In breach of contract actions, outline the basic rules regarding the recovery of damages for non-pecuniary losses such as disappointment, inconvenience and distress.

An exception to this rule, known as the rule in Addis, is where the very object of the contract is for peace of mind or freedom from distress, which was established in the ‘holiday cases’ such as Jarvis v Swan Tours Ltd.  In Jarvis’ case, Lord Denning M.R said that Jarvis was entitled to damages for his disappointment, the loss of entertainment and his loss of enjoyment.

This principle was followed in Watts v Morrow where the plaintiffs were awarded damages for distress and inconvenience.  The Court of Appeal gave a narrow scope to the category of a contract as ‘to provide peace of mind or freedom from distress.’  

This principle was followed and its scope extended in the case of Ruxley Electronics v Forsyth.  The court awarded relatively small damages to Forsyth, whose expectations were not fulfilled when he contracted for a swimming pool for reasons of pleasure.  The courts described the contract as one for a pleasurable amenity.  This principle was confirmed in Farley v Skinner when Lord Steyn said he was;

“…satisfied that the principles enunciated in Ruxley’s case…for a breach of respect of the provision of a pleasurable amenity have been authoritatively established.’

In Farley v Skinner the House of Lords awarded the plaintiff damages in respect of his disappointment at loss of a pleasurable amenity that was of no economic value but was of importance to him in ensuring his pleasure, and their lordships said that it was sufficient if the provision of the amenity had been a major or important part of the contract rather than its sole object.  Lord Hutton stated that, “cases falling outside the exception”, namely the holiday cases, need to satisfy three conditions;

“(1) the matter in respect of which the individual claimant seeks damages is of importance to him; (2) the individual claimant has made clear to the other party that the matter is of importance to him; and (3) the action to be taken in relation to the matter is made a specific term of the contract.”

This has been interpreted into its simplest form that the damages for loss of pleasure can be awarded if you bargained for it, and it is seen to be the basis of the principle for awarding damages for non-pecuniary loss.  The courts no longer have to look specifically at whether the purpose of the contract was one for pleasure.  

It is uncertain to what extent the courts will award damages for non-pecuniary loss as in the past the majority of decisions have been influenced by public/legal policy.  The underlying influence of the policies is that it is difficult to quantify such losses, since such feelings are hard to prove or disprove, and there is fear of rewarding double compensation as pecuniary damages may cover the scope of emotions, for example, disappointment. 

This is best observed in the context of commercial contracts where the courts have refused to allow recovery of damages for disappointment and distress.  This is illustrated in the case of Hayes v Dodd, where Staughton’s LJ reasons for disallowing the claim were fuelled on policy.  The policy behind this case was to limit recovery for mental distress to categories of contract in which it was a central obligation to provide peace of mind or to relieve a source of distress.  This was reiterated in the case of Johnson v Unisys Ltd., where Lord Millett explained that there could be no damages for injured feelings in the context of breaches of commercial contracts on the basis that such loss would be too remote.