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?