# How does the Contract Law definition of 'consumer surplus' relate to the Microeconomics definition?

O'Sullivan & Hilliard's The Law of Contract (2018 8 ed). 16.23 starts on p. 387, 16.35 on p. 391.

Right: Pindyck, Rubinfeld. Microeconomics, Global Edition (2017 9 ed). p. 152.

Difference in value or cost of cure? (Section 11.3.1)
The £2,500 award made in Ruxley for Mr Forsyth’s ‘loss of amenity’ can be interpreted as damages for non-pecuniary loss, based on the fact that the contract was a consumer contract for enjoyment (see the opinions of Lords Clyde and Hutton in Farley v Skinner (2001)). However, the award may also be interpreted as a response to the need for a wider principle of recovery based on the loss of ‘consumer surplus’. Consumer surplus is the difference in value between what a thing is worth commercially and the higher value at which a consumer subjectively values it. So, whilst an extra few inches on the swimming pool added no financial value, the £2,500 represented Mr Forsyth’s consumer surplus: to him, and him alone, the pool was a more valuable asset if it was deeper (i.e. if his contract was fully performed). He had contracted for this extra depth and it had not been provided, so you could argue that the award of £2,500 was compensation for loss of this consumer surplus.

I'm not a microeconomist, but these terms appear to be defined wholly differently? Or am I overlooking something similar that underlies them?

• You've added another passage by Taylor & Taylor (2019): Consumer surplus is the difference in value between what a thing is worth commercially and the higher value at which a consumer subjectively values it. To me, this is again identical to the economist's definition of consumer surplus. If you believe that this is "wholly different" from the economist's definition, you should probably add more context to explain why. – Kenny LJ Nov 18 '19 at 23:34
• @KennyLJ Yes. I'm just double-checking. – NNOX Apps Nov 19 '19 at 8:44

Using Pindyck and Rubinfeld's example: If a student was willing to pay as much as $$\13$$ for a rock concert ticket (this is the value she places on the "performance of a particular obligation") but only had to pay $$\12$$ (this is the price or the market value of the ticket), then her consumer surplus is $$\13-\12=\1.$$