| Citation | Hadley v Baxendale (1854) 9 Exch 341 |
| Date of judgement | 23 February 1854 |
| Court | Exchequer Court |
| Appellant | HADLEY |
| Respondent | BAXENDALE |
| Judge(s) | LORD EDWARD HALL, ALDERSON |
FACTS
- When Hadley’s crankshaft broke, his corn milling was put on hold while he waited for a replacement. In order for Joyce and Co., an engineering company, to utilise the shaft as a model for a new one, he had to transport it to them.
- The terms of the agreement between Hadley (Plaintiff) and Pickford and Co., a shipping business owned and operated by Baxendale (Defendant), stipulated that if Hadley delivered the shaft to Pickford and Co. by noon the next day, Baxendale would transfer the shaft to Joyce and Co. the following day.
- Hadley paid the shipping costs and delivered the shaft to Pickford and Co. before noon as per the agreement, but he neglected to let Baxendale know that his mill cannot run without the shaft.
- Because of Baxendale’s negligence, the transportation took longer than expected, and the shaft was delivered several days later than scheduled. Due to Pickford’s breach, Hadley’s mill stayed shut down until the replacement shaft arrived.
- Hadley responded by suing Baxendale for compensation in a lawsuit. Hadley’s claim for damages reflected the revenue lost by his business as a result of Pickford and Co.’s breach.
ISSUES
Is the defendant responsible for the losses suffered by the plaintiff as a result of the shaft’s shipping delay?
JUDGEMENT
The defendant was found not responsible for the plaintiff’s losses. The non-breaching party is entitled to recover damages that naturally result from the breach or those that were reasonably anticipated by the parties at the time of the contract. Although the Plaintiffs’ lost wages were a direct result of the defendant’s violation, under normal circumstances such a loss cannot be argued to naturally result from such a breach. For a number of reasons, a miller could deliver a crankshaft to a different party. The defendants had no means of knowing that their breach would prolong the mill’s downtime and cause them to lose money. Additionally, neither Defendants nor Plaintiff were aware of the special circumstances; in fact, neither party ever told the other of them.
CONCLUSION
Preventing the aggrieved party from suffering loss due to the other party is the goal of the breach of contract remedy. However, there are some situations when the party in default cannot comprehend the effects of their acts even after exercising due care. The verdict serves as a precedent and shields them against such unforeseeable events.
REFERENCE
This Article is written by Chahak Agarwal of Lloyd school of law , greater Noida, Intern at Legal Vidhiya.
