Hadley v Baxendale

Hadley v Baxendale is an 1854 decision of the English Court of Exchequer that established the foundational rule on remoteness of damages in contract law. A mill shaft broke, forcing Hadley to send it away for repair, and he engaged the carrier Baxendale to transport it, but the carrier delayed delivery, extending the mills shutdown and increasing Hadleys lost profits. The court held that a party in breach of contract is liable only for losses that arise naturally from the breach, or that both parties could reasonably have contemplated at the time of contracting as a probable result of a breach, and that Baxendale had not been told the mill would be idle without the shaft. The rule that damages must be foreseeable in this sense remains the starting point for assessing contract damages across the common law world.