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Breach of contract: Difference between revisions
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*'''Causation''': The breach needs to be the [[operating cause]] of the innocent party’s loss (is that the ''[[causa sine qua non]]''?); | *'''Causation''': The breach needs to be the [[operating cause]] of the innocent party’s loss (is that the ''[[causa sine qua non]]''?); | ||
*'''[[Remoteness of damage|Remoteness]]''': They need to have been the sorts of losses the parties reasonably contemplated might arise from a breach when they entered the contract – i.e. they need to be [[reasonably foreseeable]] - the “usual consequences” of a [[breach of contract]]. | *'''[[Remoteness of damage|Remoteness]]''': They need to have been the sorts of losses the parties reasonably contemplated might arise from a breach when they entered the contract – i.e. they need to be [[reasonably foreseeable]] - the “usual consequences” of a [[breach of contract]]. | ||
These ordinary principles apply pragmatically to limit the damages a party must pay to what is reasonable for what that party was responsible. | These ordinary principles apply pragmatically to limit the damages a party must pay to what is reasonable for what that party was responsible. | ||
==={{casenote|Hadley|Baxendale}} === | |||
All summed up very nicely in the case of {{casenote|Hadley|Baxendale}} where Baron Alderson said: | All summed up very nicely in the case of {{casenote|Hadley|Baxendale}} where Baron Alderson said: | ||
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====Since Hadley==== | ====Since Hadley==== | ||
A bunch of garlanded cases, some [[Victoria Laundry v Newman - Case Note|involving laundry]] and others [[Koufos v Czarnikow (The Heron II) - Case Note|named after ships]], have drummed out this original [[Obiter dicta|dicta]]. Chitty would summarise these as concluding that a loss is not too remote a consequence of breach if, at the time of contract, the consequence it was within their reasonable contemplation as a not-unlikely result of their breach. | A bunch of garlanded cases, some [[Victoria Laundry v Newman - Case Note|involving laundry]] and others [[Koufos v Czarnikow (The Heron II) - Case Note|named after ships]], have drummed out this original [[Obiter dicta|dicta]]. Chitty would summarise these as concluding that a loss is not too remote a consequence of breach if, at the time of contract, the consequence it was within their reasonable contemplation as a not-unlikely result of their breach. | ||
===[[Indemnity]] for breach of {{tag|contract}}=== | |||
In theory, these pragmatic considerations of proximity, [[causation]] and [[remoteness]] do not apply where you have provided an [[indemnity]] for your breach of contract. This is why lawyers FREAK OUT about [[indemnities]]. By an indemnity you agree to pay a sum on demand in a certain event. The only question becomes whether you paid the amount when it was demanded. Note, in theory: | |||
*'''Causation''': The question of whether the contract has been breached — usually the domain of the Queen’s Bench division — must be determined by the alleging indemnitor. Should that determination be wrong, do you have a counter-breach of contract? A restitutionary action for [[money had and received]]? | |||
*'''Remoteness of damage''': Because your indemnity payment is for all losses howsoever caused, whether direct or indirect ... (''ad nauseam'') you are essentially contracting out of the rules of remoteness of damage, to your own detriment. You can hardly claim loss of profits weren't within the parties reasonable contemplation when you have explicitly contemplated it. | |||
===[[Consequential loss]]=== | ===[[Consequential loss]]=== | ||