• In the case of Hadley v Baxendale 1854 9 Exch 341, it was found that where two parties have made a contract, which one of them has broken, the damages which the other pays should only be just and reasonable and naturally arising.

Facts of the Case

  • The plaintiffs, the owners of a flour mill, sent a broken iron shaft to an office of the defendants, who were common carriers, to be conveyed by them, and the defendants’ clerk, who attended at the office, was told that the mill was stopped, that the shaft must be delivered immediately, and that a special entry, if necessary, must be made to hasten its delivery; and the delivery of the broken shaft to the consignee, to whom it had been sent by the plaintiffs as a pattern, by which to make a new shaft, was delayed for an unreasonable time; in consequence of which, the plaintiffs did not receive the new shaft for some days after the time they ought to have received it, and they were consequently unable to work their mill and thereby incurred a loss of profits.

Issues in Hadley v Baxendale 1854 9 Exch 341

  • Whether the loss of profits resultant form the mill’s closure was too remote for the claimant to be able to claim

Held by Court of Exchequer

  • Under the circumstances, such loss could not be recovered.

Alderson B

  • Held that a party could only successfully claim for losses due to breach of contract where the loss is reasonably viewed to have resulted naturally from the breach of it.
  • The claim for losses was too remote
  • “This therefore is a question of law, and the jury ought to have been told that these damages were too remote; and that, in the absence of the proof of any other damage, the plaintiffs were entitled to nominal damages [353] only : Tindall v. Bell (11 M. & W. 232). Siordet v. Hall (4 Bing. 607) and De Faux v. Salvador (4 A. & E. 420) are instances of cases where the Courts appear to have gone into the opposite extremes—in the one case of unduly favouring the carrier, in the other of holding them liable for results which would appear too remote. If the defendants should be held responsible for the damages awarded by the jury, they would be in abetter position if they confined their business to the conveyance of gold. They cannot be responsible for results which, at the time the goods are delivered for. carriage, are beyond all human foresight.” P.150