Stephanie Mullen, ‘Damages for Breach of Contract: Quantifying the Lost Consumer Surplus’

This article examines the current approach to the quantification of damages for non-pecuniary loss, and the issues that have arisen therein. Notwithstanding the acceptance by English contract law that certain forms of non-pecuniary loss are compensable, substantial difficulties still arise when attempting to quantify such loss. In particular, the courts have struggled to justify damages in cases that require some measurement of the value of the ‘subjective’ loss to the claimant. One method of measurement is the concept of consumer surplus, as demonstrated in the oft-cited cases of Ruxley v Forsyth and Farley v Skinner. This article discusses various inconsistencies with the courts’ application of the term consumer surplus, and posits a solution for quantification of loss in such situations, using tools already available to economists (viz equivalent and compensatory valuation deployed in the course of cost–benefit analyses). In so doing, the article seeks to promote the utility of the consumer surplus as a remedial tool, and advance the underlying goals of contract law.

Stephanie Mullen, Damages for Breach of Contract: Quantifying the Lost Consumer Surplus. Oxford Journal of Legal Studies (2015), doi: 10.1093/ojls/gqv018. First published online: June 2, 2015.

First posted 2015-06-03 06:42:23

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