Jackson v Horizon Holidays Ltd [1975] 3 All ER 92

Facts

  • Mr. Jackson entered into a contract with Horizon Holidays for a holiday package covering himself, his wife, and two children, at a price of £1,200.
  • The contract specified accommodation, amenity, and dietary requirements for the family, which Horizon accepted.
  • Just before departure, Horizon informed Mr. Jackson that the original hotel was unavailable, providing an alternative at the same price and claiming it was of equal standard.
  • Upon arrival, the substitute accommodation proved unsatisfactory, causing significant distress, discomfort, and inconvenience to the family.
  • Mr. Jackson sued Horizon Holidays for breach of contract due to misrepresentation, seeking damages.
  • The trial judge awarded Mr. Jackson £1,100 in damages, intended to compensate for the losses, including mental distress, suffered by both Mr. Jackson and his family.
  • Horizon Holidays appealed the amount of damages awarded.

Issues

  1. Whether damages for breach of contract can extend to cover distress suffered by third-party beneficiaries, namely Mr. Jackson’s family, in a contract made for their collective benefit.
  2. Whether the doctrine of privity of contract restricts recovery solely to the contracting party’s own loss.
  3. Whether awarding damages for third-party distress in such contracts is an exception to the general rule of contractual damages.

Decision

  • The Court of Appeal upheld the damages awarded by the trial judge, confirming they could include the distress experienced by Mr. Jackson’s family.
  • Lord Denning MR reasoned that where a contract is made for the benefit of third parties (such as family holidays), the contracting party may recover damages for distress suffered by beneficiaries, not merely their own.
  • The court noted that the award would have been excessive if limited to the contracting party alone, but was reasonable given the contract’s purpose.
  • James LJ dissented, maintaining damages should only reflect the mental distress of Mr. Jackson and not extend to third parties.
  • The majority judgment created a specific exception to the standard privity and measure of contractual damages.

Legal Principles

  • Ordinarily, only parties to a contract can recover damages for breach, and only for their own loss.
  • Where a contract is expressly for the benefit of third parties (such as family holiday arrangements), damages may extend to distress suffered by those beneficiaries.
  • The judgment established an exception to the privity of contract principle for a limited class of cases—contracts made for the benefit of others in contexts such as family holidays.
  • This principle was later restricted by the House of Lords in Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277, which confined such exceptions to specific circumstances involving group benefit.

Conclusion

Jackson v Horizon Holidays [1975] 3 All ER 92 established a qualified exception to the privity and damages rule, allowing recovery for third-party distress in group benefit contracts such as family holidays. Though later confined by the House of Lords, the case remains significant for recognizing circumstances in which a contracting party can recover damages reflecting the loss and distress suffered by intended third-party beneficiaries.

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