A Gain-based Remedy for Breach of Contract in English Law: Some Lessons for South African Law

Abstract

A gain-based remedy for breach of contract is aimed at taking away the profits acquired through breach of contract. Traditionally, contractual damages can be claimed only if the breach caused the plaintiff patrimonial loss. There is an assumption that breach of contract causes a loss to the plaintiff, and as a result the defendant should compensate the plaintiff. However, in the past, courts have been confronted with cases where the opposite of this assumption is true. This is in instances where a defendant breaches a contract and gains profit as a result of that breach, whereas the plaintiff suffers little or no patrimonial loss. Unfortunately, in these circumstances the plaintiff may be left with no remedy or legal recourse for the breach, while the defendant may keep the profits generated as a result of the breach. However, in English law the courts have recognised a gain-based remedy in the circumstances outlined above, allowing the disgorgement of such ill-gotten profits. But a similar remedy has not yet gained recognition in the South African law of contract. The purpose of this article is to explore how South African law can draw some valuable lessons from English law in developing and recognising a gain-based remedy for breach of contract in order to deal with the profits generated through breach of contract.