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According to section 73 of the Indian Contract Act, 1872, one of the vital requirements for an award of

damages is that the loss or damage arose in the usual course of things from such breach; or parties
knew that such a loss or damage could subsequently arise at the end of the time of entering into the
contract. Thus, the defendant would not be liable for damages that are remote to the breach of
contract. In the landmark case of Hadley v. Baxendale the principle governing remoteness of damages
was elaborated. The rules enunciated in this case were that a party injured by a breach of contract can
recover only those damages that either should reasonably be arising naturally, i.e.,
according to the usual course of things from the breach, or might 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. This forms the basis of the understanding of special damages.

Special Circumstances:

If the plaintiffs can establish that the defendants were aware of the particular losses suffered by the
plaintiffs due to the actions or inactions of the defendants, the latter shall be liable for such losses, if
such losses do not occur in the normal course of events. In circumstances where it is evident that the
defendant has not assumed such risk as contemplated under the special circumstances under the terms
of the contract or that any reasonable man would not have assumed such risk, then mere knowledge of
the special circumstances would not make the defendant liable for the corresponding loss or injury.
Reiterating the finding in Hadley v. Baxendale, the following principles of remoteness and foreseeability
were enunciated in Victoria Laundry (Windsor) Ltd v. Newman Industries Ltd: In cases of breach of
contract, the aggrieved party is only entitled to recover such part of the loss actually resulting as was at
the time of the contract reasonably foreseeable as liable to result from the breach. What was at that
time reasonably so foreseeable, depends on the knowledge then possessed by the parties or, at all
events, by the party who later commits the breach. For this purpose, knowledge possessed is of two
kinds: one imputed, the other actual.

Kerela High Court: The defendant is liable only for natural and proximate consequences of a breach or
those consequences which were in the parties contemplation at the time of contract,the party guilty of
breach of contract is liable only for reasonably foreseeable losses - those that a normally prudent
person, standing in his place possessing his information when contracting, would have had reason to
foresee as probable consequences of future breach.

Damages for direct, consequential and incidental losses and damage

Generally, the defendant would be accountable for the loss of profits directly emerging from the
contractual breach, for example, loss of normal profits due to delay in delivery of a relevant material by
the defendant. However, loss of profits, which are not direct consequences of the breach of the contract
would not attract damages except where the injured party has intimated the defendant of the same or if
such loss of profits are contemplated by the parties. For example, in cases where unreasonable delays in
delivery of machinery lead to loss of profitable contracts which were dependent on such machinery, and
was known to the party expected to supply the machinery, damages can be claimed for such loss of
profits that could have been made but not for the loss of the contract that could have been procured.58
Generally speaking, a party may claim for loss of opportunities or loss of chance of gaining something,
which results from a contractual breach.

In the present case there exist no special circumstances, so no damages can be given to the other party.
Moreover the law of the country through various judicial decisions has now established that for
damages to be given, the loss must arise from direct consequences of the breach of the contract, must
be reasonable force able and should arise from natural and proximate consequences of the breach.
Hence any indirect loss or enforceable or indeterminable loss which the parties did not have the
knowledge of at the time of the formation of contract, will not constitute as a damage that can be borne
by the party.