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Ruxley Electronics and Construction Ltd v Forsyth

[1996] AC 344

Case summary last updated at 04/01/2020 12:48 by the Oxbridge Notes in-house law team.

Judgement for the case Ruxley Electronics and Construction Ltd v Forsyth

F contracted R to build him a pool  for 317K, and R built the pool slightly shallower than specified (although it made very little difference to F’s ability to use the pool). F then claimed £20k in damages to demolish the pool and rebuild it to F’s desired specifications i.e. a cure. HL rejected F’s claim for the cost of cure, since the cost of cure was “unreasonable”. This was because the cost of cure exceeded the extent of F’s loss. This claim of unreasonableness was supported by the fact that F had no intention of actually remaking the pool, which is evidence that his loss of having a pool slightly shallower than he would have liked is not so great as the value put on the cost of cure. To award the value of the cost of cure when F does not care enough to effect the cure (i.e. where his loss has been less than the value of curing the defect) would be to overcompensate him. They also said that the cost of cure would be “disproportionate”, given that the pool was no less valuable or workable for its being slightly shallower. The HL also rejected D’s proposed “diminution in value” approach since it would under compensate P (since the pool was no less valuable for its being shallower) and would mean that people’s specifications would be illusory and unenforceable. Thus HL decided to make an award based on a “loss of amenity” approach, where the value of the promise to the promisee exceeds the financial enhancement that would have occurred had there been full performance i.e. an award can be made for P’s personal dissatisfaction even if there is no economic loss. 
 
Lord Lloyd: The court will not allow a plaintiff to “create a loss that does not exist in order to punish the defendants.” He also says that Parke B’s dictum only applied in cases where there was actually a loss and it does not necessarily impl that the “cost of cure” should always apply, since in cases like this it would place F in a far better position than if the pool had been built according to correct specifications. 
 
NB The amenity damages are hard to quantify, since they are necessarily subjective and the court ishaving to ask itself “how upset is P” at not having the exact specifications of the contract. Secondly, it could lead to gross over-compensation where P is a sensitive or neurotic person. 

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