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I am posting this on behalf of Prof. Andrew Burrows. For my own part, I add only one word to the discussion, based on my own experience of working for a large integrated oil company one summer, spending months verifying the calculations involved in keeping track of a scheme like this. That word, which may send many subscribers to one dictionary or another, is "ullage." Para. 19 suggests that Esso dispensed with this by using average stock, but the way we did it, when the price changed, everything turned on ullage ...

Lionel

======= From Prof. Andrew Burrows:

1. Can anyone help with one aspect of Esso v Niad which is puzzling me and that I do not think has yet been discussed? Apart from compensation for expectation loss, Esso was held by Morritt VC to be entitled to two remedies: (1) an account of profits for breach of contract; (2) a so-called "restitutionary remedy". Morritt VC said , at para 64, that (2) was "the most appropriate remedy". But it is not clear to me what the difference is on these facts between (1) and (2).

2. As I understand it, there were two possible benefits gained by Niad by breaking the Pricewatch contract and charging higher prices than it should. The first was that Niad was given "price support" by Esso to which Niad was not entitled. This appears to mean that Niad were given higher margins, as referred to in paras 28 and 33, (or higher compensation under the stock valuation compensation scheme referred to in para 19) than Niad was entitled to. This "price support" meant that Niad paid less to Esso for its petrol than it should have done: eg para 19 tells us that the credit or debit was "accounted for in the price for the next fuel delivery". So Niad was benefiting from its breach of contract by paying less to Esso for its petrol than it should have done. The second possible benefit was that Niad was being paid more by its customers than the prices it should have charged. On the face of it there would be problems of proof here because higher prices ought to have meant less sales (although this might have been offset by Esso's pricewatch advertising).

3. One might be tempted then to think that remedy (1) was concerned with both (or perhaps just the second of) those possible benefits whereas remedy (2) was purely concerned with the first possible benefit. This interpretation would tie in with para 57 where Morritt VC said that an account of profits "is unlikely to yield by way of recompense the amount of additional price support obtained by Niad from Pricewatch which it did not pass on." Yet at paras 58 and 64 Morritt VC expressly referred to the second possible benefit as falling within (2) saying, eg, that the "restitutionary remedy... [would require] Niad to pay to Esso the amount by which the actual prices charged to customers exceeded the recommended prices" (para 58) and "Niad was enriched to the extent that it charged pump prices in excess of the recommended prices" (para 64).

Andrew Burrows