Mitchell v. Clarke

McKinstry, J. In Hadley v. Baxendale, 9 Exch. 341, it was laid down that the damages which one party to a contract ought to receive in respect to a breach of it by another are such as arise “naturally ”—that is, in the usual course of things —from the breach itself, or such as may reasonably be supposed to have been contemplated by the parties when making the contract as the probable result of the breach. The doctrine of that case has since been followed, and is said by Lord Campbell to accord with the Code Napoleon, with Pothier, and “ with all the authorities.” (Smeed v. Foord, 1 El. & E. 612.) When reference is made to the terms of the contract alone, there is ordinarily little difficulty in determining what damages arise from its breach in the usual course of things, and the parties will be presumed to have contemplated such damages only. But where it is claimed the circumstances show that a special purpose was intended to be accomplished by one of the parties (a failure to accomplish which by means of the contract would cause him greater damage than would ordinarily follow from a breach by the other party), and such purpose was known to the other party, the facts showing the special purpose and the knowledge of the other party must be averred. This rule has frequently been applied to the breach of a contract for the sale of goods to be delivered at a certain time. In such cases the general rule of damages is fixed by reference to the market value of the goods at the time they were to have been delivered, because in the usual course of events the purchaser could have supplied himself with like commodities at the market price. And if special circumstances existed entitling the purchaser to greater damages for the defeat of a special purpose known to the contracting parties (as, for example, if the purchaser had already contracted to furnish the goods at a profit, and they could not be obtained in the market), such circumstances must be stated in the declaration with the facts which, under [165]the circumstances, enhanced the injury. (1 Sutherland on Damages, 764.)

Here the plaintiff placed in the hands of the defendant a certain sum of money, to be paid when it should become due from the plaintiff to a third person with whom plaintiff had contracted. The consequence which would follow, in the usual course, from a failure of the defendant to pay the money, would be that plaintiff would be obliged himself to pay his creditor. If the plaintiff was insolvent when he intrusted defendant with the money, and the circumstances—known to defendant —were such as that the sacrifice of plaintiff’s only property would probably follow from defendant’s neglect to pay the money to Jackson, it might be argued that such sacrifice and consequent greater damages than would usually flow from a breach of a like contract were in the contemplation of defendant as well as of plaintiff when their contract was entered into. We express no opinion whether the complaint herein may be amended, or in what particulars; nor do we express any opinion as to what injuries may be proved in case of any supposed amendment, as flowing naturally and directly from facts which may be alleged in the complaint as amended and established by evidence. It is enough to say that, under the present complaint, evidence with respect to the action brought by Jackson against plaintiff, the attachment of his property, its sale as perishable, and the consequent loss, was not admissible.