Substitutability and disgorgement damages in contract

Abstract

The principles governing the award of disgorgement damages for breach of contract remain opaque. In the leading judgment in Attorney-General v Blake, Lord Nicholls proposed a ‘legitimate interest‘test for determining when a breach of contract would give rise to an account of profits. However, continuing uncertainty about what constitutes a legitimate interest has made the test notoriously difficult to apply. In that context, Lord Steyn’s remark, that ‘[e]xceptions to the general principle that there is no remedy for disgorgement of profits against a contract breaker are best hammered out on the anvil of concrete cases’, simply highlights the need for concrete criteria to guide the enquiry. T..