Question

Brief Fact Summary. Plaintiffs operated a mill, and a component of their steam engine broke causing...

Brief Fact Summary. Plaintiffs operated a mill, and a component of their steam engine broke causing them to shut down the mill. Plaintiffs then contracted with Defendants, common carriers, to take the component to W. Joyce & Co. to have a new part created. When delivery was delayed due to Defendants’ neglect, causing Plaintiffs’ mill to remain closed longer than expected, Plaintiffs sued to recover damages.
Synopsis of Rule of Law. The damages to which a nonbreaching party is entitled are those arising naturally from the breach itself or those that are in the reasonable contemplation of the parties at the time of contracting.
Facts. Plaintiffs operated a mill, which they were forced to shut down when the crank shaft of their steam engine broke. They contacted the manufacturer of the engine, W. Joyce & Co. (Joyce), and Joyce agreed to make a new shaft from the pattern of the old one. Therefore, a servant of Plaintiffs went to the office of Defendants, common carriers, to have the crank shaft taken to Joyce. Plaintiffs’ servant told Defendants’ clerk that the mill was shut down and the shaft must be sent immediately. The clerk informed Plaintiffs’ servant that if the shaft were given to them by twelve o’clock any day, it would be delivered by the next day. Plaintiffs took the shaft to Defendants the next day before noon. Due to Defendants’ neglect, the delivery to Joyce was delayed, and Plaintiffs did not receive the new shaft for several days after they should have received it.
Issue. Are Defendants liable to Plaintiffs for damages suffered by Plaintiffs due to lost profits?

Question:

The Hadley case limited damages to damages that were foreseeable at the time of the formation of the contract. Suppose we eliminate this limitation and allow all damages caused in whole or part by the contract breach. What positive or negative economic consequences would follow?

Homework Answers

Answer #1

Delays in delivery result in serious consequences for shippers. In some circumstances, compensation may be obtained from a defaulting carrier. As per international convention, the Hague Rules of 1924 do not preclude the recovery of consequential losses such as those arising from a delay in delivery.

46 U.S. Code § 40502 - Service contracts

Unless the parties agree otherwise, the exclusive remedy for a breach of a service contract is an action in an appropriate court. The contract dispute resolution forum may not be controlled by or in any way affiliated with a controlled carrier or by the government that owns or controls the carrier.

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