Victoria Laundry (Windsor) Ltd v Newman Industries Ltd
[1949] 2 KB 528
Ratio Decidendi
Damages for breach of contract are limited to losses within the reasonable contemplation of the parties at the time of contract. Losses arising naturally from the breach (first limb of Hadley v Baxendale) are recoverable; unusual losses known to the defendant (second limb) are also recoverable.
Facts
Victoria Laundry ordered a boiler from Newman Industries for use in their laundry business. Delivery was five months late. The laundry claimed damages for (1) ordinary loss of profits and (2) loss of exceptionally lucrative government dyeing contracts.
Judgment Summary
The Court of Appeal held that ordinary loss of profits was recoverable (within reasonable contemplation as the defendants knew the boiler was for immediate use). However, the exceptional profits from the government contracts were not recoverable as the defendants had no knowledge of these special contracts.
Key Quotes
"In cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach."
— Asquith LJ
Subsequent Treatment
Important refinement of Hadley v Baxendale remoteness principles. Discussed in The Heron II [1969] and Transfield Shipping v Mercator Shipping [2008].