Hadley v. Baxendale
Facts of the Case
Questions of Law
Analysis of Ratio Decidendi
Contract Law like other laws is not a stagnant legislation. It has evolved over the time with changing social life and circumstances. In a common law country where legislature makes a law, the judiciary plays a significant role in the interpretation and application of the law to the facts and circumstances of a case. The ratio decidendi of a court acts as a precedent for the subsequent cases. Therefore, the contract law is structured by legislations as well as judicial precedents.
The most interesting and ambiguous aspect of the contract law is the 'damages awarded by the court for the loss suffered by parties to a contract'. The reasoning followed by the court in awarding the damages to a party is manipulated by different circumstances of each case which becomes a precedent for future litigation.
I have opted to critically analyse a famous English case Hadley v. BaxendaleÃ¯Â¿Â½, which is the cornerstone for the analysis and awarding of consequential damages, which entails that a party to a contract may often lack the knowledge of the value of performance of the contract, unless the same is communicated by the other party to the contract.
I will first briefly explain the entire case and then analyse the judgement of the Court of Exchequer. Then I will be concentrating on the rule of reasonable foresight and contemplation by the parties to the contract. I would then comment on the ratio decidendi established by the court in Hadley v. Baxendale.
2.1 Facts of the CaseÃ¯Â¿Â½
The plaintiff had a business of millers in...