Ratio Decidendi
Damages for breach of contract are limited to those which: (1) arise naturally from the breach (according to the usual course of things), or (2) may reasonably be supposed to have been in the contemplation of both parties at the time the contract was made, as the probable result of the breach.
Fapte
Hadley operated a mill in Gloucester. The mill shaft broke and needed to be sent to the manufacturers in Greenwich as a pattern for a new one. Hadley engaged Baxendale's carrier to transport the shaft. The carrier delayed delivery, resulting in the mill being stopped for longer than necessary. Hadley claimed loss of profits during the period of delay.
Rezumatul hotărârii
Alderson B held that the lost profits were too remote to be recovered. The carrier did not know that the mill would be entirely stopped pending the return of the shaft — Hadley might have had a spare. The rule was established that damages should be either those arising naturally from the breach itself, or those which the parties had in contemplation at the time of contracting as the probable result of the breach. Since Baxendale had no special knowledge of the consequences of delay, only ordinary damages could be recovered.
Citate cheie
"Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., 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."
— Alderson B
Tratament ulterior
The leading authority on remoteness of damage in contract. The two-limb test remains the foundation of the law on contractual remoteness.
Refined in Victoria Laundry v Newman Industries [1949] and The Heron II [1969], which clarified that the test is whether the type of loss was within reasonable contemplation as a 'not unlikely' or 'serious possibility' result of the breach.