Jackson v Royal Bank of Scotland
Encyclopedia
Jackson v Royal Bank of Scotland [2005] UKHL 3 is an English contract law
case, which concerns remoteness of damage.
. By mistake, RBS sent Economy Bag a document showing that Jackson was making a 19% markup on every transaction. Feeling cheated, they cancelled the business relationship with Jackson and Davies. Jackson sued RBS for the loss of the opportunity to make further profits.
At first instance, Jackson won, since the relationship would have continued for four more years on a decreasing scale, and after then further dealings would just be speculative.
The Court of Appeal held that damages should be limited to one year of the breach, and all other losses were too remote. Jackson appealed, arguing that one year was based on an error of principle, and in fact RBS's liability was open ended. RBS argued that no loss at all was foreseeable, because it was not within its reasonable contemplation that accidental disclosure would lead to the relationship being terminated.
On the issue of remoteness, the judge's assessment was a good one, in that it was increasingly likely as time passed that Economy Bag would want to squeeze Jackson's profit margins. To avoid further cost, that award (four years) would be restored.
Lord Walker made some interesting observations on the rule in Hadley v Baxendale.
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
case, which concerns remoteness of damage.
Facts
Mr James Jackson was a partner with Barrie Stewart Davies (by the time, passed on), trading under the name "Samson Lancastrian". They imported dog chews from Thailand and sold them to a firm called "Economy Bag". They both had the same bank, the Royal Bank of ScotlandRoyal Bank of Scotland
The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...
. By mistake, RBS sent Economy Bag a document showing that Jackson was making a 19% markup on every transaction. Feeling cheated, they cancelled the business relationship with Jackson and Davies. Jackson sued RBS for the loss of the opportunity to make further profits.
At first instance, Jackson won, since the relationship would have continued for four more years on a decreasing scale, and after then further dealings would just be speculative.
The Court of Appeal held that damages should be limited to one year of the breach, and all other losses were too remote. Jackson appealed, arguing that one year was based on an error of principle, and in fact RBS's liability was open ended. RBS argued that no loss at all was foreseeable, because it was not within its reasonable contemplation that accidental disclosure would lead to the relationship being terminated.
Judgment
The House of Lords held that the loss of future orders was not too remote, and that Jackson had an obvious commercial interest in retaining confidential information. The point of damages for breach of contract with RBS, to which Jackson was entitled, was to put him in the position as if there had been no breach.On the issue of remoteness, the judge's assessment was a good one, in that it was increasingly likely as time passed that Economy Bag would want to squeeze Jackson's profit margins. To avoid further cost, that award (four years) would be restored.
Lord Walker made some interesting observations on the rule in Hadley v Baxendale.