Addis v Gramophone Co Ltd [1909]

Court: House of Lords

Facts: Addis, employed as a manager by Gramophone Co Ltd, was given a six-month notice of termination. However, Gramophone Co Ltd appointed a replacement and prevented Addis from performing his duties before the notice period ended. Addis left his position after two months and sued for wrongful dismissal, claiming damages for loss of earnings and for the mental distress and damage to his reputation caused by the breach.

Held: The House of Lords awarded damages for loss of wages and commission for the six-month notice period but ruled that damages for mental distress and loss of reputation were not recoverable. Lord Atkinson emphasized that damages for breach of contract are intended to compensate for financial loss rather than to address emotional harm or reputational damage. Such claims are more suitable for tort actions involving fraud, defamation, or violence.

Key Judicial Statement: Lord Atkinson stated, "Damages for breach of contract are meant to compensate for actual financial loss suffered, not to address mental distress or loss of reputation unless the breach involves elements typically addressed in tort actions."

💡LevelUpLaw: This case reinforced the principle that contract damages are limited to financial loss directly resulting from the breach, excluding compensation for mental distress or reputational harm unless related to tortious conduct.