MBE Rules · Remedies
Consequential Damages — Foreseeability
Hadley v. Baxendale, adopted in Cal. Civ. Code § 3300
The rule
Consequential (special) damages in contract are recoverable only if they arise naturally from the breach in the usual course of events, or were within the reasonable contemplation of both parties at the time of contracting as the probable result of a breach.
In plain English
Consequential damages are losses that occur as a result of a breach of contract, but are not the direct result of the breach itself. To recover these damages, they must either be a natural outcome of the breach or something that both parties could have reasonably anticipated when they made the contract.
Worked example
A bakery contracts to supply a wedding cake for a couple's wedding. If the bakery fails to deliver the cake on the wedding day, the couple may claim consequential damages for the loss of their wedding reception, provided it was discussed or could have been reasonably foreseen by both parties. Since the couple mentioned the importance of the cake for their event, they can recover these damages.
Memory hook
Consequential damages: foresee it or lose it!
The trap
Exams often include fact patterns where students might confuse direct damages with consequential damages, leading them to incorrectly assess recoverability. Additionally, students may overlook whether the damages were foreseeable to both parties.
How examiners test it
Questions typically present a scenario involving a breach of contract and ask whether certain damages are recoverable, requiring students to analyze foreseeability and the parties' contemplation at the time of contracting.
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