A default clause turns breach into arithmetic. But before calculating the loss, you need to fix the date on which the calculation begins, and that date is rarely the day a party decided its patience had run out.
The default date is not a detail to be settled later. It determines the market against which damages may be assessed.
It follows from which obligation was breached and what the contract says about the consequences of that breach. Sometimes default arises immediately on the expiry of a deadline. Sometimes a further step is required: a notice, the running of a prescribed period, or the operation of a specific mechanism in the standard form.
Only once that date has been identified can the tribunal ask what the goods were worth, whether a replacement transaction was reasonable, and what loss the breach actually caused.
After default, the innocent party may make a replacement sale or purchase. That transaction can provide the basis for calculating damages, but only if it was commercially reasonable.
A tribunal may examine how soon the replacement was made, whether the market had moved, whether the goods were genuinely comparable, and whether quantity, quality, origin, delivery period and contractual basis matched.
A poorly timed or commercially unusual transaction does not become decisive merely because it followed the breach.
Where no valid replacement sale or purchase was made, damages are generally assessed by comparing the contract price with the market or actual value of the goods on the default date. That value must be proved.
A headline market price is rarely enough. The closer the evidence sits to the contractual goods and the relevant date, the more weight it is likely to carry.
The innocent party must act reasonably after the breach. It cannot wait for the market to move in its favour and then transfer the resulting loss to the defaulting party.
Equally, mitigation does not require perfect judgment with hindsight. The question is whether the steps taken were commercially reasonable in the circumstances known at the time.
Reasonable additional costs incurred in dealing with the default may also be recoverable, provided they were caused by the breach and properly evidenced.
In a default dispute, start with four questions: who breached the contract, when did default occur, what did the innocent party do afterwards, and what evidence supports each figure. If any answer is unclear, the calculation is not finished.