All bankruptcy practitioners know that a debtor may choose which contracts to assume and which contracts to reject.  But may a debtor reject contracts that are part of an overall, integrated transaction?  In a recent bankruptcy decision, the court found the answer to be no, at least if the parties are careful in drafting their contracts.

What happens if one party to a contract fails to perform? Can the innocent party get all of its losses back? What happens if the losses are difficult to prove?

Here, we look at what you can claim and how to protect your position.

The general rule

Damages for breach of contract are usually intended to compensate the injured party for its losses arising naturally from the breach or which were within the parties' contemplation when the contract was made.

In the case of William Hare Ltd v Shepherd Construction Ltd [2009] EWHC 1603 (TCC) (25 June 2009), the court declined to incorporate amendments made to an Act before the contract was signed which were not specifically referred to in the contract.

The facts