Dear List Members,

The English Court of Appeal handed down an interesting judgement yesterday in Supershield Ltd v. Siemens Building Technologies FE Ltd [2010] EWCA Civ 7, concerning remoteness in contract.

http://www.bailii.org/ew/cases/EWCA/Civ/2010/7.html

The Court dealt with remoteness at [27]-[45].

Toulson LJ stating at [43]:

“Hadley v Baxendale remains a standard rule but it has been rationalised on the basis that it reflects the expectation to be imputed to the parties in the ordinary case, i.e. that a contract breaker should ordinarily be liable to the other party for damage resulting from his breach if, but only if, at the time of making the contract a reasonable person in his shoes would have had damage of that kind in mind as not unlikely to result from a breach. However, South Australia and Transfield Shipping are authority that there may be cases where the court, on examining the contract and the commercial background, decides that the standard approach would not reflect the expectation or intention reasonably to be imputed to the parties. In those two instances the effect was exclusionary; the contract breaker was held not to be liable for loss which resulted from its breach although some loss of the kind was not unlikely. But logically the same principle may have an inclusionary effect. If, on the proper analysis of the contract against its commercial background, the loss was within the scope of the duty, it cannot be regarded as too remote, even if it would not have occurred in ordinary circumstances.”

___________________________

Phillip Morgan
Lecturer in Contract and Tort Law
School of Law
University of Southampton
Highfield
Southampton SO17 1BJ
Phillip.Morgan@soton.ac.uk

http://www.law.soton.ac.uk/
http://www.soton.ac.uk/law/staff/academicstaff/morgan_phillip.html