McRae v Commonwealth Disposals Commission (1951) 84 CLR 377
Contract; remedies for breach; damages for wasted expenses.
Facts: The Commonwealth Disposals Commission asked interested persons to bid for the purchase of an oil tanker that the commission said was lying wrecked on a reef called Jourmand Reef. McRae's bid of £285 was accepted, and McRae spent considerable sums of money searching for the reef and tanker, but it turned out that neither of them actually existed. On discovering these facts, McRae sued the commission for breach of contract. McRae claimed damages calculated to include both the price paid for the tanker and the much larger expenses that had been wasted searching for it.
Issue: Was McRae entitled to claim the wasted expenses as damages in addition to the price paid for the tanker?
Decision: McRae was entitled to claim the wasted expenses.
Reason: The parties must have known when contracting that expenses would be incurred searching for the tanker. McRae had a right to claim these as damages unless the commission could prove that the expenses would have been wasted even if the contract had not been breached. McRae was awarded damages of £3,285. Note: This case involves the sale of a non-existent thing, and such agreements are not normally enforceable. However, in this case, the commission had in effect guaranteed the existence of the tanker they sold to McRae.