damages Flashcards
(49 cards)
What case established the rules for remoteness of damages?
Hadley v Baxendale (1854).
What was the issue in Hadley v Baxendale?
Whether Hadley could claim lost profits even though Baxendale didn’t know the delay would shut the mill.
What was the court’s decision in Hadley v Baxendale?
The court denied the claim for lost profits due to lack of foreseeability.
What two-part test did Hadley v Baxendale establish?
1) Ordinary loss – natural from breach; 2) Special loss – only if circumstances were known at contract time.
What is meant by “Ordinary loss” in Hadley v Baxendale?
A loss that naturally arises in the usual course of events from a breach of contract.
Is prior knowledge required for ordinary loss?
No, it is assumed to be obvious and foreseeable.
Why did Hadley v Baxendale fail the first limb?
Because not all mills would shut down from the component issue – the loss wasn’t naturally arising.
What is “Special loss” in the Hadley v Baxendale test?
Losses arising from unusual circumstances, recoverable only if known at time of contract.
Is prior communication necessary for special loss claims?
Yes, the special circumstances must have been reasonably contemplated by both parties.
Give an example of special loss.
Losing a job interview due to a delayed courier delivery, after informing the courier of its importance.
Why did Hadley fail the second limb of the test?
Baxendale didn’t know the delay would stop the mill; Hadley didn’t communicate it.
What case illustrates both ordinary and special loss?
Victoria Laundry v Newman Industries (1949).
What ordinary loss was awarded in Victoria Laundry v Newman?
Loss of ordinary profits due to a 5-month delay in boiler delivery.
Why was special loss denied in Victoria Laundry v Newman?
Newman didn’t know about the extra government dyeing contract.
What case refined the second limb of Hadley v Baxendale?
The Heron II (Koufos v C Czarnikow Ltd, 1969).
What was the issue in The Heron II case?
Whether sugar price drop during shipping delay was too remote to claim damages.
What was decided in The Heron II?
The loss was recoverable as the ship owner knew sugar was being traded and could foresee market fluctuation.
How did The Heron II refine the special loss test?
Losses must be in reasonable contemplation of the parties, even if not likely, if there’s a serious possibility.
What does C&P Haulage v Middleton demonstrate?
Damages not recoverable for losses that weren’t caused by the breach.
What is the principle of restitutio in integrum?
The injured party should be put in the position they would have been in had the breach not occurred.
How is the plaintiff’s loss assessed in damages claims?
Based on actual loss suffered, not defendant’s potential gain.
What is loss of bargain?
Damages awarded to reflect expected profits if the contract had been properly performed.
What is reliance loss?
Damages for wasted expenses incurred in reliance on the contract.
What case is used to show reliance loss?
Anglia Television Ltd v Reed (1972).
