than the market price rule under Section 50(3).
- Presented evidence from the Sales Manager asserting the ability to sell another car to the subsequent purchaser.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Sale of Goods Act 1893, Section 50 |
Defines the measure of damages for wrongful refusal to accept goods, distinguishing between general loss and loss when an available market exists. |
The court analysed whether Section 50(3) applied, concluding that the general rule in Section 50(2) governed the measure of damages in this case. |
| Thompson (W.L.) Ltd. v. Robinson (Gunmakers) Ltd. [1955] Chancery Division |
Damages for loss of profit when the supply of goods exceeded demand; loss established when resale is impossible or limited. |
The court considered this case analogous, noting that in Thompson supply exceeded demand and the court awarded loss of profit; contrasted with the present case where the Plaintiff could sell all cars he could obtain. |
| Dunkirk Colliery Co. v. Lever [1909] 9 Chancery Division |
Definition of "market" as a place or situation where goods can be sold freely at a market price fixed by supply and demand. |
The court referenced Lord Justice James' definition to assess whether an available market existed for the car in question, concluding it did not. |
| In re Vic Mill Ltd. [1913] 1 Chancery |
Principle on loss of profit and damages in breach of contract cases. |
The court applied the principle that loss of profit must be shown to be irretrievable to award damages. |
| Marshall & Co. v. Nicoll & Son [1919] House of Lords |
Considered the existence of an available market for goods not kept in stock. |
The court noted the divided opinion on whether an available market existed, supporting caution in applying Section 50(3). |
Court's Reasoning and Analysis
The court began by affirming the trial Judge's finding of a concluded contract and focused on the measure of damages. The key statutory provision was Section 50 of the Sale of Goods Act 1893, which distinguishes between damages measured by loss directly resulting from breach (Section 50(2)) and damages measured by difference between contract and market price where an available market exists (Section 50(3)).
The Defendant argued the existence of an available market at the fixed retail price, which would limit damages to nominal amounts since the Plaintiff re-sold the car at the same price. The court examined the nature of the market for Hillman Minx cars, noting that prices were fixed by the manufacturer and dealers earned a fixed profit per sale.
The court reasoned that the concept of an "available market" presupposes a market where goods can be sold at a price determined by supply and demand, which was not the case here due to fixed retail pricing and the necessity of finding retail purchasers individually. The Plaintiff's evidence showed that he could sell all cars he could obtain, indicating that supply met or exceeded demand.
Consequently, the court applied the general principle of Section 50(2) rather than the market price rule of Section 50(3). The Plaintiff had to prove actual loss of profit, not merely assert it. Although the Plaintiff resold the car, he claimed loss of profit on the original sale plus a lost opportunity to sell a second car. The court found this claim unsupported by evidence, particularly the Sales Manager's statement that the Plaintiff could sell all cars he obtained.
Precedents such as Thompson (W.L.) Ltd. v. Robinson (Gunmakers) Ltd. were considered. That case awarded damages where supply exceeded demand, causing a genuine loss of sale. Here, the Plaintiff failed to prove a similar market condition or loss.
On balance, the court found no evidence that the Plaintiff suffered loss beyond what was recouped by the resale, and thus no compensable damages beyond nominal damages were established.
Holding and Implications
The court ALLOWED THE APPEAL and held that the Plaintiff was entitled only to nominal damages of 40 shillings.
The direct effect is that the Plaintiff's claim for loss of profit was rejected due to failure to prove actual loss beyond the resale recovery. No new precedent was established; the decision reaffirmed the necessity of proving irretrievable loss of profit in breach of contract cases where resale occurs at the contract price. Costs were awarded to the successful Defendant both at trial and on appeal.