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The rise and demise of damages for disappointment and distress in contract

Link, Kellie (2012) The rise and demise of damages for disappointment and distress in contract. Honours thesis, Murdoch University.

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This thesis traces the common law development of the general rule prohibiting the recovery of contractual damages for disappointment and distress. This thesis begins by outlining and discussing the origins of the rule dating back to the 1800’s in England. It then discusses the development of the rule through English case law, and the subsequent implementation of that approach in Australia. Whilst there has always been a few exceptions to the general rule against damages for disappointment and distress, historically, in both England and Australia, there has been judicial hesitancy to expand the range of exceptions, or discard the rule altogether. This thesis argues that this hesitancy was primarily because it was feared that to allow recovery for disappointment and distress would open the floodgates to the attachment of a disappointment and distress claim to every contractual dispute. The development of the common law rule is therefore marked by a slow evolution of principled exceptions allowing for recovery in some limited circumstances whilst still ensuring that the floodgates were kept firmly closed. However, over time, the number of principled exceptions steadily increased to a list so extensive that it almost served to invalidate the general rule. By the late 1990’s and the Australian case of Baltic Shipping Co v Dillon, judicial reluctance had transformed into an expressed willingness to consider the very validity of the rule itself. From that point it seemed that the much feared floodgates were well and truly ajar, if not swinging wide open.

English and Australian responses to the gradual erosion of the rule limiting disappointment and distress damages have been quite different. This thesis demonstrates that in England the courts have continued to allow for a greater erosion of the general rule, whilst in Australia the response has been to enact legislation severely restricting the range of situations where recovery for disappointment and distress is possible. A discussion of the Australian legislative response forms the remainder of this thesis. It argues that through a combination of recently enacted civil liability and employment legislation a return has been made to the early days of Hamlin v Great Northern Railway Co when the general prohibitive rule prevailed and claims for disappointment and distress were very limited. Despite having limited conceptual and empirical justification, the legislation has effectively confiscated from disappointed and distressed plaintiffs the right to recover compensation for their loss.

Item Type: Thesis (Honours)
Murdoch Affiliation(s): School of Law
Notes: Note to the author: If you would like to make your thesis openly available on Murdoch University Library's Research Repository, please contact: Thank you.
Supervisor(s): Walker, Sonia
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