Back to basics: Reliance damages for breach of contract revisited

Hutchison, Dale

Back to basics: Reliance damages for breach of contract revisited

Journal Article

2004

Journal Title

The South African Law Journal

Link to Journal

https://jutalaw.co.za/products/3601-south-african-law-journal

Publisher

Juta Law

Publisher

University of Cape Town

Department

Department of Public Law

Faculty

Faculty of Law

Abstract

Many years ago Professor D J Joubert suggested that there was no real distinction in principle between positive and negative interesse and that the terms should be avoided because they were likely to cause confusion ('Negatiewe interesse en kontrakbreuk' (1976) 39 THRHR 1 at 13-14). More recently ajudge has defended the distinction as a practical one (Horwitz AJ in Masters v Thain t/a Inhaca Safaris 2000 (1) SA 467 at 473nl). That case is the latest in a series grappling with the question whether or to what extent the victim of a breach of contract may elect to claim damages measured according to its negative rather than its positive interest (see Probert v Baker 1983 (3) SA 229 (D); Svorinic v Biggs 1985 (2) SA 573 (W); Hamer v Wall 1993 (1) SA 230 (T); Mainline Carriers (Pty) Ltd vJaad Investments CC 1998 (2) SA 468 (C); Tweedie v Park Travel Agency (Pty) Ltd t/a Park Tours 1998 (4) SA 802 (W); Masters v Thain (supra)). The cases reveal such a wide variety of judicial opinion on these points - particularly as regards which losses are covered by the terms positive and negative interest - that one cannot help but begin to share Professor Joubert's misgivings about the usefulness of the distinction. After the decision in Probert v Baker - the first in the series of cases just mentioned - Professor Gerhard Lubbe of Stellenbosch University wrote a very helpful article in which he attempted to clear up some of the misconceptions and confusion apparent from that decision ('The assessment of loss upon cancellation for breach of contract' (1984) 101 SALJ 616). That article has proved most influential: it has been cited in almost every subsequent case dealing with the issue, by judges on either side of the debate. It is not an easy read, however, and at times one is left with the uncomfortable feeling that its arguments have not been properly understood. In fairness, it should be said that the more recent cases reflect, to my mind at any rate, a better understanding of the issues and principles involved, and in this regard particular mention should be made of the very learnedjudgment of FarlamJ (as he then was) in the Mainline Carriers case. Nevertheless, taken as a whole, the body of case law on the topic represents a confusing and almost impenetrable mass for most students, and no doubt for many practitioners,law teachers and even judges.

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