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Case Brief: Hadley v. Baxendale
Facts
The plaintiff Hadley had contracted the defendant Baxendale to deliver a replacement for a broken crank shaft for a mill operated by the plaintiff. Baxendale was to deliver the shaft to an engineering firm. However, Hadley failed to inform Baxendale that the mill was not operational and the replacement had to be carried out promptly. Therefore, the defendant failed to deliver the shaft on the agreed upon date. As a result, the mill remained closed resulting in revenue loss. Therefore, Hadley sought legal redress to under the claim that he was entitled to special damages due to the loss in profit occasioned by the delay. The court awarded the plaintiff damages amounting to £25 and subsequently the defendant appealed the ruling
Legal Issues
Can the damages for a breach of contract include damages from special circumstances considering that the special circumstances were not disclosed at the signing of the contract?
Legal Principle Applied in the Case
The plaintiff can only recover damages out of circumstances that are foreseeable to both parties at the time they are signing the contract. Also, the plaintiff is only entitled to special damage if the special circumstances were revealed and communicated before signing of the contract.
Holding/Reasoning
The plaintiff did not inform the defendant that failure to deliver the shaft would result in lost profits. Therefore, the situation was neither communicated nor deemed foreseeable at the time of contract signing. Therefore, the plaintiff is not entitled to any damages.
Summary of concurrences and dissents
There were not dissenting views in the ruling. All held that the plaintiff was not entitled to damages.
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