MarIus

4.1 Introduction

Consider a charterer that redelivers on a short 3-day notice on 25 January in contravention of a required 20 days’ notice. Pursuant to our view of notice as a pure information obligation, we may simply deduce that the owner was objectively entitled to notice on 5 January, and that damages ought to be measured correspondingly as was our prima facie inference. But one may also observe that there are numerous ways in which the charterer could have complied with the notice obligation–he could have postponed redelivery to some future point that lets him notify properly.^{(1) Granted that there is enough time left on the charter.} That hypothetical will often be a more realistic scenario, since it does not presume that the charterer can know what may have been unknowable at the time. Why, then, premise damages on the former loss – or causal – perspective rather than the latter?

The question concerns how to conduct the causal inquiry. We are asking losses due to what? Since the answer is breach, one may think of that inquiry in terms of the economic difference between what actually occurred with a hypothetical non-breach scenario. Of course, there is much more to the measure of damages than a descriptive comparison of worlds. It involves numerous judgments and modifications based on rules on mitigation, remoteness and compensatio.^{(2) Hagstrøm (2011), p. 538.} Due to these complexities, some authors have questioned the utility of a difference approach.^{(3) See e.g., Hellner (1995), pp. 358-359.} To measure damages remains, however, at its core a causal inquiry.^{(4) Simonsen (1997), p. 302.} The purpose of damages is compensatory; it responds to a breach. To that end, the difference approach is intuitive and in cases of doubt, it provides a structure for the thought.

The critique is helpful in reminding us that a non-breach scenario is only a means to an end. We ought to be acutely aware that when we alter a parameter to create a non-breach scenario, we define and calibrate the setup of the causal inquiry, which is a highly norm bound exercise. If we are reckless, our method may turn into a source of error.

To avoid error, it is held that we must follow the normative reasoning as it flows from the purpose of damages i.e., to compensate for breach of a contractual norm. In other words, the basic premise is to give economic effect to the aggrieved party’s contractual right. The non-breach scenario must therefore be set up to give effect to said right, whatever content it may have. If there are any subjective or other limitations that apply, they must follow from an analysis of the contractual right.

Against that backdrop, the thesis will in the following first conclude that our initial inference finds solid ground. Thereafter, the thesis will address the argument put forth by The Great Creation, before it moves on to discuss some unusual characteristics of the causal inquiry. Having concluded on the main research question, we will round off by revisiting Michelet’s critique.