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LOSS OF CHANCE AND THE EVALUATION OF HYPOTHETICALS IN CONTRACTUAL CLAIMS

Lloyd's Maritime and Commercial Law Quarterly

Loss of chance and the evaluation of hypotheticals in contractual claims

Jill Poole*

In the light of recent observations in Gregg v. Scott, this article assesses the legal basis for permitting recovery of damages for loss of chance in the contractual context, seeking to justify such recovery and to analyse the process and standard of proof applicable when proving loss and establishing causation in the case of a contractual claim based on one or more hypotheticals. It also considers some of the difficulties in evaluating these hypotheticals, particularly in the case of sequential or alternative multiple contingencies, and in arriving at a measure for recovery of loss of chance. Finally, it is argued that when seeking to establish liability the courts should avoid mathematical percentages which are relevant to the determination of quantum .

I. INTRODUCTION

In a contractual claim, in addition to the need correctly to identify the nature of the loss being claimed,1 the claimant has to prove that loss2 and to establish that it was caused by the breach of contract,3 ie, that on the balance of probabilities the defendant’s breach was “an effective”4 or “dominant” cause of [the claimant’s] loss.5 In principle, the claimant is then entitled to recover in full for that loss.
However, if the loss involves the loss of a chance of securing the expectation under the contract where that loss turns upon the hypothetical actions of third parties, it is not possible to establish the existence of an “actual” loss. Nevertheless, the Court of Appeal

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Lloyd's List Group is a trading division of Informa UK Limited, a company registered in England and Wales with company number 1072954 whose registered office is 5 Howick Place, London, SW1P 1WG. VAT GB365462636. Informa UK Limited is part of Informa PLC. Lloyd's is the registered trademark of the Society incorporated by the Lloyd's Act 1871 by the name of Lloyd's.