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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 10264
Experience:  I have been practising for 30 years.
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I have a question about consequential loss due to

Customer Question

I have a question about consequential loss due to cancellation of an employment contract before the employment started but after accommodation charges were incurred after signing the contract. My daughter entered in to contract with Buro4 for a one year paid internship in London and as a result entered into a one year lease on a flat in London in order for her to be able to take up the post. However, just a few days before she was due to start the employment Buro4 cancelled the contract on the grounds of market uncertainties and offered one weeks compensation as per the contract. They have since increased this to 4 weeks through informal discussion. However, my daughter is now liable to a maximum of the full years rent if she is not able to re-let her place in the flat. Whilst I do not envisage the worst case I would like to understand the companies liabilities in terms of this consequential loss up to the point where we find a replacement.
Submitted: 1 year ago.
Category: Law
Expert:  F E Smith replied 1 year ago.

Did they know that she was signing up for a one-year flat and that if they cancelled, she would be stuck with paying the rent until a replacement was found or for the rest of the term of the rental agreement?

Customer: replied 1 year ago.
No I doubt that she mentioned is specifically to them but she was living in Dorset and expected to work in London so it was rather obvious she would have to get local accomodation. In addition thay had offered to help her find somewhere if needed
Expert:  F E Smith replied 1 year ago.

This consequential loss is also called “pure economic loss”.

Any such loss pursuant to breach of failure of a contract is only recoverable if it is “the contemplation of the parties”. Hence, they would need to know that your daughter was arranging accommodation specifically to take up this position and that if they withdrew the position, she would incur the loss in respect of the rent. In view of the fact that they offered to help her find somewhere if needed, I think they would struggle to say that they would not aware of that.

However if they will not take out their cheque book, daughter is faced with taking them to court for these losses and any losses pursuant to the breach of contract.

It depends whether she wants to go to that trouble or not. I think she has a reasonable chance of succeeding.

Can I clarify anything for you?

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Best wishes.