Form and substance in contract damages

  • David McLauchlan Victoria University of Wellington
Keywords: contract, damages, mitigation, avoided loss, causation, form and substance

Abstract

This article discusses the role of form and substance in the modern law of contract both generally and with specific reference to the law of damages for breach of contract and, in particular, the decisions of the UK Supreme Court in Swynson Ltd v Lowick Rose LLP [2017] UKSC 32 and Fulton Shipping Inc of Panama v Globalia Business Travel SAU (The New Flamenco) [2017] UKSC 43. Although it was probably true to say when Atiyah and Summers wrote in Form and Substance in Anglo-American Law over 30 years ago that ‘the English law of contractual damages continues to be treated by judges and writers as governed by highly formal rules’, it would be wrong to describe the reasoning employed by judges in modern times when explaining, refining and applying these rules as highly formal. Particularly in appellate decisions, judicial reasoning is usually an amalgam of what the authors would describe as formal and substantive considerations. Indeed, the formal reason for supporting a decision may be preferred precisely because it provides the just or most convenient solution to the dispute, as in Swynson v Lowick Rose. In that case the Supreme Court overturned the decision of the majority of the Court of Appeal that denial of the damages claimed ‘would be a triumph of form over substance’, preferring the view of the dissenting judge who said that ‘the form here is the substance’. And, while the decision in The New Flamenco appears at first sight to rest on formal, arguably formalistic, reasoning, a closer reading reveals that substantive considerations influenced the outcome of the appeal.

Published
2019-07-04
Section
Articles