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Breach of Contract Hadley vs Baxendale

In: Business and Management

Submitted By comwhiz
Words 910
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Hadley vs Baxendale.
About the Companies.
Hadley carried out an extensive business as millers. Their business was stopped due to a breakage of the crankshaft on which the whole mill worked. They gave the crankshaft carrying order to Baxendale , a carrier company. But due to some reasons the delivery of the crankshaft was delayed by the carriers and because of that the plaintiffs(Hadley) had to incur losses. The plaintiffs claimed that the defendants(Baxendale) should pay them for the special damages as well since it was because of the delay of the delivery that they had to incur huge losses.

Scene 1
Mr Hadley() (calling Mr Baxendale on phone ): Hello Mr Baxendale, this is Mr hadley speaking.
Mr Baxendale() : Hello, Mr Hadley, good to hear from you. I hope you have got your delivery of the crankshaft by now.
Mr Hadley : Yes Mr Baxendale, I have got the delivery. But I am afraid to say that it was late by three days!! And because of that, my company could not operate for all this duration and had to suffer huge losses because of that.
Mr baxendale : I am really sorry to hear that Mr Hadley.
Mr Hadley : U had signed the contract for carrying the shaft in three days and I think you must pay us for the losses we have suffered because of your negligence in the delivery of the crankshaft.
Mr Baxendale : Mr Hadley, We had signed the contract but I Do not think we should be paying for your losses. After all we carriers and we did our duty!!!
Mr Hadley : I am afraid then I will have to take you to the court for this
Mr Baxendale : I am ready for it Mr Hadley, See you at the court then!!!

Scene 2 (Court Room)
Judge(: Let us start the proceedings for the day. (Lawyer for Baxendale) : So, Company A(Hadley), what are your claims?
: My company suffered huge losses because of the negligence in the delivery of the crankshaft by company B(Baxendale).
: and on what basis are u claiming this?
Bax : We had signed a contract which clearly stated that company B will carry the crankshaft. They delayed the delivery and we had to stop functioning for a longer period.
Law22 (Lawyer for Hadley): My lord , it was because of Company B’s delay that my client suffered losses. They did not carry the shaft within the time mentioned in the contract and they had to shut down till the delivery arrived!!
Law2 : Objection My lord ! It is too early to say anything right now. If you may allow , I would like to ask Mr Hadley some questions.
JUDGE : You may go ahead.
Law2 (to Hadley) : So tell me Mr Baxendale, What was written in the contract?
Hadley : My lord, It was stated that we had to deliver the crankshaft for company A , with in three days.
Law2 : Were you informed about the criticality of the shaft?
Hadley : No.Never.
Law2 : Point to be noted my lord!!!! My client was never informed about the criticality of the shaft and it was not mentioned in the contract also that the shaft was so critical.
Law22 : But my lord, Company B has breached the contract and because of that my client suffered huge losses.
Law2 : Objection My lord, I want to ask company A, if the shaft was very critical to its operations, y did not they have a back up for it?
Law22 : but my lord, The point is about the breach of the contract and not about the operations!!
Law2 : But my point is Why would my client pay for such SPECIAL (EXEMPLARY) DAMAGES when they were not even informed about the criticality of the shaft?

Law2 ( to Bax) : so tell me , Mr Hadley,The amount that you have claimed, Is it your normal day to day turnover?
Bax : No
Law2 :Then y have u claimed such a huge amount?
Bax :My company was working on a big project during those days and we had to stop that because we had no crankshafts!!
Law2 : Did u inform this to my client?
Bax : No.
Law2 : So do you usually get such big projects?
Bax : No.
Law2 : Point to be noted my lord.As you can see my client was not informed about 1)The ongoing project 2) also, the company gets this project once in a blue moon 3) If the project was so critical , y dint they have any spare crankshafts ?
That’s is my lord.
Law2( to law22) : Your witness please.
Law22 : I do not have any questions My lord.

Pause..JUDGE noting down the points and coming to a conclusion .

JUDGE : After hearing the arguments from both the sides, The court has decided that
1)Company B will pay a compensation for the damages.
2)But the compensation claimed by company A are too exemplary. Since Company B were not informed about the criticality of the project , they will only pay for the damages caused due to the daily operations. It will not compensate for the damages caused by the non delivery of the consignment.
JUDGE : Case is closed and the Court is adjourned.

Narration(Law22) U can read this out. (or ppt)
“We learned that – An injured party may recover those damages reasonably considered to arise naturally from a breach of contract, or those damages within the reasonable contemplation of the parties at the time of contractin.…...

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