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Damages for breach of an undertaking?

1 Aug 2017

The case of Stratton v Patel concerned an undertaking given by the defendant to carry out remedial works for fire and water damage to commercial premises leased by the defendant to the claimant.  The claimant alleged that the defendant had breached its undertaking, and issued a claim for damages for loss of profits.

 

The court observed that a claim for damages for breach of undertaking on its own faced “considerable difficulty”.  Although a court can award damages in respect of breach of an undertaking amounting to a contempt of court, the court lacked the power “to compensate individuals by an order for damages”.  In this case therefore, the court had no power to order damages as there had been no contempt (as contempt is concerned with public interests).

However, the court did also state that the undertaking in this case was exceptional in that it had some “collateral contractual operation” between the parties.  Therefore damages could be awarded on that basis.

This ruling is useful, as it differentiates between undertakings which have a purely procedural function (for which damages cannot be claimed for contempt), and those which have a clear effect in a contract (for which the court can award damages).

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