Victoria Laundry (
2 K.B. 528 (1949)
Facts: The plaintiffs contracted to buy a boiler from the defendants. The boiler was delivered several months
late. The plaintiffs sued for lost
profits.
Issue: What part of the plaintiff’s profits can they recover?
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: The court says it is reasonable to think that since
the defendant knew that the plaintiff was in the laundry business, it was foreseeable
that the lack of a boiler would keep them from receiving the profits laundry people
usually get. The engineering company
cannot plead ignorance as to what the boiler was for because any reasonable
person would understand that it is essential to their business.
Conclusion: The court awarded the plaintiff damages for its
ordinary profits but not for special dyeing contracts that the defendant didn’t
know about.
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Damages