Clients in commercial cases want to know the answer to two simple questions: do they have a claim and what is it worth? As lawyers, the majority of our energies seem to be spent on the first question. Almost as an afterthought we answer the second question by saying that, if successful, the claimant will recover whatever loss they have suffered. There might be difficult questions of calculation of loss but this can be left safely to accountants to sort out once liability is established.

The recent case of World Wide Fund for Nature v World Wrestling Federation [2007] not only illustrates the dangers of such an approach but also shows the opportunities for claimants to recover more than their strict financial loss.

The WWF case is the latest in a trilogy which starts with Attorney General v Blake [2001]. The notorious double agent, George Blake, escaped from prison and fled to Moscow where he wrote his autobiography in breach of a confidentiality undertaking in his employment contract. The UK Government sought disgorgement of the royalties he made from his book. The Government's problem was the rule that damages for breach of contract are limited to losses incurred by the breach and no losses could be proved. The House of Lords responded to the obvious injustice by altering the rule: in exceptional cases a court was not limited to compensating a claimant for its financial loss but could award disgorgement of the profit earned by the defendant as a result.

In the second case in the trilogy, Experience Hendrix v PPX Enterprises [2003], the estate of Jimi Hendrix had reached an agreement with a record producer, PPX, giving it a limited licence to exploit some of Jimi Hendrix's recordings in return for a royalty. When PPX purported to grant rights to others in breach of the terms of this licence, Experience Hendrix, which had acquired the rights from Jimi Hendrix's estate, sought an account of profits for breach of contract on the principles set out in the Blake case.

The Court of Appeal held that the circumstances were not sufficiently exceptional to warrant a full account of profits but ordered PPX to pay a reasonable sum for its unauthorised use of the recordings. Such a sum would be greater than the financial loss, if any, which Experience Hendrix might have suffered, but it would not be as much as a full account of PPX's profits.

The WWF case arose as a direct consequence of the Blake and Hendrix cases. The World Wide Fund for Nature and the World Wrestling Federation entered into an agreement about the use of the initials 'WWF'. The Federation used the initials in breach of that agreement and the Fund thus sought damages for breach of contract. The claim was originally pleaded as a claim for damages for the recovery of the Fund's financial loss.

However, following the Blake case, the Fund sought, but was refused, leave to amend to include a claim for recovery of the profits which the Federation had earned through its wrongful use of the WWF initials. Following the Hendrix case, it sought to claim Hendrix-style damages but the Court of Appeal upheld the Federation's argument that it would be an abuse of process for the Fund to be allowed to pursue a Hendrix claim in view of the court's previous refusal of the Blake claim.

Two important points arise out of the decision. The first and most obvious one is that it is not good enough to leave the analysis of the basis of any financial award to be dealt with by accountants once liability is settled. Thought needs to be given at the outset as to how the case on damages is going to be put, as otherwise circumstances might arise in which it is too late to amend the case later.

The second and more important point brings us back to the question of what a claim is worth. In the WWF case the Federation supported its argument that it was an abuse of process for the Fund to be allowed to pursue a Hendrix-style claim by contending that both it and a Blake-style claim were claims for gain-based awards and thus juridically the same. Lord Justice Chadwick held that they were indeed juridically the same but that both awards were compensatory and not gain-based at all. The underlying feature of both, he said, was that: "the court recognises the need to compensate the claimant in circumstances where he cannot demonstrate identifiable financial loss". This is at odds with much academic thought which regards the awards in both Blake and Hendrix as restitutionary.

Where this leaves the state of contract law damages is difficult to say. If Chadwick is correct that these awards are compensatory, then it would seem that whenever it can be said that a claim for financial loss would not lead to 'full' compensation, one of these claims may be available. But even then it will be difficult to predict whether such 'compensation' should take the form of a Blake-style award or the more limited Hendrix-style award.

Given that uncertainty, lawyers can perhaps be forgiven for concentrating on questions of liability and leaving for another day the thorny question of what a claim is worth.

John McGhee QC is a barrister at Maitland Chambers.