Hadley, the plaintiff, was a miller, proprietor of the City Steam-Mills in Gloucester. The mill was powered by a steam engine and when the crankshaft broke the machine would not work. The plaintiff wanted a new crankshaft made and ordered one from W. Joyce & Co., based in Greenwich. To ensure that the new crankshaft would fit correctly into the machine it was advised that the broken crankshaft should be sent and used as a template for the new one. The defendants, under the name of ‘Pickford & Co’, were the carriers who were chosen to convey the crankshaft according to the prior agreement that if the crankshaft was received in their office it would reach its destination in Greenwich on the following day. However due to some error the delivery was delayed by a further five days. The plaintiffs complained that the carriers had not used due care and diligence in completing their side of the bargain and that due to their negligence the plaintiffs were prevented from carrying out their normal business. This extra five days of delay caused them to buy in supplies to meet their customer obligations and compelled them to pay the wages of their workmen even though the work had stopped. This deprived them of the opportunity of running a profitable concern for five days and their claim for subsequent loss was increased accordingly.
The defendants objected to these damages as being too remote.
The level of damages that an injured party can expect from a breach of contract.
Outcome and rule:
The previous decisions had been to return the claimant to the position he would have been in if the contract had been carried out correctly. This would have returned the full amount claimed by the plaintiff. But in this landmark case, the court held that the liability for damages should be assessed as those reasonably and fairly coming from a breach of this kind.
The court considered that only the damages that both parties would have contemplated as likely to result from this type of agreement could be awarded. Would a common carrier have considered the consequential losses of not delivering the crankshaft on time? Would he have known that this broken part was crucial to the working of the mill and the indirect losses that could accrue from non-compliance with the contract as agreed? The direct losses would perhaps have been thought of as an inconvenience and fairly minor, as the carriage paid for the crankshaft was only £2.4s, whereas the compensation claimed was £300. The carrier would probably have considered a refund of carriage as a fair restitution.
The result would have been different if, on delivery of the broken crankshaft to the defendants depot, attention had been drawn to the urgency of the delivery and the consequences of any delay. This would have brought to the contemplation of the defendant the level of dependence the plaintiff was placing on his ability to complete his obligations in a timely fashion.