Introduction

• This case involves assessing the consequential damages from a breach of contract.
• In case of consequential damages, the party at fault is obligated to compensate for damages up to the anticipated extent caused by the breach, rather than being responsible for damages that were not foreseeable while entering into the contract.

Facts

• The petitioner, an owner of a mill with a damaged crankshaft, opted for the services of the defendant to transport the crankshaft to the repair location and subsequently return it to the plaintiff.
• Due to an oversight by the defendant, the crankshaft was returned a week later than anticipated, and as a result of delay in delivery the plaintiff's mill was not able to perform its operation during that week and suffered subsequent damage.
• Consequently, the plaintiff initiated a legal action against the defendant seeking compensation for the losses incurred due to the delayed delivery.

Issues Involved

• Whether defendant was liable for the breach of the contract?
• Whether the plaintiff is entitled to compensation for claimed loss of profit because of the defendant's late delivery?

Observation

• The Court of Exchequer, England ruled that in the event of a breach of contract, only losses that naturally and reasonably arise for both parties should be taken into account.
• Any loss of profits cannot be deemed a consequence that both parties could not have anticipated when entering into the contract.
• The court emphasized that a party can pursue a successful lawsuit against the other party for losses that were reasonably foreseeable at the time of contract formation by both parties.

Conclusion

The Court decided in favour of the defendant by saying that he had no knowledge about the losses and also these kinds of damages are not naturally from the contract, hence the defendant was not liable for the breach of the contract.