Future Performance and Proof in Contract Damages

Abstract

A longstanding common law controversy is whether, following a contract’s termination for the defendant’s repudiatory breach, the plaintiff’s entitlement to substantial damages depends upon proving its ability to have performed any outstanding, and now discharged, obligations. This question may arise in various distinct contexts and consideration of the relevant case law reveals that courts have not imposed identical proof requirements across these different scenarios. Despite these ostensible inconsistencies, the adoption of a two-stage model reveals the existence of an intelligible order within the leading authorities. The first stage involves determining the nature of the relationship between the parties’ unperformed obligations. This relationship may decisively determine what the plaintiff must prove to recover substantial damages. But if not, the onus of proving whether the plaintiff would have been able to perform any remaining obligations, if relevant to its entitlement to substantial damages, must be allocated. Proper allocation of this onus requires consideration of certain other features of the case, including most notably the presumptive availability of specific performance to the plaintiff. This article explains the operation of this model by analysing the leading English and Australian decisions, providing a framework for resolving the various scenarios that may arise.