Anglia Television Ltd v Reed [1972] 1 QB 60

Facts

• Anglia Television (claimant) was preparing to produce a television play and hired Mr. Reed (defendant) as the leading actor.
• Prior to engaging Mr. Reed, Anglia Television had incurred various costs related to planning and pre-production, including director’s fees and associated expenses.
• Mr. Reed repudiated the contract, constituting a breach, which caused Anglia Television to abandon production and suffer financial loss.
• The claimant sought to recover wasted expenditure rather than lost profits, as the latter was difficult to quantify.

Issues

1. Whether Anglia Television could recover costs incurred in reliance on the contract (reliance loss), including those expended before the contract with Mr. Reed was formed.
2. Whether reliance loss could be claimed as an alternative to expectation loss where lost profits were difficult to prove.
3. What limits applied to the recoverability of reliance losses, particularly regarding remoteness, reasonableness, and mitigation.

Decision

• The court, per Lord Denning MR, held that Anglia Television was entitled to recover production expenses incurred both before and after the contract with Mr. Reed, as these were within the reasonable contemplation of the parties.
• Reliance loss could be claimed where loss of profits was difficult to establish, but not in addition to expectation loss.
• The recoverable expenses included costs reasonably contemplated by both parties as likely to be wasted if the contract was breached.

Legal Principles

• Reliance loss serves as an alternative measure of damages where lost profits are uncertain, but is confined by the principle that a claimant cannot be better off than if the contract had been performed.
• Expenses incurred prior to contract formation may be recovered if they were reasonably foreseeable to the parties as likely to be wasted upon breach.
• Subsequent case law clarifies that reliance loss is a subset of expectation loss and cannot exceed the profit that would have been earned; the defendant must demonstrate any excess.
• The duty of mitigation requires claimants to take reasonable steps to limit their losses, and advantages gained in the process of mitigation are considered in calculating damages.
• Restitutionary damages for gains made by the breaching party are rare and typically only available in exceptional cases.

Conclusion

Anglia Television Ltd v Reed established that reliance loss may be claimed as damages for breach of contract where lost profits are uncertain, provided the expenditure was within the parties’ contemplation. Later cases confirmed that reliance loss is not an independent right but a method to assess expectation loss, subject to limits of reasonableness, remoteness, and mitigation.