header-logo header-logo

07 August 2018 / Daphne Perry
Categories: Features , Commercial
printer mail-detail

Consequential loss: what the reasonable businessperson really thinks

Daphne Perry discusses evidence of what commercial contract users understand by an exclusion of indirect & consequential loss

According to the Court of Appeal, both indirect and consequential loss (in a limitation clause) have the same well established meaning from which the courts cannot, or should not, depart. Both mean an unusual kind of loss, caused by a special circumstance and recoverable only if both parties were in a position to know about that circumstance, under the second limb of the rule in Hadley v Baxendale [1854] 9 Exch 341 All ER Rep 461.

What the courts say

The Court of Appeal has consistently interpreted both indirect and consequential loss in this way, rejecting arguments based on context or on what a reasonable person might think, in:

  • 1935: Millar's Machinery v David Way and Son [1935] 40 Com Cas 204
  • 1978: Croudace Construction Ltd v Cawoods Concrete Products Ltd [1978] 2 Lloyd's Rep 55
  • 1997: British Sugar Plc v NEI Power Projects Ltd [1997] EWCA Civ 2438
  • 2000: Hotel Services
If you are not a subscriber, subscribe now to read this content
If you are already a subscriber sign in
...or Register for two weeks' free access to subscriber content

MOVERS & SHAKERS

NLJ Career Profile: Hugo Plowman, Mishcon de Reya

NLJ Career Profile: Hugo Plowman, Mishcon de Reya

From global fraud cases to fishing off-grid, Mishcon de Reya’s chair of dispute resolution Hugo Plowman discusses mentors, management switching off

Maguire Family Law—Jennifer Hudec, Ciara Florey, Alice Ferguson & Ruth Wynn

Maguire Family Law—Jennifer Hudec, Ciara Florey, Alice Ferguson & Ruth Wynn

Maguire Family Law announces partner promotion and new hires amid a record year for enquiries

Switalskis—Rebecca Parry & Hannah Gamble

Switalskis—Rebecca Parry & Hannah Gamble

Switalskis wills and probate team extends reach with two appointments

NEWS
Restrictions on workplace non-disclosure agreements could make settlements slower, more complex and more expensive when reforms expected in 2027 take effect
Private prosecutors face closer scrutiny under Crown Prosecution Service guidance designed to strengthen accountability and consistency when intervention is requested
Foreign states cannot necessarily claim immunity for cyber operations launched abroad against computers in Britain, following a divided Supreme Court ruling
Defendants who make unsupported complaints about their lawyers risk losing legal aid while confiscation proceedings continue without representation
Lawyers advising Russian clients face different sanctions restrictions across the UK, EU and US, despite their shared objective of increasing pressure on Russia
back-to-top-scroll