Remoteness

Question 1

hadley test for remoteness

Answer 1

Only losses that can reasonably be foreseen to have flown from the breach or were in the contemplation of both parties at the time of the contract are recoverable.

Question 2

Achilleas test for remoteness

Answer 2

• Even if a loss is foreseeable, a defendant is not liable if the market expectation is that they didn’t assume responsibility for that specific type of risk.
• Valcke’s preferred approach

Question 3

Hadley v. Baxendale

Answer 3

• Facts: The plaintiff’s mill stayed idle due to a broken shaft, and the defendant carrier delayed the delivery of the broken shaft to the engineer.
• Rule: Damages are only recoverable if they arise naturally from the breach or were in the contemplation of both parties at the time the contract was made (requiring communication of special circumstances).

Question 4

Horne v. The Midland Railway Company

Answer 4

• Facts: The plaintiffs told the station master they had a contract to send shoes by a specific date, but the shoes arrived late and the plaintiffs lost an unusually high price.
• Rule: For notice to have any effect, it must be given under such circumstances that an actual contract arises on the part of the defendant to bear the exceptional loss.
• Valcke/Class Note: Here, the railway charged a tiny fee, meaning they couldn’t objectively be said to have bargained to ensure a massive loss.

Question 5

Victoria Laundry Ltd. v. Newman Industries Ltd.

Answer 5

• Facts: The defendant delivered a boiler 20 weeks late, and the plaintiffs sued for lost profits and lost highly lucrative ministry contracts.
• Rule: For special circumstances (category 2 in Hadley), it must be reasonably foreseeable that the breach could have led to the particular harm.

Question 6

Munroe Equipment Sales Ltd. v. Canadian Forest Products Ltd.

Answer 6

• Facts: The defendant rented a second-hand tractor from the plaintiff that broke down, and the defendant counterclaimed for massive lost profits.
• Rule: Courts are reluctant to award massive lost profits for the failure of second-hand equipment unless the lessor explicitly knew the extent of the risk and practically “insured” the outcome.

Question 7

Scyrup v. Economy Tractor Parts Ltd.

Answer 7

• Facts: The plaintiff purchased a defective second-hand tractor attachment from the defendant, which caused the plaintiff to lose a contract from a third party.
• Rule: Affirmed the reasonable foreseeability test for remoteness in Hadley.

Question 8

Koufos v. C Czarnikow Ltd. (The Heron ll)

Answer 8

• Facts: Defendant charterers deviated and delayed a sugar delivery by 9 days, and the plaintiffs sought lost profits.
• Rule: Contract remoteness is stricter than tort: A defendant in contract is only liable for consequences that were “not unlikely” (a serious possibility) at the time of the contract, which is a higher threshold than the “slight possibility” sufficient for tort liability.
• Valcke/Class Note: This case was wrongfully decided because the plaintiff’s loss of profits was not reasonably foreseeable to the defendant. The sugar owner should have mitigated their loss by selling on the futures market on the exact day of the beach, rather than making the shipper act as an insurer for market fluctuations.

Question 9

Transfield Shipping Inc. v. Mercator Shipping Inc. (The Achilleas)

Answer 9

• Facts: The defendants returned a chartered vessel 9 days late, and the plaintiffs claimed damages for the loss of the difference between the original rate and the reduced rate over the period of a subsequent fixture.
• Rule: Even if a loss is foreseeable, a defendant is not liable if the market expectation is that they didn’t assume responsibility for that specific type of risk.

Question 10

Cornwall Gravel Co. Ltd. v. Purolator Courrier Ltd.

Answer 10

• Facts: The plaintiffs hired the defendant courier to deliver a tender package, which was delivered late, causing the plaintiffs to lose a $70,000 profit.
• Rule: Affirmed the reasonable foreseeability test for remoteness.
• Valcke/Class Note: Here, Purolator is a specialized courier charging premium rates, which objectively signals they are assuming the risk of significant loss