Damages
Damages
Damages for breach of contract are intended to put the injured party in the position it would have enjoyed had the contract been properly performed.
The kind of losses recoverable were first defined in Hadley v Baxendale (1845):
•losses arising naturally, in the ordinary course of things (known as ‘direct’ losses); and
•losses which were reasonably forseeable when the contract was made (known as ‘indirect’ losses).
Losses arising as a result of any special circumstances of the parties which the defendant couldn’t reasonably have known when the contract was made are considered too remote and are not recoverable.
Jurisprudence since Hadley has developed and refined these principles. In essence, direct and indirect losses (within the meaning above) may be recovered unless the contract expressly excludes them. All other losses are not recoverable unless it can be proven that the defendant knew (or should have known) the claimant’s circumstances (the contractual exclusion of ‘indirect’ or ‘consequential’ loss has been held to mean the exclusion of those losses under the second limb of Hadley).
The important cases which have examined these principles are:
•Victoria Laundry v Newman (1949)
•Czarnikow Ltd v Koufos (The Heron II) (1969)
•Croudace Construction Ltd v Cawoods Concrete Production Ltd (1978)
•British Sugar plc v NEI Power Projects Ltd (1997)
•Deepak Fertilisers & Petrochemicals Corp Ltd v Davy McKee Ltd (1999)
•Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) (2008)
Contract ReFresh: Damages
15/03/2010
Contract ReFresh:
Damages