Cutting corners: freighters, fire engines and Formula One—the puzzle of pure services, skimped performance and market value
In Tibermede v Graham & Co (1921) 7 Ll.L.Rep. 25 a charterer hired a freighter. It seems that, when the time came to load it, the charterer discovered the vessel was slightly smaller than had been warranted, but the charterer was sell able to carry all its intended cargo without difficulty. The charterer nonetheless claimed damages for this breach of warranty.
In English law, the purpose of contract damages is for the claimant “so far as money can do it, to be placed in the same situaƟon, with respect to damages, as if the contract had been performed” (per Baron Parke in Robinson v Harman (1848) 154 ER 363). Lords ScoƩ and SumpƟon confirmed this to be the ‘fundamental principle’ governing the quantum of damages for breach of contract (in Golden Strait CorporaƟon v. Nippon Yusen Kubishka Kaisha (“The Golden Victory”)  UKHL 12 at paragraph 29 and again in Bunge SA v Nidera BV  UKSC 43 at paragraph 14). Tibermede’s owner had ‘skimped’ on performance but the charterer was no worse-off than if the contract had been performed in full. The undersized ship carried all the cargo. A larger ship would have carried the same cargo. The charterer was already in the same situaƟon as if the contract had been performed. No money was needed to place him there. Yet the charterer was awarded damages for breach of contract. In this arƟcle, we consider whether that award can be jusƟfied.