Hadley Vs Baxendale is the landmark case that is related to the Indian Contract Act, 1872.
Hadley Vs Baxendale Case FACTS
-Hadley, owned a mill that was forced to shut down when the crankshaft of their steam engine broke.
▪Hadley engaged Baxendale, the transporter, to transport the crankshaft to the location at which it would be repaired and then subsequently transport it back.
▪But Baxendale then made an error causing the crankshaft to be returned to the mill owner a week later than agreed, during which time Hadley’s mill was out of operation.
▪ Hadley, therefore, sued Baxendale to recover damages for such delay.
CLAIM in Hadley Vs Baxendale
The claimant contended that the defendant had displayed professional negligence and attempted to claim for the loss of profit resulting from the unexpected week-long closure.
• The defendant retorted that such an action was unreasonable as he had not known that the delayed return of the crankshaft would necessitate the mill’s closure.
Issue:- Whether a defendant in a breach of contract case could be held liable for damages that the defendant was not aware would be incurred from a breach of the contract?
What is HELD in the Hadley Vs Baxendale case?
▪Here, while the breach by Defendant in the Hadley Vs Baxendale case, was the actual cause of the lost profits of Plaintiff, it cannot be said that under ordinary circumstances such loss arises naturally from this type of breach. There is a multitude of reasons for a miller to send a crankshaft to a third party.
▪The defendant of the Hadley Vs Baxendale case had no way of knowing that their breach would cause a long shutdown of the mill, resulting in lost profits Further, Plaintiff never communicated the special circumstances to Defendant, nor did Defendant know of the special circumstances. Therefore, Plaintiff is not entitled to any special damages.
Some important points of this case:-
1. Hadley: Owner of a steam mill in Gloucester.
2. W. Joyce & Co.: Manufacturer in Greenwich.
3. Baxendale- operated common carries under the name Pickford & Co.