Boris Ignachkov Legal Principles and Key Points:
- In the case of Lazenby Garages Ltd v Wright [1976] 1 WLR 459, the repudiation of the sale of a unique good is mitigated by a higher subsequent sale. The loss will not be mitigated where it is a fungible good, the innocent party would have been able to make another sale if it was not for that breach.
Facts of Lazenby Garages Ltd v Wright [1976] 1 WLR 459
- C, Lazenby Garages, was contracted to sell D, Wright, a second-hand BMW for the value of £1,670
- D repudiated the contract, telling the dealers he did not wish to proceed and refused the delivery
- Over a month later, the C sold that car to another for £100 more
- C then sued D for breach of contract, seeking damages for the difference between the price C had purchased the car and the £1,670 from the contracted sale which fell through
- C also argued that if the D had accepted the car, as contracted, they could have sold another car of the same make and model
Issues in Lazenby Garages Ltd v Wright [1976] 1 WLR 459
- Was the C entitled to damages?
Held by the Court of Appeal
Appeal allowed – C entitled to nominal damages, only. The sellers could recover damages for the loss of the transaction of the same car, but not for the resell of that said car as they sold it for a higher price, and thus suffered no loss.
Lord Denning M.R.
Where the good is fungible, Denning L cited W. L. Thompson Ltd. v. Robinson (Gunmakers) Ltd. [1955], US cases Torkomian v. Russell (1916) and Stewart v. Hansen (1923), as well as others. He stated:
- “if there are a number of new cars, all exactly of the same kind, available for sale, and the dealers can prove that they sold one car less than they otherwise would have done, they would be entitled to damages amounting to their loss of profit on the one car” [462]
However this is not the same where the case concerns secondhand cars:
- “Each secondhand car is different from the next, even though it is the same make. The sales manager of the plaintiffs admitted in evidence that some secondhand cars, of the same make, even of the same year, may sell better than others of the same year. Some may sell quickly, others may be sluggish. You simply cannot tell why. But they are all different.” [462]
So, s50(2) of the Sale of Goods Act 1893 applies [462]:
- “The measure of damages is the estimated loss resulting directly and naturally in the ordinary course of events from the buyer’s breach of contract.”
- “test of what could reasonably be expected to be in the contemplation of the parties as a natural consequence of the breach”
In the present case, the D would not have contemplated the C dealer would sell a car less:
- “At most he would contemplate that, if they resold this very car at a lower price, they would suffer by reason of that lower price and should recover the difference. But if they resold this very car at a higher price, they would suffer no loss.” [462]
