HADLEY V.

BAXENDALE

FACTS-
Hadley owned a mill which had stopped working due to breakage of crankshaft. He engaged Baxendale,
the transporter, to transport the crank shaft to the location at which it would be repaired then subsequently
transport it back. They contracted the manufacturer Joyce & Co. and they agreed to make a new shaft for
the plaintiff. Then, the servant of the plaintiff went to the defendant (common carriers) to take the craft to
Joyce & co. and asked for the shaft on an urgent basis as it was to be sent on an immediate basis. But due
to some neglect on the part of the defendant, the shaft couldn't be sent on an immediate basis and he
returned it to the mill owner a week later then the agreed during which time Hadley's mill was out of
operation and as a result of this the plaintiff incurred huge losses. Hadley therefore sued Baxendale to
recover damages for such delay and the losses he suffered.

ISSUES RAISED-
 Whether defendant was liable to compensate the plaintiff for the loss suffered by the plaintiff due
to non-operation of the mill for a longer time?

 Whether the plaintiff loss of profits because of the mill closure was too remote to justify a claim?

ARGUMENTS-
• The plaintiff complained that because of late delivery of the crankshaft, his mill had to remain
inoperative for several days, and he lost the profits that he otherwise would have gained. Therefore, the
defendant stood liable for breach of contract and had to pay compensation.

• The defendant retorted that such an action was unreasonable because he had no knowledge that the mill
would have to close because of the delayed return of the crankshaft, and thus the loss of profit did not
meet the test of remoteness.

JUDGMENT:-
Trial Court held the decision in favor of Hadley and ordered Baxendale to compensate the damages to
Hadley. Aggrieved by the decision of the trial court, the defendant filed an appeal to the Court of
Exchequer. The Court of Exchequer, led by Baron Sir Edward Hall Alderson, declined to allow Hadley to
recover lost profits, holding that a party could be held liable only for losses that were generally
foreseeable, or if the party had mentioned his special circumstances in advance.

The mere fact that a party is sending something to be repaired does not indicate that the party would lose
profits if it is not delivered on time. The court suggested various other circumstances under which Hadley
could have entered into this contract that would not have presented such dire circumstances, and noted
that where special circumstances exist, provisions can be made in the contract voluntarily entered into by
the parties to impose extra damages for a breach.