Loss of opportunity is something that individuals and businesses encounter every day. Normally it is just part and parcel of the decision-making process but where it is the result of a breach of contract or fraudulent misrepresentation, loss of opportunity is capable of justifying legal action. It should be noted though that a claim for loss of opportunity based on misrepresentation presents significant challenges.
The Law: Contract or Tort
As noted in above, loss of opportunity can be claimed through a claim for breach of contract or a claim based on fraudulent misrepresentation. In the case of breach of contract, it is long established that damages for breach of contract claims seek to put the parties in the position they would have been in had the contract been performed.
Misrepresentation, however, falls into a category of law known as torts, where one party has perpetrated a wrong on another. Tort law, in differentiation the contract law, seeks only to restore parties to a position had the tort not been committed. It does not try to put the parties in the position they would have achieved had the misrepresentation in fact been true, in other words to make up the loss of bargain in the contract. However, in the case of loss of opportunity, the loss from passing up other profitable opportunities may be covered in tort if the misrepresentation can be shown to have caused the loss.
Loss of Opportunity
The peculiar concept of loss of opportunity creates a need for complex analysis of causation. Where a contract has been breached, the direct losses flowing from that breach may be relatively easy to quantify; the lost opportunity may be less so, although not impossible. A court must consider a hypothetical outcome whereby, a breach of contract deprived the claimant of an opportunity to obtain a benefit.
The issue of causation presents particular problems for claimants seeking to rely on loss of opportunity to establish damages in tort on the basis of fraudulent misrepresentation. As noted above, claims in tort can only seek to restore a claimant to a 'no worse-off' position than they would have been had the fraud not been committed. In principle, damages must have directly flowed from the transaction and been directly caused by the transaction but claimants may seek consequential losses.
A claim for loss of opportunity requires the claimant to show that the alternative opportunity would have provided it with the claimed benefit, on the balance of probabilities, for which damages are sought in compensation.
There is support for this type of claim in case law but careful consideration must be given to the evidential requirements before pursuing a claim on this basis.
If you need advice regarding any type of commercial dispute, Rollingsons has experienced lawyers who can assist you; for more information please contact James Crighton (JCrighton@rollingsons.co.uk) via e-mail or by telephone on 0207 611 4848.
