Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949]
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Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 revolved around the principle of the remoteness of damage in English contract law.
Newman Industries Ltd had a contractual obligation to deliver a boiler to Victoria Laundry (Windsor) Ltd. However, the delivery was significantly delayed by five months. As a direct consequence of this delay, Victoria Laundry suffered a loss in laundry capacity, leading to the forfeiture of a lucrative contract with the Ministry of Supply. The critical question before the court was whether Victoria Laundry could claim not only the ordinary profit forgone due to the late delivery of the boiler but also the extraordinary profit it would have gained from the Ministry of Supply contract.
Asquith LJ in the Court of Appeal articulated a crucial distinction. He held that Newman Industries Ltd was obligated to compensate Victoria Laundry for the ordinary loss of profits incurred by the delayed delivery. However, the recovery of extraordinary profits, specifically those arising from particularly lucrative dyeing contracts, was contingent on the defendant having sufficient knowledge of such extraordinary losses. Asquith LJ emphasised that for these extraordinary losses to be recoverable, the defendant must have possessed knowledge to a degree that it was reasonable to attribute acceptance of liability for such losses. The court reasoned that the vendor of the boilers would have perceived profits from these specific contracts as a different and higher level of risk compared to the general risk of loss of profits by the laundry.
In essence, this case exemplifies the application of the principle of foreseeability and the need for a reasonable connection between the losses claimed and the knowledge imputed to the party in breach at the time of contracting. The court's distinction between ordinary and extraordinary losses serves as a nuanced approach to the recoverability of damages based on the nature of the losses and the contracting parties' foreseeable contemplation.
Newman Industries Ltd had a contractual obligation to deliver a boiler to Victoria Laundry (Windsor) Ltd. However, the delivery was significantly delayed by five months. As a direct consequence of this delay, Victoria Laundry suffered a loss in laundry capacity, leading to the forfeiture of a lucrative contract with the Ministry of Supply. The critical question before the court was whether Victoria Laundry could claim not only the ordinary profit forgone due to the late delivery of the boiler but also the extraordinary profit it would have gained from the Ministry of Supply contract.
Asquith LJ in the Court of Appeal articulated a crucial distinction. He held that Newman Industries Ltd was obligated to compensate Victoria Laundry for the ordinary loss of profits incurred by the delayed delivery. However, the recovery of extraordinary profits, specifically those arising from particularly lucrative dyeing contracts, was contingent on the defendant having sufficient knowledge of such extraordinary losses. Asquith LJ emphasised that for these extraordinary losses to be recoverable, the defendant must have possessed knowledge to a degree that it was reasonable to attribute acceptance of liability for such losses. The court reasoned that the vendor of the boilers would have perceived profits from these specific contracts as a different and higher level of risk compared to the general risk of loss of profits by the laundry.
In essence, this case exemplifies the application of the principle of foreseeability and the need for a reasonable connection between the losses claimed and the knowledge imputed to the party in breach at the time of contracting. The court's distinction between ordinary and extraordinary losses serves as a nuanced approach to the recoverability of damages based on the nature of the losses and the contracting parties' foreseeable contemplation.
