Remoteness Flashcards
What case does the fundamental rule of remoteness derive from?
Hadley v Baxendale
What happened in Hadley v Baxendale?
The claimants were millers in Gloucester who contracted with the defendant carriers to take a broken mill shaft to the repairers in Greenwhich, as a pattern for a new shaft. The claimants had no spare shaft. Although the defendants had promised to deliver within a day, they in fact delayed, and the shaft was not delivered until a week later. The claimants sued the defendants for damages for loss of profits, arising from the fact that the mill was out of action for longer than anticipated, owing to the delay.
The court held that the claimant’s loss did not arise ‘naturally’ because the claimants might we have posessed a spare shaft; neither was it “in the contemplation of the parties” as the defendants were unaware that the shaft entrusted to them was the only one which the claimants possessed. It would have been different if, at the time of the contract, the claimants had informed them of the position. Accordingly, loss of profits was too remote a head of damage.
In Hadley v Baxendale, what did Alderson B. say damages for breach should be?
He said they should be such as may:
“…Fairly and reasonably be considered as either arising naturally, ie according to the usual course of things, from such breach of contracts itself”; or be
“…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.”
Damages outside of these two categories would be too remote.
How was the rule as originally laid down perceived? How did this change and why?
It was originally perceived as being two separate parts:
1) Dealing with normal or usual loss and; 2) dealing with special, abnormal or unusual losses.
Later cases telescoped the two limbs into a single principle because it is presumed that the contract breaker will be aware of the normal losses arising from a breach, and recovery for any special loss will depend on their contemplation of that loss at the time of the contract.
When was the idea that the time of the contract is relevant ascertained?
Jackson v Royal Bank of Scotland
What happened in Victoria Laundry (windsor) v Newman Industries Ltd
The defendants agreed to sell to the claimant launderers a boiler, which, as the defendants were aware, was required for immediate use. In breach of contract, the defendants delayed delivery by 5 months. The claimants sought damages for loss of profits (a) £16 a week that they could have earned by taking on extra business with their new, larger boiler, (b) £262 a week that they could have earned from certain lucrative dyeing contracts with the Ministry of Supply. It was held by the Court of Appeal that the defendants were not liable for item (b), the loss was too remote. The defendants did not actually know of the lucrative dyeing contracts and could not therefore be liable for their loss. However, knowing what the claimants business was, they would have been aware that if the boiler was delayed, they would suffer a loss on their ordinary day-to-day business.
Balfour Better Construction (Scotland) Ltd v Scottish Power PLC
It was held by the house of Lords that there was no general priciniple that the parties were presumed to have knowledge of each others business practices, particularly where complex construction or manufacturing processes were involved.
In the case, the defendants agreed to supply the claimants with a supply of electricity to a site where they were constructing a concrete aqueduct. The defendants were not aware that the works required a continuous pour of concrete. As a result, the work that had been done had to be demolished and the installation rebuilt. This loss was held not to be in the reasonable contemplation of the defenders and too remote. As the Lord Ordinary at first instance had put it:
“The defenders could certainly contemplate that if the supply failed the plant would not operate and that if it was operating at the time the manufacture of concrete would be interrupted. What they did not know was the necessity of preserving a continuous pour for the purposes of the particular operation….Nor were they asked for any specifically secure supply of electricity. Furthermore they did not know that a construction joint [i.e. Remedial work] would not be an acceptable solution if the power was terminated so that demolition would follow.
Kemp v Intansun Holidays Ltd
This case affords an interesting comparison with Balfour Betty. A holidaymaker verbally informed his travel angent that her was prone to asthma attacks. Whilst on holiday, the defendants, in breach on contract, required the the claimant to relocate his hotel accommodation which triggered off an asthma attack. On a claim for additional damages, the Court of Appeal held that the mention of asthma was merely conversational and not part of the booking as the claimant had left blank a box on the booking for header “special requests”. the injury to the claimant was therefore outside the defendants’ reasonable contemplation. The principles of remoteness established in Hadley v Baxendale were reviewed by the House of Lords in Transfield shipping Inc v Mercator Shipping Inc, the Achilleas. This decision
