HADLEY & ORS. vs. BAXENDALE & ORS.

Citation: [1854] EWHC ExCh J70

Facts

Plaintiff sent a broken iron shaft to the defendants, who were the common carriers, to be conveyed by them to the third party who was to make a new shaft on similar lines. The fact that the mill work was stopped and could not be continued until the shaft is ready wasn’t known to the defendants. There was unreasonable delay in supplying the shaft back to the plaintiffs such that in addition to the general damages for breach of collateral warranty of time, within which delivery was to take place, sued the defendants for the special damages for mill remaining closed, idle wages to be paid and loss of profits which accrued because of no production in the mill in the delayed interval of time.

Issues: Whether plaintiff could seek special damages.

Held

“Where two parties have made a contract which one of them has broken the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it.”

Now, in the present case, only circumstances that were communicated by the plaintiffs to the defendants at the time the contract was made, were, that the article to be carried was the broken shaft of a mill, and that the plaintiffs were the millers of that mill. These circumstances, therefore, don’t show that the loss of profits can reasonably be considered as a consequence of the breach of contract as could have been fairly and reasonably contemplated by both the parties when they made this contract. For such loss neither flowed naturally from the breach of this contract (refer for eg: Suppose the plaintiffs had another shaft in their possession put up, and that they only wished to send back the broken shaft to the engineer who made it; it is clear that this would be quite consistent with the above circumstances, and yet the unreasonable delay in the delivery would have no effect upon the intermediate profits of the mill. Or, again, suppose that, at the time of the delivery to the carrier, the machinery of the mill had been in other respects defective, then, also, the same results would follow), nor was the special circumstances, which, perhaps, would have made it a reasonable and natural consequence of such breach of contract, communicated to or known by the defendants.

Author: Vishrut Kansal