After the Golden Victory: Still Lost at Sea

Abstract

In The Golden Victory the House of Lords held that when determining damages for a repudiatory breach, in a conflict between the compensatory principle and finality, the former trumped. The decision was recently ratified by the Supreme Court in Bunge SA v. Nidera BV. The claim in this paper is that this was a mistake; properly conceived, there is no conflict. The contract should be viewed as an asset and compensation would entail determining the decline in value of that asset at the time of the breach. The value of the contract at that moment would reflect the possible effects of future events (e.g., the occurrence of the Gulf War in The Golden Victory and the lifting of the Russian wheat embargo in Bunge). This does not mean rejection of the compensatory principle; it simply entails defining more precisely what is being compensated — the value of the contract at the moment it had been repudiated.