In Westbrook Resources Ltd v Globe Metallurgical Inc – Lawtel 19.2.08 the Defendant was a manufacturer and supplier of metals. The Claimant was a metals trader. In January 2005 they concluded a contract for the sale by the Claimant to the Defendant of approximately 30,000mt of manganese ore. The Claimant brought proceedings seeking damages for non-performance. The court held (see the October 2007 bulletin) that the Defendant had committed a repudiatory breach which the Claimant had accepted. The Claimant was therefore entitled to damages, and the instant hearing was to determine quantum, the measure of damages being governed bys 50(2) and (3) of the Sale of Goods Act 1979.
The Commercial Court held that in determining the measure of damages under s 50(2) and (3) of the Sale of Goods Act 1979, the court was not concerned with the acquisition cost of the goods sold, but with compensating the seller for the loss of the contract, which could be measured by the difference between the contract price and the price obtainable in the market at the date of breach. The assumption underlying the exercise was that, with the additional money the seller could, by selling in the market at the current price, put himself into the financial position he would have been in had the contract been performed according to its terms. The purpose of the exercise was simply to ensure that the seller was put into the same financial position as if the contract had been performed.
Section 50 of the Sale of Goods Act 1979 provides, so far as material: '(2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of events, from the buyer's breach of contract. (3) Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price at the time or times when the goods ought to have been accepted or (if no time was fixed for acceptance) at the time of the refusal to accept.'
It followed that the price for which the Claimant had acquired or could have acquired manganese ore was wholly irrelevant to assessing the damages to which it was entitled.