(1) Compensation is due only for harm, including future harm, that is established with a reasonable degree of certainty. 

 

(2) Compensation may be due for the loss of a chance in proportion to the probability of its occurrence. 

 

(3) Where the amount of damages cannot be established with a sufficient degree of certainty, the assessment is at the discretion of the court.

 

COMMENT

 

1. Occurrence of harm must be reasonably certain

 

This Article reaffirms the well-known requirement of certainty of harm, since it is not possible to require the non-performing party to compensate harm which may not have occurred or which may never occur. 

 

Paragraph (1) permits the compensation also of future harm, i.e. harm which has not yet occurred, provided that it is sufficiently certain. Paragraph (2) in addition covers loss of a chance, obviously only in proportion to the probability of its occurrence: thus, the owner of a horse which arrives too late to run in a race as a result of delay in transport cannot recover the whole of the prize money, even though the horse was the favourite.

 

2. Determination of extent of harm

 

Certainty relates not only to the existence of the harm but also to its extent. There may be harm the existence of which cannot be disputed but which it is difficult to quantify. This will often be the case in respect of loss of a chance (there are not always “odds” as there are for a horse, for example for an engineering company preparing for the making of a bid) or of compensation for non-material harm (detriment to someone’s reputation, pain and suffering, etc.).

 

Illustration

 

A entrusts a file to B, an express delivery company, in response to an invitation to submit tenders for the construction of an airport. B undertakes to deliver the file before the closing date for tenders but delivers it after that date and A’s application is refused. The amount of compensation will depend upon the degree of probability of A’s tender having been accepted and calls for a comparison of it with the applications which were admitted for consideration. The compensation will therefore be calculated as a proportion of the profit which A might have made.

 

According to paragraph (3), where the amount of damages cannot be established with a sufficient degree of certainty then, rather than refuse any compensation or award nominal damages, the court is empowered to make an equitable quantification of the harm sustained.

 

3. Harm must be a direct consequence of non-performance as well as certain

 

There is a clear connection between the certainty and the direct nature of the harm. Although the latter requirement is not expressly dealt with by the Principles, it is implicit in Article 7.4.2(1) which refers to the harm sustained “as a result of the non-performance” and which therefore presupposes a sufficient causal link between the non-performance and the harm. Harm which is too indirect will usually also be uncertain as well as unforeseeable.