Remoteness of Loss

Question 1

But for the breach would the loss have occured…

Answer 1

• if the answer is no the loss isnt recoverable/covered by breach
• if yes the loss was caused by the breach but it may still not produce a damages remedy of the loss is considered too remote

Question 2

Rule for remoteness by Baron Alderson in Hadley v Baxendale (1854)

Answer 2

“the damages.. should be such as may fairly and reasonably be considered either arising naturally, ie 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”

Question 3

Victoria Laundry v Newman (1949)

Answer 3

• C operated commerical laundry and diner business and bought a boiler from D to expand
• D knew c wanted boiler for business purposes
• D was 20 weeks late in delivery
• adverse financial consequences on C
• C unable to expand and missed out on lucrative contract
• C sued D for full extent of loss
• C succeeded in damages for loss of profits for normal operations but not for lucrative contracts
• CA held contract was to exapsn business but the same normal operations of business
• D wasn’t aware of the possibility of lucrative contracts when entering the contract and it wasn’t part of the ordinary course of things either

Question 4

HL in Heron II

Answer 4

• cargo of sugar to Iraqi port
• breach of contract as sugar is 9 days late in arriving
• cargo owner wanted to sell sugar in market as soon as it arrived
• over the 9 days the market price for sugar fell, wouldn’t have made as much money as if it was delivered on time
• cargo owner sued ship owner in damages for that
• ship owner claimed loss was too remote because when entering into contract he didn’t know sugar merchant planned to sell it as soon as it arrived and was never told
• HL disagreed
• precise plans weren’t known but it was obvious that sugar trader would sell it immediately it arrived as there is a sugar market
• sugar is also a time sensitive commodity, so this kind of loss could obviously occur

Question 5

Parson v Uttley Ingham (1978)

Answer 5

• Farmer gets a tool called a hopper that dispenses and stalls food for farmer’s pigs
• hopper isnt installed correctly and inside it becomes moldy
• moldy food fed to pigs and they become ill
• farmer figured out the problem with the hopper and bought new food
• adult pigs recovered but some gave birth to pigs that inherited the disease
• farmer sued supplier of hopper and claimed damages for dead/diseased pigs
• hopper supplier claimed loss was too remote, no one could know moldy food would have that consquence
• not in reasonable contemplation of parties when contract was concluded
• contract contained term that hopper wold be reasonably fit to contain/store pig food
• involved obligation of keeping food in condition that wouldn’t cause illness
• there is a breach of this clause
• its likely that the loss would have ensued from a breach of this clause

Question 6

Important note from Uttley Ingham case and Brown v KMR services

Answer 6

its about the likelihood of the type of loss not the precise loss/extent that ensued