Aggravated, Exemplary and Restitutionary ... - Law Commission

that have been made against the general availability of restitutionary awards. 263
First, many breaches of contract are made for commercial reasons and it is difficult
to draw the line between ‘innocent’ breach, for which there would be only
compensation, and ‘cynical’ breach, in which there would also be the option of
restitution in the way suggested by some commentators. This would lead to
greater uncertainty in the assessment of damages in commercial and consumer
disputes. Secondly, in seeking restitution the plaintiff might be evading the
requirements of the duty to mitigate. Thirdly, a restitutionary award is in reality a
monetized form of specific performance but not all contracts are specifically
enforceable. Fourthly, there may be difficulties of attribution. The making of a
profit in excess of that which the plaintiff might have made had the contract been
performed may require skill and initiative which should not be taken from the
defendant save in exceptional cases.
1.47 Most consultees considered that the case for restitutionary (and exemplary)
damages was less powerful in respect of breach of contract than for torts and
equitable wrongs. And over two-thirds thought that, in any event, the extent to
which restitutionary damages should be available should be left to development by
the courts. 264
We agree that it would be dangerous to attempt to ‘freeze’ in
legislative form the extent to which, if at all, restitutionary damages should be
available for breach of contract. Accordingly, we recommend that:
(6) no legislative provision should deal with whether (and if so, when)
restitutionary damages may be awarded for breach of contract; the
development of the law of restitution for breach of contract should
be left to common law development.
(2) Exception: legislative reform required by our proposals on
exemplary damages
1.48 Our basic position, which we describe above, is that the law of restitution for
wrongs is most appropriately left for common law development. This extends to
central questions, such as which wrongs should attract a restitutionary remedy. It
also extends to less central questions, which we consider in the next section, such
as the quantum of restitution, the relationship between compensation and
restitution for wrongs, and the method for dealing with claims to restitution for
wrongs by multiple claimants, or against multiple defendants.
1.49 Nevertheless, we do believe that a limited measure of legislative reform is required
by our recommendations for a new approach to exemplary (or, as we propose to
label them, ‘punitive’) damages. This limited reform has two elements:
263 Aggravated, Exemplary and Restitutionary Damages (1993) Consultation Paper No 132,
para 7.18.
264 See para 3.41 above.
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