Hadley v. Baxendale
9 Ex. 341, 156 Eng. Rep. 145 (Ex. 1854)
A broken mill shaft delivered late, and the profits the carrier never knew about
- In one lineEn una línea
- Damages for breach are limited to losses arising naturally from the breach or that both parties contemplated at contracting; special circumstances not communicated are not recoverable.Los daños por incumplimiento se limitan a las pérdidas que surgen naturalmente del incumplimiento o que ambas partes contemplaron al contratar; las circunstancias especiales no comunicadas no se recuperan.
- RuleRegla
- The injured party may recover damages that may fairly and reasonably be considered either as arising naturally from the breach, or as such as may reasonably be supposed to have been in the contemplation of both parties at the time of contracting as the probable result of a breach; losses from special circumstances are recoverable only if those circumstances were communicated.
- Why this case is herePor qué está aquí este caso
- The foreseeability limit on damages (Part VII, with R.2d § 351 and UCC § 2-715): consequential losses are recoverable only if they arise naturally from the breach or were within the contemplation of both parties when they contracted. Every lost-profit question on the exam runs through it.
- Procedural posturePostura procesal
- Mill owners sued a carrier for lost profits caused by delay in delivering a shaft; the jury awarded the profits; the Court of Exchequer ordered a new trial because the loss was not within the parties' contemplation.
Facts
The Hadleys’ mill stopped when its crankshaft broke. They sent the shaft by Pickford’s carriers (Baxendale) to the manufacturer as a pattern for a new one; delivery was delayed several days through the carrier’s neglect, and the mill stayed idle meanwhile. The Hadleys sued for the profits lost during the delay.
Procedural posture
The jury awarded £25 for lost profits; the Court of Exchequer ordered a new trial, holding the profits were not recoverable on the facts communicated.
Issue
Whether lost profits from the mill’s stoppage were recoverable from a carrier who did not know the mill would be stopped by the delay.
Holding
No. The only facts communicated were that the item was a broken mill shaft and the senders were millers; the stoppage of the mill was not the natural consequence of delay in most cases, and the special circumstances were not made known.
Reasoning
Baron Alderson stated the two-branch rule and explained its policy: a carrier who knew of the special loss might have charged more or taken precautions; a party should bear only risks it could have evaluated when it contracted.
Rule (own words)
You pay for the losses anyone would expect from your breach and for the special ones you were told about. Surprises are not your problem.
What-ifs
- The millers told the carrier: the mill is stopped and cannot run until this shaft returns, please hurry. Special circumstances communicated; lost profits recoverable.
- The carrier’s standard terms limited liability to the value of the goods: contractual limitation, usually enforceable.
- UCC sale: a buyer’s consequential damages include losses from requirements the seller had reason to know of and could not reasonably be prevented by cover (§ 2-715(2)).
Likely follow-upsRepreguntas probables
What did the carrier not know?
How does the Restatement state it?
Mexican comparison?
Say the answer out loud before revealing each part. Rate yourself honestly; the case comes back sooner when you miss.Di la respuesta en voz alta antes de revelar cada parte. Califícate con honestidad; el caso vuelve antes si fallas.
Panic kit: “Could you repeat the question, please?” · “Let me make sure I have the facts right: …” · “I'm not certain, but I'd argue … because …”Kit de pánico: “Could you repeat the question, please?” · “Let me make sure I have the facts right: …” · “I'm not certain, but I'd argue … because …”