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Foundational Principles of Contract Law$
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Melvin A. Eisenberg

Print publication date: 2018

Print ISBN-13: 9780199731404

Published to Oxford Scholarship Online: October 2018

DOI: 10.1093/oso/9780199731404.001.0001

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The Principle of Hadley v. Baxendale

The Principle of Hadley v. Baxendale

Chapter:
(p.239) Nineteen The Principle of Hadley v. Baxendale
Source:
Foundational Principles of Contract Law
Author(s):

Melvin A. Eisenberg

Publisher:
Oxford University Press
DOI:10.1093/oso/9780199731404.003.0019

This chapter concerns the principle of Hadley v. Baxendale. Under this principle a promisee injured by a breach of contract can recover only those damages that either should “reasonably be considered . . . as arising naturally, i.e., according to the usual course of things” from the breach, or might “reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.” On the basis of Hadley v. Baxendale contract law has conventionally distinguished between general and consequential damages. General damages are damages that flow from a given type of breach without regard to the buyer’s particular circumstances. Consequential damages are damages that flow from the buyer’s particular circumstance. They can be recovered only if at the time the contract was made it was reasonably foreseeable that the damages would probably result from the breach. A better alternative to Hadley v. Baxendale, which is more in keeping with general law, has three elements: contractual allocation of losses resulting from the breach, the principle of proximate cause, and limits on disproportionate damages.

Keywords:   general damages, consequential damages, reasonably foreseeable, Hadley v. Baxendale, disproportionate damages

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