‘Consequential loss’ is a term which often appears in contracts and agreements

Essay by zzz1226zzzUniversity, Bachelor'sA-, October 2014

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Consequential loss is an important element in a contract and an agreement that would have a big difference of compensation either to include this clause in the contract or not when the contract is breached. Consequential loss's definition is keep changing through the development of the law. Hadley v Baxendale, GEC Alsthom Australia Ltd v City of Sunshine, Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd, these cases will be used to show my view of consequential loss in a transaction particularly in the construction industry.

Hadley v Baxendale is the leading case that brought the first understanding of consequential loss into the field. Compensation is an issue that always arise from a breach of a transaction, of course, the plaintiff will try to claim as much as they can since they lose their profit for sure, however, the defendant will try to prove that the loss of the defendant is not completely rely on them then reduce the compensation to the lowest.

Hadley v Baxendale illustrates the compensation fight from the breach of the deal.

The fact of the case- the second count of the case had explained that in the contract between the plaintiff and defendant, they all agreed that the defendant would take responsibility of the maintenance of the manufacture machine. As the shaft of the machine has broken due to its service life, the plaintiff needed to deliver the broken shaft to the defendant, and then the defendant needed to convey the broken shaft from Gloucester aforesaid to W. Joyce & Co. at Greenwich, and deliver back to the plaintiff within a reasonable time. Because of the places mentioned above, the defendant promised the plaintiff to use due and proper care and diligence in and about the carrying and conveying the broken shaft from...