#6607 - British Westinghouse V. Underground Railways - Commercial Remedies BCL

British Westinghouse v. Underground Railways

Facts

The contract, which was made in 1902, bound the appellants to deliver and erect within a period and in accordance with a specification eight steam turbines of 5500 kilowatt capacity and eight turbo alternators.

New Parsons Turbines with increased efficiency: The appellants at various dates during the years 1904, 1905, and 1906 provided the machines, but the respondents alleged that the machines provided failed to satisfy the provisions of the contract with respect to economy and steam consumption. They claimed damages for the breach of contract to the extent of 280,000l. and upwards, which they said was their estimate of the loss caused by the excessive coal consumption for a period of twenty years at which they estimated the life of the machines. Alternatively they claimed the cost of installing eight new Parsons turbines, being machines of an improved order and of 6000 instead of 5500 kilowatt capacity, which they had purchased elsewhere when theappellants' machines proved insufficient. The cost of these machines they estimated at 78,186l. 4s., and they claimed in addition 42,000l. for the estimated loss caused by the excess of coal consumption during the time in which the appellants' machines were working and before the Parsons machines could be installed.

The new machines were to the advantage of the claimants: He found further that the purchase of the Parsons machines was to the pecuniary advantage of the respondents and that the superiority of Parsons machines in efficiency and economy over those supplied by the appellants was so great that, even if the appellants had delivered to the respondents machines in all respects complying with the conditions of the said contract, it would yet have been to the pecuniary advantage of the respondents at their own cost to have replaced the machines supplied to the respondents by Parsons machines so soon as the latter could be obtained.

Holding

General Principles

Compensatory Principle: Subject to these observations I think that there are certain broad principles which are quite well settled. The first is that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed.

Duty to Mitigate Loss: ..this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps. In the words of James L.J. in Dunkirk Colliery Co. v. Lever, “The person who has broken the contract is not to be exposed to additional cost by reason of the plaintiffs not doing what they ought to have done as reasonable men, and the plaintiffs not being under any obligation to do anything otherwise than in the ordinary course of business.”

Avoided Losses: As James L.J. indicates, this second principle does not impose on the plaintiff an obligation to take any step which a reasonable and prudent man would not ordinarily take in the course of his business. But when in the course of his business he has taken action arising out of the transaction, which action has diminished his loss, the effect in actual diminution of the loss he has suffered may be taken into account even though there was no duty on him to act.

I think that this decision illustrates a principle which has been recognized in other cases, that, provided the course taken to protect himself by the plaintiff in such an action was one which a reasonable and prudent person might in the ordinary conduct of business properly have taken, and in fact did take whether bound to or not, a jury or an...