MBE Rules · Contracts
Consequential damages — Hadley foreseeability
Hadley v. Baxendale
The rule
Consequential (special) damages are recoverable only if they were reasonably foreseeable to the breaching party at the time of contracting — meaning they arise either (1) naturally from the breach, OR (2) from special circumstances the breaching party had reason to know.
In plain English
You can only get extra damages in a contract breach if the other person could have predicted those damages when you made the deal.
Worked example
A bakery's oven breaks, and the repair company delays fixing it. The bakery loses a big catering job. The repair company isn't liable for those lost profits unless they knew about the catering job when hired.
Memory hook
Foresee it or forget it! Damages must be predictable or known to claim.
The trap
Students think: Any damages from breach are recoverable. Wrong, because only foreseeable damages count. The actual test is if the breaching party knew or should have known.
How examiners test it
The MBE loves: breach leads to unusual losses. Question: recoverable? Trap: assuming all damages are covered. Key is whether special circumstances were communicated.
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