Effect of events after repudiation of contract on assessment of damages

As we reported briefly last week (see Legal update, Effect of events after repudiation of contract on assessment of damages), in Golden Strait Corporation v Nippon Yusen Kubishka Kaisha [2007] UKHL 12, the House of Lords had to consider where damages for an accepted repudiation of a contract are claimed, in what circumstances the party in breach can rely on subsequent events to show that the contractual rights which have been lost would have been rendered either less valuable or valueless.

By a majority of three to two, the House of Lords found that the respondent charterers could rely on a subsequent event to show that the appellant shipowner's contractual rights had been rendered less valuable. The majority of their Lordships found that considerations of certainty and finality in commercial transactions had "to yield to the greater importance of achieving an accurate assessment of the damages based on the loss actually incurred". This case is of interest because the principles outlined by the House of Lords are of general application in assessing damages for repudiatory breach of contract and the issue has never been considered before.