94 6: Breach of contract and remedies Part B The law of obligations
Victoria Laundry (Windsor) v Newman Industries 1949
The facts: The defendants contracted to sell a large boiler to the claimants 'for immediate use' in their
business of launderers and dyers. Owing to an accident in dismantling the boiler at its previous site
delivery was delayed. The defendants were aware of the nature of the claimants' business and had been
informed that the claimants were most anxious to put the boiler into use in the shortest possible space of
time. The claimants claimed damages for normal loss of profits for the period of delay and for loss of
abnormal profits from losing 'highly lucrative' dyeing contracts to be undertaken if the boiler had been
delivered on time.
Decision: Damages for loss of normal profits were recoverable since in the circumstances failure to deliver
major industrial equipment ordered for immediate use would be expected to prevent operation of the
plant. The claim for loss of special profits failed because the defendants had no knowledge of the dyeing
contracts.Contrast this ruling with the case below.The Heron II 1969
The facts: K entered into a contract with C for the shipment of a cargo of sugar belonging to C to Basra. He
was aware that C were sugar merchants but he did not know that C intended to sell the cargo as soon as it
reached Basra. The ship arrived nine days late and in that time the price of sugar on the market in Basra
had fallen. C claimed damages for the loss due to the fall in market value.
Decision: The claim succeeded. It is common knowledge that market values of commodities fluctuate so
that delay might cause loss.If the type of loss caused is not too remote the defendant may be liable for serious consequences.H Parsons (Livestock) v Uttley Ingham 1978
The facts: There was a contract for the supply and installation of a large storage hopper to hold pig foods.
Owing to negligence of the defendant supplier the ventilation cowl was left closed. The pig food went
mouldy. Young pigs contracted a rare intestinal disease, from which 254 died. The pig farmer claimed
damages for the value of the dead pigs and loss of profits from selling the pigs when mature.
Decision: Some degree of illness of the pigs was to be expected as a natural consequence. Since illness
was to be expected, death from illness was not too remote.5 Measure of damages
The measure of damages is that which will compensate for the loss incurred. It is not intended that the
injured party should profit from a claim. Damages may be awarded for financial and non-financial loss.As a general rule, the amount awarded as damages is what is needed to put the claimant in the position
they would have achieved if the contract had been performed. This is sometimes referred to as protecting
the expectation interest of the claimant.
A claimant may alternatively seek to have their reliance interest protected; this refers to the position they
would have been in had they not relied on the contract. This compensates for wasted expenditure.
The onus is on the defendant to show that the expenditure would not have been recovered if the contract
had been performed.FAST FORWARD