Anglia
Television Ltd. v. Reed
3
All E.R. 690 (Court of Appeal, 1971).
Facts:
Issue: Can the plaintiff collect
reliance damages for expenses incurred before making the contract on which the
plaintiff relied?
Rule: When lost profit can’t be proved,
a plaintiff is entitled to recover reliance damages.
Analysis: The court is wrong,
wrong, wrong when it says that “[t]he aggrieved party cannot recover both
lost profits and wasted expenditures and must elect between them”.
The
court argues that at the time of contract formation, the defendant knew that
the plaintiff had already spent money setting up the production. Thus the defendant could have foreseen that
breaching the contract would cause the plaintiff to lose out on the money
they’d spent so far.
Question
The
evidence mentioned in the hypothetical would tend to show that the wages paid
to secretaries were actually fixed rather than variable and thus
would not contribute to reliance damages.
In this factual pattern, the money for secretaries would have been spent
anyway, and thus they wouldn’t have truly spent it in reliance on
Dempsey’s performance.
Conclusion: The judgment of the trial
court was upheld.