Engineers must pay damages for breaching contract
An engineering firm has lost its appeal against having to pay damages to an airline company. The case involved a breach of contract by the engineers. They had an agreement with the airline that they would service aircrafts at a specified hourly rate. However, the airline was not obliged to use the service.
Over time, the agreed hourly rate became less favourable to the engineers and more favourable to the airline.
The engineers attempted to renegotiate the contract but the airline refused. As a result, the engineers began to take longer to complete the maintenance work.
The airline responded by sending their aircrafts to a different maintenance company, at a higher hourly rate than the one charged by the engineers.
The engineers then told the airline that they could no longer perform maintenance services and terminated the contract. The airline claimed damages for breach of contract.
The judge ruled in favour of the airline. He ordered that the engineers should pay damages based on the cost of servicing 19 aircrafts, which would have been the work carried out in the remainder of the contract.
The engineers claimed that the sum was too much, given that the airline had no obligation to use their service.
They claimed that in all likelihood, the airline wouldn’t have used their service again given the increase in the amount of time taken to do the work.
The Court of Appeal upheld the judge’s decision. It held that the airline would have continued to use the service because of the favourable hourly rate.
If it didn’t continue because the engineers were no longer able to carry out the work, then the engineers would benefit from their own breach.
Please contact Clare Jones if you would like more information about contract law, or any of the issues raised in this article.