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Addis v Gramophone [1909] AC 488 House of Lords

The claimant was employed as a manager by the defendant. The defendant in breach of contract dispensed with his services and replaced him with a new manager. The claimant brought an action for breach of contract claiming that the level of damages should reflect the circumstances in which he was dismissed damaged his reputation and ability to find suitable employment.

Held:

Contract law seeks to put the parties in the position they would have been in had the contract been performed. He was therefore limited to claiming wages and loss of commission during the contractually agreed  notice period. There was no right to exemplary damages or damage to reputation in contract claims. Such claims would have to be actioned in the law of tort. 

Lord Atkinson:

“In many other cases of breach of contract there may be circumstances of malice, fraud, defamation, or violence, which would sustain an action of tort as an alternative remedy to an action for breach of contract. If one should select the former mode of redress, he may, no doubt, recover exemplary damages, or what is sometimes styled vindictive damages; but if he should choose to seek redress in the form of an action for breach of contract, he lets in all the consequences of that form of action: Thorpe v. Thorpe. One of these consequences is, I think, this: that he is to be paid adequate compensation in money for the loss of that which he would have received had his contract been kept, and no more.”
 
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