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Hadley v. Baxendale (1854), 9 Ex 341

ISSUE:

Whether the defendants are liable to Plaintiffs for damages suffered by Plaintiffs due to loss of profits or was the damage too remote to be able to claim?

RULE:

Damages are limited to those that arise naturally from a breach and those that are reasonably contemplated by the parties at the time of contracting.

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REMEDIES

Transfield Shipping Inc v. Mercator Shipping Inc [2008] UKHL 48

ISSUE:

Whether it was reasonably contemplatable as a serious possibility at the time of contracting that the plaintiff could have suffered a loss due to the late redelivery of the ship? Did the defendant assume the responsibility for the same?

RULE:

The principle of Hadley v. Baxendale had been extended to say that the law on remoteness is not only concerned to protect the contractual bargain but to set limits of liabilities.

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REMEDIES

Dunlop Pneumatic Tyre Co Ltd v. New Garage & Motor Co Ltd, (1915) AC 79 

ISSUE:

Whether the stipulation mentioned in the agreement was a genuine pre-estimate of damage or a penalty?

RULE:

Laid down the key differences between liquidated damages and penalty clause:

(a) It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach. (Clydebank case)

(b) It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid (Kemble v Farren).

(c)There is a presumption (but no more) that it is penalty when "a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events, some of which may occasion serious and others but trifling damage" (Lord Elphinstone v. Monkland Iron and Coal Co).

On the other hand,

(d) It is no obstacle to the sum stipulated being a genuine pre-estimate of damage, that the consequences of the breach are such as to make precise pre-estimation almost an impossibility. On the contrary, that is just the situation when it is probable that pre-estimated damage was the true bargain between the parties

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REMEDIES

Fatehchand v. Balkishan Das [1964] 1 SCR 515

ISSUE:

Whether the breach had been committed by the defendant or the plaintiff?

RULE:

Section 74 declares the law as to liability upon breach of contract where compensation is by agreement of parties predetermined or where there is a stipulation by way of penalty. But the application of the enactment is not restricted to cases where the aggrieved party claims relief as a plaintiff. The section does not confer a special benefit upon any party. It merely declares the law that notwithstanding any term in the contract for determining the damages or providing for forfeiture of any property by way of penalty, the Court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated.

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REMEDIES

Maula Bux v. Union of India [1969] 2 SCC 554

ISSUE:

Whether the money deposited by the plaintiff as a way of security be forfeited by the defendants as a way of penalty?

RULE:

The expression "whether or not actual damage or loss is proved to have been caused thereby " in s. 74 is intended to cover different classes of contracts which come before the courts:

In case of breach of contracts, it may be impossible for the court to assess compensation arising from breach, while in other cases, compensation can be calculated in accordance with established rules.

Where the court is unable to assess the compensation, the sum named by the parties, if it be regarded as a genuine preestimate, may be taken into consideration as the measure of reasonable compensation, but not if the sum named is in the nature of a penalty.

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REMEDIES

Jamaal v. Moola Dawood, (1916) ILR 43 Cal 493

ISSUE:

In a contract for sale on negotiable securities, is the measure of damages for breach the difference between the contract proce and the market price at the date of the breach?

RULE:

If the seller holds on to the shares after breach, the speculation as to the way the market will subsequently go is the speculation of the seller and not of the buyer. The seller cannot recover from the buyer the loss below the market price at the date of the breach if the market falls, nor is he liable to the purchaser for the profit if the market rises. (confirm)

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REMEDIES

Beswick v.  Beswick [1968] AC 58

ISSUE:

Whether Mrs. Beswick can sue her nephew either in her own personal capacity or as the administrator of the will, or both?

RULE:

Third parties cannot sue for breach of contract when they are not a party to the contract, even if they were named as beneficiary of the contract.

Executors of wills can sue for specific performance of promises made in contracts with the deceased.

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