Hadley v Baxendale [1854]

Shaft in plaintiff’s mill broke.
Defendant carriers agreed to carry broken shaft to
Greenwich so pattern and new shaft could be made.
Shaft delayed in transit due to defendant’s
Production halted at mill.
Plaintiffs sought to recover loss of profits due to
breach of contract.
Held that defendants liable for:
(i)  Such losses
as occur ‘naturally’ after breach.
Stoppage of mill not natural consequence as defendants
might have had spare shaft.
(ii)  Such
losses which did not occur naturally but were within reasonable contemplation
of both parties at time contract made.
Plaintiffs had not informed defendants that delay
would mean halt in production, so not liable here either