Consequential loss CASES
In English law, consequential loss refers to indirect or secondary losses resulting from breaches of contract or negligent acts, extending beyond immediate or direct losses.
Definition and Principles
Consequential losses include financial harm arising indirectly from the initial breach, such as lost profits, additional expenses, or other economic losses not directly linked to the initial harm.
Key Characteristics
- Indirect Nature: Losses not directly resulting from the immediate breach or harm.
- Foreseeability: Recoverable only if losses were reasonably foreseeable when the contract was formed.
Examples
- Lost business profits due to delayed supply of essential goods.
- Extra operating expenses incurred from equipment breakdown.
Practical Importance
Recognising consequential losses clarifies liability scopes, informing parties how to clearly draft contract clauses, such as exclusions or limitations, reducing disputes and risk.
Home » Consequential loss
A solicitor's negligence induced the claimants to purchase a business. The court held that damages were limited to the difference in the property's value at the date of breach. Subsequent trading losses were not recoverable as they were not reasonably foreseeable. Facts The plaintiffs, Mr and Mrs Hayes, purchased a motor repair and scrap business, including the freehold property, for £48,000 in 1979. They relied on the advice of their solicitor, the defendant Mr Dodd. The defendant acted negligently by failing to discover and advise the plaintiffs of a right of way which ran across the rear of the property,
A mill's operations stopped due to a broken crankshaft. The carrier's delay in delivering the broken shaft for repair caused further profit loss. The court held the carrier was not liable for these unforeseeable special losses, establishing the remoteness of damage test. Facts The plaintiffs, Hadley and another, were owners of the City Steam Mills in Gloucester. A crankshaft in their steam engine broke, causing all milling operations to cease. They needed to send the broken shaft to engineers in Greenwich to serve as a model for a new one. The plaintiffs’ agent contracted with the defendants, operating as Pickford
