G. Time of Measurement

Author:John D. McCamus
Profession:Professor of Law. Osgoode Hall Law School, York University

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As a matter of principle, identification of the time as of which damages should be measured is not normally a matter of difficulty. The victim of a breach of contract is entitled to expectancy damages, subject to the usual limitations, up to the moment in time at which the victim’s reasonable steps in mitigation would avoid any further aggravation of the loss resulting from breach. Thus, for example, a wrongfully dismissed employee may recover wages that would have been earned during a reasonable notice period subject to the limitation, however, that if reasonable steps in mitigation would have achieved re-employment during the period, the compensable losses terminate at that point in time. Where the calculation of damages requires the valuation of an asset, however, the question of when the valuation should occur is a more difficult matter. In the context of agreements for the purchase and sale of goods and of realty, a rather crisp rule developed at common law that, in the normal case, the subject matter of the transaction would be valued at the date of breach. Thus, a purchaser of goods faced with non-delivery would be entitled to recover the difference between the contract price and the market value of the goods on the date for delivery. Similarly, a purchaser of land confronted by the vendor’s refusal to close the transaction would be entitled to recover the difference between the contract price and the value of the land at the date of closing. Although in some cases, particularly in the context of sale of goods, it may be realistic to assume that the victim of the breach could

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in fact mitigate on the date of the breach, there must be many cases in which an expectation that a purchaser would immediately mitigate by acquiring substitute property is quite unrealistic. Accordingly, the normal rule can only be defended as a rule of convenience that provides some stability or predictably in the calculation of damages in these contexts. The normal rules are capable of working a hardship, however, especially in cases involving the sale of land, where, for a variety of reasons, it may be quite unrealistic to expect the disappointed purchaser of land to mitigate by acquiring a substitute property. In order to address this difficulty, English and Canadian courts have recognized, in recent decades, the existence of greater flexibility in the normal rule than was traditionally thought to be the case. For a time, it was thought that principles of equity might be called upon to intervene, at least in the context of land sales, in cases of this kind. More recently, however, it has become clear that the normal rule, the common law rule, is sufficiently flexible to permit a court to measure the value of the subject matter of the transaction at a later point of...

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