Hadley v Baxendale
The defendant who was unaware of its urgency delayed delivery of the repaired crankshaft to the plaintiff. The plaintiff claimed damages for loss of profits during the period of delay.
Alderson B’s dissenting judgment established that damages ought to be received for a breach of contract should be:
(i) Those which may fairly and reasonably be considered to have naturally arisen from the breach or
(ii) Such damages, reasonably supposed to have been in the contemplation of both parties at the time the contract was made as the likely result of its breach.
If any special circumstance exists, the plaintiff can only recover damages, which would ordinarily follow from the breach of the contact under the special circumstances where the circumstance was known to both parties.
In the case, the defendant could not be liable because he was unaware of the fact that the mill had no spare crankshaft (special circumstance) and so could not have contemplated the damages as a result of his delay
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