Wijck, Peter van --- "Foreseeability" [2011] ELECD 129; in De Geest, Gerrit (ed), "Contract Law and Economics" (Edward Elgar Publishing, 2011)

Book Title: Contract Law and Economics

Editor(s): De Geest, Gerrit

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847206008

Section: Chapter 12

Section Title: Foreseeability

Author(s): Wijck, Peter van

Number of pages: 14

Extract:

12 Foreseeability
Peter van Wijck


1. Introduction
The general aim of damages for breach of contract is to put the claimant
into as good a position as if the contract had been performed. There are,
however, a number of principles which limit the compensatory damages.
One of these is the principle of `foreseeability'. The famous English case
of Hadley v. Baxendale [1854] EngR 296; (1854, 9 Ex. 341, 156 Eng. Rep. 145) can be con-
sidered `the fountainhead of the limitation of foreseeability' (Farnsworth,
2004, p. 792). Burrows (2007, p. 1630) summarizes the `perhaps best-
known of all English contract cases' as follows.
The claimant's mill was brought to a stand-still by a broken crank-shaft. The
claimant engaged the defendant's carrier to take it to Greenwich as a pattern
for a new one, but in breach of contract the defendant delayed delivery. The
claimant sought damages for loss of profit arising from the fact that the mill
was stopped for longer than it would have been if there had been no delay. The
court held that the loss of profit was too remote and therefore the carriers were
not liable for it.

The rationale of the decision appears in what came to be known as the
two rules of Hadley v. Baxendale (Farnsworth, 2004, p. 793). The first rule
was that the injured party may recover damages for loss that `may fairly
and reasonably be considered [as] arising naturally, i.e. according to the
usual course of things, from ...