The brief
| Citation | 9 Ex. 341, 156 Eng. Rep. 145 (1854) |
|---|---|
| Court and year | English Court of Exchequer, 1854 |
| Procedural posture | The mill owners sued the carriers for lost profits. The jury awarded damages, and the Court of Exchequer ordered a new trial. |
| Facts | The millers’ crankshaft broke, stopping their Gloucester mill. They sent the broken shaft to Greenwich as a pattern for a replacement. The report says their servant told the carrier’s clerk that the mill was stopped and the shaft must be sent immediately. Delivery was delayed, the replacement was correspondingly late, and the millers claimed profits lost during the extra shutdown. |
| Issue | Was the carrier liable for the mill's lost profits caused by the delay? |
| Rule | Damages for breach are limited to those arising naturally from the breach, or those that both parties reasonably contemplated at the time of contracting as the probable result of it. |
| Holding | The court ordered a new trial and instructed that these lost profits should not be included on the facts before it. It treated the relevant special circumstances as insufficiently communicated. |
Reasoning
Alderson identified two routes to recovery: loss that ordinarily follows this kind of breach, and loss that the parties would reasonably contemplate because special circumstances were known when they contracted. The jury needed that direction instead of an unrestricted invitation to compensate every consequence.
Read the reported facts and the conclusion together. The servant did say the mill was stopped; it is inaccurate to say the carrier received no notice of a stoppage.
Nevertheless, the court concluded that the circumstances making these profits a probable result of delayed delivery had not been communicated sufficiently. On an exam, explain the claimed loss and the precise notice linking delivery to that loss, instead of replacing the notice inquiry with the word foreseeable.
Why it is assigned
Causation is only the beginning. Even where delayed delivery caused a loss, the damages argument must distinguish an ordinary probable consequence from a consequence dependent on special circumstances and connect the latter to information communicated when the agreement was made. State the relevant notice precisely. Classifying a loss as foreseeable without explaining that factual link leaves the central dispute unanswered, and the amount of any recovery still needs adequate proof.
Limits of the holding
The historical holding limits recovery by ordinary consequences and communicated special circumstances. The damages rule does not establish that notice alone proves the amount of every claimed loss or removes other damages requirements.
Two changed-facts hypotheticals
The millers explain at contracting that they have no working replacement and will lose a specified daily production margin until this shaft reaches the maker.
Show the analysis
That notice links timely delivery to the claimed loss more specifically than a demand for urgency. It supports the special-circumstances route, but the millers must still establish the claimed loss and its connection to the delay.
Change the facts so that the Hadleys told the carrier only after the shaft was in transit.
Show the analysis
The special-circumstances inquiry uses what was known when the carrier contracted. Later information does not retroactively supply that knowledge. Identify any independently established ordinary loss separately; late notice alone does not make the particular shutdown profits recoverable under the communicated-circumstances route.
Quick answers
What are the two rules in Hadley?
General damages that arise naturally from breach, and special damages that arise from circumstances known to the breaching party at contracting.