English Project

CASE ANALYSIS
ON
VICTORIA LAUNDRY (WINDSOR) LD. v
NEWMAN INDUSTRIES LD; COULSON &
CO. LD. (THIRD PARTIES) 2K.B 528
1949

PARTENERS NAME
Ayesha Rehman

SUBMITTED TO
Maam Sabiha Zaidi

SUBMITTED BY
Sana Wasim
B.A,L.L.B(Hons.)

1ST SEMESTER
FACULTY OF LAW
Victoria Laundry (Windsor) LD. v. Newman Industries
LD.; Coulson & Co. LD. (Third parties) C.A (1949)
March 21, 22, 23, April 12

Overview
Case Name- Victoria Laundry
(Windsor) LD. v. Newman Industries LD.;
Coulson & Co. LD. (Third parties) [1949]
2 KB 528
Court- Court of appeal
Bench- Kings bench division
Judges - Tucker, Asquith, Singleton L.J
Principle-

Remoteness of damage

DETAILED CASE
FACTS:
The plaintiff, Victoria Laundry with the intention of extending their
business and having in view (inter alia) certain lucrative dyeing
contracts, required a large boiler.
Hence on seeing an advertisement by the defendants, an
Engineering Firm, published on January 17, 1946, of two
Cochran boilers of 8,000 lb. per hour capacity heavy
steaming, the plaintiffs concluded a contract by ordering one of
them on April 26, 1946 at a price of 2,150l which was then
installed on the defendants premises and whose delivery was
arranged on June 5.
The Owing to a mishap while the boiler was being dismantled
by the third parties (Coulson & Co. LD.) under a contract with
the defendants, rolled over and sustained damage, delaying the
delivery of the boiler until November 8, 1946.
The defendants were cognizant of the nature of the business of
the plaintiff and were informed by means of a letter about the
rapidity with which the plaintiff intended to put the boiler into
use.
In an action for breach of contract the plaintiffs claimed to
include in their damages their loss of business profits.
The trial judge allowed the plaintiffs a sum for damages under
certain minor heads but disallowed the claim for loss of profits
on the ground that is was based on special circumstances which
had not been drawn to the attention of the defendants and
therefore came within the second rule in HADLEY v
BAXENDALE (1857) 9 Exch 341 . (The injured party may
recover damages for loss other than that arising naturally - to

recovery of what have come to be known as consequential

damages).

CONTENTIONS MADE BY PLAINTIFF

Beney K.C. and John Davidson from the plaintif
If the defendants in this case had considered in April, 1946 the
probable effects of a delay of five months, with due regard to what
might reasonably be expected to occur, they could not have failed to
foresee that some financial loss to the plaintiffs was a serious
possibility. The defendants had described themselves as electrical
engineers and manufacturers, and from the fact that they were asked if
they would do the erection and fitting of the boiler they must have
known that the boiler was to be put into operation and was not being
purchased merely as a spare. Also the fact that by letter the plaintiffs
had intimidated their intention to put the boiler into use as speedily as
possible justified the inference being drawn that speed was necessary
it must have been reasonably conveyed to the defendant that the boiler
was wanted to use promptly although the facts on CORY v THAMES
IRONWORKS Co (I) were different from those in the present case
the test lied down to see into what category the case fell is of assistant
in this case.

CONTENTIONS MADE BY DEFENDANT

Paull K.C and A.J Hodgson for defendants :The measure to damages recoverable in any case of breach of contract
must depend upon the inferences which the court is entitled to draw
from the facts the defendants here was selling a second hand boiler .
They had no special knowledge of the use of boilers generally and no
knowledge of how laundries were run. There may be a great
difference between a sale such as this and the sale of a chattel by
manufactures of an experts in the use of a particular chattel. The seller
had no special knowledge or information that this part of machinery
was essential for immediate profit making, thus he was not liable for
that loss of profit Hadley v Baxendale (I). To saddle the defendant
with liability where the loss of profit is due to special circumstances
the court must be able to draw the inference that those circumstances
have been brought to the notice of the defendant. In must be found
that the defendant had that knowledge at the time he entered into the
contract and expressly or impliedly accepted liability for a breach.
Special circumstances must have brought to the knowledge of the
other contracting party or else the claim comes under the second rule
in Hadley v. Baxendale (I). The defendants did not know that the
boiler they were supplying was a bigger boiler than the one already
possessed by the plaintiffs and therefore they must not be assumed to
know that delay in delivery would cause loss of profits.

ISSUE:
Whether the defendants knowing the nature of the business of the
plaintiff can be held liable for the loss of profits incurred by the
plaintiff due to delay in delivery?

JUDGEMENT:
ASQUITH L.J. delivered the judgment of the court: This is an
appeal by the plaintiffs against a judgment of Streatfeild J. in so far as
that judgment limited the damages to 110l. In respect of an alleged
breach of contract by the defendants, which is now uncontested. The
breach of contract consisted in the delivery of a boiler sold by the
defendants to the plaintiffs some twenty odd weeks after the time
fixed by the contract for delivery. The short point is whether, in
addition to the 110l awarded, the plaintiffs were entitled to claim in
respect of loss of profits which they say they would have made if the
boiler had been delivered punctually. Seeing that the issue is as to the
measure of recoverable damage and the application of the rules in
Hadley v. Baxendale [FN11], it is important to inquire what
information the defendants possessed at the time when the contract
was made, as to such matters as the time at which, and the purpose for
which, the plaintiffs required the boiler. The defendants knew before,
and at the time of the contract, that the plaintiffs were laundrymen and
dyers, and required the boiler for purposes of their business as such.
They also knew that the plaintiffs wanted the boiler for immediate
use. On the latter point the correspondence is important. The contract

was concluded by, and is contained in, a series of letters. In the

earliest phases of the correspondence - that is, in letters of January 31
and February 1, 1946 - (which letters, as appears from their terms,
followed a telephone call on the earlier date) - the defendants
undertook to make the earliest possible arrangements for the
dismantling and removal of the boiler. The natural inference from this
is that in the telephone conversation referred to the plaintiffs had
conveyed to the defendants that they required the boiler urgently.
Again, on February 7 the plaintiffs write to the defendants: "We
should appreciate your letting us know how quickly your people can
dismantle it"; and finally, on April 26, in the concluding letter of the
series by which the contract was made: "We are most anxious that
this" (that is, the boiler) "should be put into use in the shortest
possible space of time." Hence, up to and at the very moment *534
when a concluded contract emerged, the plaintiffs were pressing upon
the defendants the need for expedition; and the last letter was a plain
intimation that the boiler was wanted for immediate use. This is none
the less so because when, later, the plaintiffs encountered delays in
getting the necessary permits and licences, the exhortations to speed
come from the other side, who wanted their money, which in fact they
were paid in advance of delivery. The defendants knew the plaintiffs
needed the boiler as soon as the delays should be overcome, and they
knew by the beginning of June that such delays had by then in fact
been overcome. The defendants did not know at the material time the
precise role for which the boiler was cast in the plaintiffs' economy,
e.g. whether (as the fact was) it was to function in substitution for an
existing boiler of inferior capacity, or in replacement of an existing
boiler of equal capacity, or as an extra unit to be operated side by side
with and in addition to any existing boiler. It has indeed been argued
strenuously that, for all they knew, it might have been wanted as a
"spare" or "standby, " provided in advance to replace an existing
boiler when, perhaps some time hence, the latter should wear out; but
such an intention to reserve it for future use seems quite inconsistent

with the intention expressed in the letter of April 26, to "put it into use
in the shortest possible space of time."

CASE SUMMARY
Victoria Laundry v. Newman Industries
2 K.B. 528 (C.A. 1949)
Facts Victoria ordered a new dye machine from Newman
on
June 5.
The contract included a provision for installation and
Newman agreed in the contract to have the dye
machine installed and operational by a certain date.
It took several months longer to set up than the
contract stipulated. Victoria sued.
Victoria argued that they lost a lot of business from
not having the dye machine operation on time, and
Newman was liable for those lost profits.
Newman argued that although it was pretty obvious
that Victoria would lose some business from not
having the dye machine, the exact amount of profits
they would have lost was not reasonably foreseeable,
and so, based on Hadley v. Baxendale(9 Ex. 341
(Ex.Ct. 1854)), they were not liable.
The Canadian Court found for Victoria.
The Canadian Court awarded Victoria damages
for business profits.
But not for any unusual profits (such as special jobs)
that might have been realized if the dye machine had
been installed on time.
IssueCan Victoria Laundry recover lost
business profits for period between June 5 and Nov.
8?

Holding- Yes. The Lost profits are foreseeable.

Rule- When there is a breach of contract, the breaching
party should be liable for damages that naturally arise from the
breach, or damages that both of the parties contemplated at the
time they made the contract.
Analysis- Loss of laundry profits reasonably foreseeable result
of failure to deliver on time, since the defendants knew that
plaintiffs wanted to use boiler for use in laundry business. Loss
was liable to result. But plaintiff cant recover for loss of
particularly lucrative dyeing contract of which defendants had
not been specifically told. Plaintiffs couldnt buy boiler from
someone else by June 5. Special order.
1

2 The Court found that what was reasonably foreseeable at

the time depended on the knowledge of the various parties.
The Court agreed that Newman could not be expected to
know the specific details of Victorias business.
However, the Court found that in order to be liable for damages from
a breach of contract, it is not necessary that they know exactly what
the damages of the breach would be. The party is liable as long as a
reasonable man would have concluded that some losses were likely to
occur.

PRESS RELEASE
Hadley v Baxendale 9 Exch. 341 (1854) is a leading English contract
law case which laid down the principle that consequential damages
will be awarded for breach of contract only if it was foreseeable at the
time of contracting that this type of damage would result from the
breach. The two important rules set out in the case are:
1. The injured party may recover damages for loss that may fairly
and reasonably be considered as arising naturally, i.e., according to
the usual course of things, from such breach of contract itself.
2. The injured party may recover damages for loss other than that
arising naturally - to recovery of what have come to be known as
consequential damages.
By introducing this requirement of contemplation for the recovery of
consequential damages, the court imposed an important new
limitation on the scope of recovery that juries could allow for breach
of contract. This resulted in imposition of a more severe limitation on
the recovery of damages for breach of contract than that applicable to
actions in tort or for breach of warranty, in which substantial or
proximate cause is the test.
Seeing that the issue in Victoria Laundry v. Newman Industries is as
to the measure of recoverable damage and the application of the rules
in Hadley v. Baxendale (I), it was important to inquire what
information the defendants possessed at the time when the contract
was made, as to such matters as the time at which, and the purpose for
which the plaintiffs required the boiler.
This case made it very clear that if the special circumstances have not
been communicated to the other party such special damages cannot be
compensated as losses arising naturally can only be compensated.

CASES REFERED
Hadley v. Baxendale
Cory v. Thames Ironworks Company
British Columbia sawmills v. Nettleship