Hadley v Baxendale

The case of *Hadley v Baxendale* concerned a dispute between Hadley, an employer, and Baxendale, a supplier of goods. Hadley sought to recover damages from Baxendale for a breach of contract. The specific nature of the dispute involved Hadley's claim for losses incurred due to a delay in the delivery of goods, which Hadley alleged prevented him from fulfilling his own contractual obligations. The matter came before the High Court of Australia.

The central legal issue before the High Court was the recoverability of damages for breach of contract. Specifically, the court had to determine the principles governing the remoteness of damages, that is, what types of loss are recoverable when a contract is breached. This involved considering whether the damages claimed by Hadley were a foreseeable consequence of Baxendale's breach.

The High Court applied the rule established in the English case of *Hadley v Baxendale* (though this is an Australian case, it refers to the foundational English case for the principle). The court held that damages are recoverable for breach of contract if they arise naturally, that is, according to the usual course of things, from the breach of contract itself. Alternatively, damages are recoverable if they are such as may 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. In this instance, the court found that the losses claimed by Hadley were not within the reasonable contemplation of the parties at the time the contract was formed, and therefore, they were too remote to be recovered.