SQE Law of agency, contract and negligence question: damages for loss of bargain

EAA SQELaw of agency, contract and negligence

Mr Siu agreed to buy a flat from Mrs Lai for HK$5,000,000 and paid a deposit of HK$500,000. Mrs Lai refuses to complete, and Mr Siu chooses to claim damages rather than specific performance. On the completion date, the flat was worth HK$5,600,000. He gets his deposit back. Assume no other loss. What damages for loss of bargain can he claim?

A HK$100,000
B HK$1,100,000
C HK$600,000
D HK$5,600,000

Show the answer and explanation

Answer: C. HK$600,000

Answer: HK$600,000. Working: Value at completion HK$5,600,000 - contract price HK$5,000,000 = HK$600,000 loss of bargain. The deposit is returned separately, so it is not counted again. Why not the others: - HK$100,000: Wrongly deducts the returned deposit from his loss of bargain. - HK$1,100,000: Adds the deposit, which he has already recovered, to his damages. - HK$5,600,000: Damages compensate for the loss of the bargain, not the full value of the flat he never paid for. Rule: Damages for breach of contract aim to put the innocent party in the position he would have been in had the contract been performed; they compensate and do not punish. Source: EAA, A Study Guide to Estate Agency Law and Practice, Part 3, para 19; as at Oct 2026

Common mistake

Mixing the returned deposit into the loss-of-bargain figure.

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An original question written to the published SQE syllabus. Figures in the explanation carry their effective dates; check them against the current law before relying on them. Independent exam practice. Not affiliated with or endorsed by the Estate Agents Authority (EAA) or the examination administrator.