What is the rule on remoteness of damage in contract?

Hadley v Baxendale (1854) restricts recovery to losses arising naturally or within the parties' contemplation. Losses outside both limbs are too remote.

What were the facts of Hadley v Baxendale (1854)?

Hadley v Baxendale (1854) concerned a delayed delivery of a broken mill shaft by a carrier. Loss of profits during the stoppage was too remote, because the carrier had not been told the mill would stand idle.

What is the first limb of Hadley v Baxendale?

The first limb covers loss arising naturally in the usual course of things. The defendant needs no special knowledge of that kind of loss.

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Contract: Remedies

Causation and remoteness of damage

3 things to know
Components 2 and 3

Overview

Rule on remoteness of damage in contract, first limb of Hadley v Baxendale and second limb of Hadley v Baxendale.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Key term

What must a claimant prove about causation?

Numbers

Which case shows a breach that was the occasion rather than the cause?

Key term

How can an intervening act break the chain of causation?

Questions from this subtopic

Each one with the model answer underneath.

1
What must a claimant prove about causation?
Model answer
The claimant must prove that the breach caused the loss claimed. The breach need not be the only cause, but it must be an effective one.
2
Which case shows a breach that was the occasion rather than the cause?
Model answer
Quinn v Burch Bros (Builders) Ltd [1966] concerned a contractor who failed to supply a stepladder. The plasterer's decision to use an unfooted trestle broke the chain of causation.
3
How can an intervening act break the chain of causation?
Model answer
An unreasonable act by the claimant or a third party may break the chain. The defendant is not liable for loss caused by that independent decision.
4
What is the rule on remoteness of damage in contract?
Model answer
Hadley v Baxendale (1854) restricts recovery to losses arising naturally or within the parties' contemplation. Losses outside both limbs are too remote.
5
What were the facts of Hadley v Baxendale (1854)?
Model answer
Hadley v Baxendale (1854) concerned a delayed delivery of a broken mill shaft by a carrier. Loss of profits during the stoppage was too remote, because the carrier had not been told the mill would stand idle.
6
What is the first limb of Hadley v Baxendale?
Model answer
The first limb covers loss arising naturally in the usual course of things. The defendant needs no special knowledge of that kind of loss.

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