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Breach of Contract

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The Court of Appeal gave judgment yesterday in a case in which it had to consider the effect of a breach of a condition in a contract for the sale of land. The seller of a warehouse and outbuildings at a farm had contracted to provide, within six months after completion, a new directly metered electricity supply and a separately metered mains water supply. The seller failed to comply with the condition of the contract and the buyer purported to rescind the contract and claim back the purchase price.

The leading judgment of the Court of Appeal in Howard-Jones v Tate was given by Lord Justice Kitchin. The admitted breach of contract did not entitle the buyer to rescind or to treat the contract as void ab initio. Instead, the breach entitled the innocent party to elect to treat the contract as discharged and claim damages for the breach. Allowing the Defendant’s appeal, the Court of Appeal remitted the case to the County Court for damages to be assessed. The proper basis of that assessment was not to put the Claimant buyer in the position he would have been in had the contract not been entered into but rather to identify the damage suffered as a result of the breach of contract.