remoteness of damage

remoteness of damage

1 in contract law, the concept that protects the contract-breaker from having to pay for all the consequences of his breach. Since one of the principal aims of the law of contract is certainty, the rules are well settled. The leading case provides for two rules (or two branches of a single rule). Alderson, B., stated the law as follows: ‘where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be, either, such as may fairly and reasonably be considered arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach of it’. Cases can be split into those where the contract-breaker knew no more than any other person in his position and those where he was possessed of (or could be held to have been possessed of) special knowledge. A recent authoritative restatement is that ‘the crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realized that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation’ The position is the same in Scotland.
2 in tort or delict different rules apply because the obligation is imposed by the law and not by the consent of the parties. English law settled on a test of reasonable foreseeability in the 1960s and it was authoritatively declared in 2004 that that too is (and has been) the law of Scotland.
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