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Wasted (Reliance)Expenditure
Last updated: 06-Oct-2014

Per Lord Denning MR in Anglia Television Ltd v Reed [1971] 3 All ER 690 at p.692:

It seems to me that a plaintiff in such a case as this had an election: he can either claim for his loss of profit; or for his wasted expenditure. But he must elect between them. He cannot claim both. If he has not suffered any loss of profits--or if he cannot prove what his profits would have been--he can claim in the alternative the expenditure which has been thrown away, that is, wasted, by reason of the breach.

… If the plaintiff claims the wasted expenditure, he is not limited to the expenditure incurred after the contract was con-cluded. He can claim also the expenditure incurred before the contract, provided that it was such as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken. Applying that principle here, it is plain that, when Mr Reed entered into this contract, he must have known perfectly well that much expenditure had already been incurred on director’s fees and the like. He must have contemplated--or, at any rate, it is reasonably to be imputed to him--that if he broke his contract, all that expenditure would be wasted, whether or not it was incurred be-fore or after the contract. He must pay damages for all the expenditure so wasted and thrown away.

… wasted expenditure can be recovered when it is wasted by reason of the defendant’s breach of contract. It is true that, if the defendant had never entered into the contract, he would not be liable, and the expenditure would have been incurred by the plaintiff without redress; but, the defendant having made his contract and broken it, it does not lie in his mouth to say he is not liable, when it was because of his breach that the expenditure has been wasted.

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