British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd
A claimant must take reasonable steps to mitigate its loss, and benefits gained from those steps reduce its damages.
Facts
British Westinghouse agreed to supply turbines to the Underground Electric Railways Company for a power station. The turbines did not meet the specification and were less efficient than promised, so they used more coal. After a few years, the railway company replaced them with new turbines from another manufacturer, which were much more efficient than even the turbines British Westinghouse had promised to supply. The savings in running costs from the new turbines exceeded the cost of buying them. The railway company claimed the cost of the replacement turbines as damages.
Legal principle
The House of Lords held that the railway company could not recover the cost of the new turbines, because the benefits it obtained from buying them more than outweighed their cost. Viscount Haldane LC said that the fundamental basis of damages is compensation for pecuniary loss naturally flowing from the breach, but this is qualified by the duty, imposed on the claimant, of taking all reasonable steps to mitigate the loss consequent on the breach. Where the claimant's steps in mitigation arise out of the transaction and reduce its loss, the benefit must be taken into account in assessing damages.
Related cases on remedies
- Addis v Gramophone Co Ltd [1909] AC 488
- Anglia Television Ltd v Reed [1972] 1 QB 60
- Attorney General v Blake [2001] 1 AC 268
- Cavendish Square Holding BV v Makdessi; ParkingEye Ltd v Beavis [2015] UKSC 67, [2016] AC 1172
- Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1
- Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79
- Farley v Skinner [2001] UKHL 49, [2002] 2 AC 732
- Golden Strait Corp v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] UKHL 12, [2007] 2 AC 353
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