Johnson v Agnew [1980]

Johnson v Agnew [1980]

Johnson v Agnew [1980] AC 367 is an English contract law case that played a crucial role in determining the date for assessing damages. The case established significant principles related to damages assessment in contract disputes, providing clarity on when damages should be evaluated.

Mrs Adeline Agnew failed to complete the purchase of Scheepcote Grange, a farm owned by Michael and Renee Johnson. The contract was to buy the farm for £117,000 on November 1, 1973. Despite the Johnsons being in financial trouble, Agnew took no action when everything was ready by January 1974. The Johnsons claimed specific performance in March 1974, won summary judgment in June, but the order was drawn up in November. Meanwhile, the mortgagees obtained orders for possession and sale. Advised that enforcing against Agnew was futile, the Johnsons left it. The property was sold for £48,000, insufficient to clear the mortgage debts, leading the Johnsons to bankruptcy.

The House of Lords, led by Lord Wilberforce, established five crucial principles related to the date for assessing damages in contract disputes:

Prospective termination: Termination for breach of contract is prospective, not retrospective. A repudiatory breach discharges both parties from future performance but preserves accrued rights, allowing for damages.

Specific performance and termination: The claimant seeking specific performance does not forfeit the right to terminate the contract by accepting a defendant's repudiatory breach. Acceptance of a repudiatory breach does not result in rescission ab initio.

Court oversight in specific performance: When a specific performance decree is made, the court has the sole jurisdiction to oversee performance and determine whether the obligation can be discharged.

Date of damages assessment: Common law damages are assessed at the date of the breach, but the court has the power to fix another date if justice requires. This flexibility is particularly relevant when the innocent party continues efforts to have the contract completed.

Equitable damages: The same principles for awarding common law damages apply to awarding equitable damages under Section 50 of the Supreme Court Act 1981, ensuring consistency in legal principles.

In summary, this case set essential principles in contract law, providing clarity on the prospective nature of termination for breach, the relationship between specific performance and termination, and the date for assessing damages in both common law and equitable contexts.
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