Negotiating Damages and the Compensatory Principle

Abstract

The question of loss is central to the account of negotiating damages, namely whether it is correct to view the breach of a contractual right as a measurable loss to the claimant. The UK Supreme Court in One Step clarified the circumstances in which negotiating damages can be awarded. The decision aimed to explain that negotiating damages are compensatory in nature, but revealed several flaws in the Court's reasoning. I draw on leading cases, including One Step, to show that negotiating damages can be plausibly explained by the compensatory principle. I explain that the loss suffered by the claimant is the 'choice value' of his infringed contractual right to performance, and that damages are awarded to the claimant equivalent to the value of his lost choice. If this new choice value approach I develop is correct, then negotiating damages can be understood as compensating the loss of the value of choice.