Edelman J

Steward J
Gleeson J
Beech-Jones J

48.

135 One issue in L Albert & Son v Armstrong Rubber Co was the assessment of
damages for a breach of contract by a seller of four machines who delivered two
of the machines at a time so late as to justify the buyer's refusal to accept all four
machines. The buyer did not claim for any alleged loss of profits from the use of
the machines but instead successfully claimed damages based on alleged wasted
expenditure of $3,000 that was spent building a foundation for the machines.

136 In upholding that part of the buyer's argument, Chief Judge Learned
Hand commenced his analysis by recognising the usual rule for damages for
breach of contract: "Normally a promisee's damages for breach of contract are the
value of the promised performance, less [their] outlay, which includes ... any
expenses necessary to prepare for the performance".168 The principle in Story
Parchment Co v Paterson Parchment Paper Co was then applied: "[i]t is often
very hard to learn what the value of the performance would have been; and it is a
common expedient, and a just one, in such situations to put the peril of the answer
upon that party who by [their] wrong has made the issue relevant to the rights of
the other".169 Nevertheless, it was said that the promisee's prima facie right to
recover their "outlay in preparation for the performance" is subject to "the privilege
of the promisor to reduce [recovery] by as much as [they] can show that the
promisee would have lost, if the contract had been performed".170

137 The same issue arose before this Court in an appeal heard a little over a year
after the decision in L Albert & Son v Armstrong Rubber Co. In this Court, in
McRae v Commonwealth Disposals Commission,171 the same approach was
broadly taken in relation to damages for breach of contract in the context of a
contract for the sale of an oil tanker. In that case, the Commonwealth Disposals
Commission, contracting on behalf of the Commonwealth—which was ultimately
the party held liable172—had promised the plaintiffs that there would be a tanker
located at a specific place known as Jourmaund Reef. The plaintiffs paid £285 to
secure the contract and spent approximately £3,000 searching for the oil tanker.
There was no tanker at that place. The Commission was in breach of its contractual
promise that the oil tanker existed. The difficulty in assessing damages for that

168 (1949) 178 F 2d 182 at 189.

169 (1949) 178 F 2d 182 at 189.

170 (1949) 178 F 2d 182 at 189.

171 (1951) 84 CLR 377.

172 (1951) 84 CLR 377 at 419.