Business Law Individual coursework Scenario 2 Essay

Business Law Individual coursework Scenario 2 - Essay Example The purpose of damages is to compensate the aggrieved party for its loss and put it in a financial position in which it would have been had the contract been performed. While awarding damages, the courts make sure that the damage or loss is not too remote. The defendants are held liable only for the loss that is attributable to their breach and for all the results of their actions. In Hadley v Baxendale,1the defendant contracted to take the plaintiff’s mill shaft to London. It was to be used as a pattern to make a new one. The defendant was unable to deliver the shaft on time due to his own fault. The plaintiff claimed damages for the loss of profits that would have been earned if the shaft was delivered on time. It was held that the loss was too remote as the plaintiff never indicated that there would be a loss of profit in case of a delay and so the defendant was not liable. In this case, the court made a very important distinction between usual damage and non-usual damage. Usual damage is the one which can be reasonably expected by anyone from the circumstances. Non-usual damage is one that arises due to circumstances that are unknown to the defendant and he is unable to anticipate the loss. In Victoria Laundry (Windsor) Ltd v Newman Industries Ltd2, the defendant had to deliver a boiler to the plaintiff and the delivery was five months late. Not having enough laundry capacity, the plaintiff lost a lucrative contract. The plaintiff sued for lost profits. It was held that the defendant was only liable for ordinary losses and not for the extraordinary ones as he did not have the knowledge of the extraordinary circumstances. The given facts indicate that Fred usually availed George’s services. This means that George could only have anticipated the loss of usual opportunities for Fred. There is no indication that Fred specifically brought the extraordinary circumstances to the knowledge of George. He did not have the