Contract Law

Robinson v. Harman

(1848) 1 Ex 850; 154 ER 363

Facts

Harman agreed to grant Robinson a lease of a house for 21 years.
Harman represented that he had the authority to grant the lease.
Robinson incurred expenses in investigating the title and preparing for completion.
Harman did not possess the legal title necessary to grant the promised lease.
The transaction therefore could not be completed.
Robinson sued for the loss caused by the breach, including the value of the bargain he would have received if the lease had been granted.

What is the proper measure of damages for breach of contract?
Whether Robinson was restricted to recovering expenses or could recover the value of the promised contractual benefit.

Damages for breach of contract are intended to place the innocent party, so far as money can do it, in the position that party would have occupied if the contract had been performed.
This is known as the expectation-interest principle.
Recoverable damages may include:
expenditure caused by the contract;
loss of the promised benefit;
lost profit or value, where sufficiently proved and not too remote.
Damages are compensatory, not punitive.

Robinson had contracted for a valuable 21-year lease.
Had Harman performed, Robinson would have obtained the economic benefit of that lease.
Merely reimbursing Robinson for his legal and preparatory expenses would not place him in the position promised by the contract.
The court therefore compared:
Robinson’s actual position after the breach; and
the position he would have occupied had the lease been validly granted.
The difference represented the contractual loss.
Harman’s inability to convey title did not reduce the measure of damages.
He had undertaken an absolute contractual obligation to grant the lease and was responsible for failing to do so.
Robinson was consequently entitled to recover both:
expenses reasonably incurred; and
the value of the lost leasehold bargain.
The case establishes that contract damages protect the claimant’s expectation, not merely money already spent.
However, the claimant must still establish the value of the lost benefit with reasonable certainty.

Robinson was entitled to damages representing the value of the position he would have enjoyed had the contract been performed.
The decision established the foundational expectation measure of contractual damages.
Use this case for: the innocent party should be placed in the same financial position as if the contract had been performed.