The parties contracted to charter the Achileas. The charterer gave notice to terminate the hire, and the owner found a new charterer. Until the termination the charterers sub-chartered. That charter was not completed, delaying the ship for the owners’ new charter which was cancelled. In the meantime hire rates had fallen. The owners claimed damages. The House was asked ‘is the rule that a party may recover losses which were foreseeable (‘not unlikely’) an external rule of law, imposed upon the parties to every contract in default of express provision to the contrary, or is it a prima facie assumption about what the parties may be taken to have intended, no doubt applicable in the great majority of cases but capable of rebuttal in cases in which the context, surrounding circumstances or general understanding in the relevant market shows that a party would not reasonably have been regarded as assuming responsibility for such losses? ‘
Held: The charters were not liable for the owners losses in the absence of a clause making them so. The general understanding in the shipping industry was that damages were not recoverable for loss of a profitable following fixture.
Lord Hoffmann, Lord Hope of Craighead, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe, Baroness Hale of Richmond
[2008] UKHL 48, Times 10-Jul-2008
Bailii, HL
England and Wales
Citing:
Cited – Hadley v Baxendale Exc 23-Feb-1854
Contract Damages; What follows the Breach Naturaly
The plaintiffs had sent a part of their milling machinery for repair. The defendants contracted to carry it, but delayed in breach of contract. The plaintiffs claimed damages for the earnings lost through the delay. The defendants appealed, saying . .
At first instance – Transfield Shipping Inc of Panama v Mercator Shipping Inc of Monrovia ComC 1-Dec-2006
The owners made substantial losses after the charterers breached the contract by failing to redliver the ship on time as agreed.
Held: On the facts found the Owners’ primary claim is not too remote. To the knowledge of the Charterers, it was . .
Appeal from – Transfield Shipping Inc of Panama v Mercator Shipping Inc of Monrovia (the ‘Achilleas’) CA 6-Sep-2007
The court considered damages for late redelivery of a time-chartered vessel. . .
Cited – Torvald Klaveness A/S v Arni Maritime Corporation (The Gregos) HL 28-Oct-1994
In a continuing charter when it was clear that the time of the charter will be exceeded, the contract allows an action for an anticipatory breach. Any new redelivery order was to be obtained after after it first became impossible to meet the charter . .
Cited – Czarnikow (C ) Ltd v Koufos; The Heron II HL 17-Oct-1967
The vessel had arrived late at Basrah in breach of the terms of the charterparty. The House was asked as to the measure of damages. The charterers had intended to sell the cargo of sugar promptly upon arrival, and now claimed for the fall in the . .
Cited – Alma Shipping Corpn of Monrovia v Mantovani (The Dione) CA 1974
Lord Denning MR said that, in relation to a charterparty for a stated period such as ‘three months’ or ‘six months’, without any express margin or allowance: ‘the court will imply a reasonable margin or allowance. The reason is because it is not . .
Cited – Liverpool City Council v Irwin HL 31-Mar-1976
The House found it to be an implied term of a tenancy agreement that the lessor was to be responsible for repairing and lighting the common parts of the building of which the premises formed part. In analysing the different types of contract case in . .
Cited – Hyundai Merchant Marine Co Ltd v Gesuri Chartering Co Ltd (The Peonia) CA 1991
If a legitimate last voyage under a charterparty nevertheless proves in the event to exceed the implied margin, the charterer will be bound to pay any increase in the market rate above the charter rate during the period of the excess. . .
Cited – Robinson v Harman 18-Jan-1848
Damages for breach of contract should compensate the victim of the breach for the loss of his contractual bargain. Baron Parke said: ‘The next question is: What damages is the plaintiff entitled to recover? The rule of the common law is, that where . .
Cited – Arta Shipping Co Ltd v Thai Europe Tapioca Service Ltd (The Johnny) 1977
When claiming damages for the loss of a charter, the market rate for a substitute charter ‘must be ascertained by postulating a charter-party which corresponds as closely as possible with the actual charter-party.’ . .
Cited – Satef-Huttenes Albertus SpA v Paloma Tercera Shipping Co SA (The Pegase) 1981
Robert Goff J set out the limits of the kinds of losses for which a reasonable person would consider himself responsible: ‘The test appears to be: have the facts in question come to the defendant’s knowledge in such circumstances that a reasonable . .
Cited – Mulvenna v Royal Bank of Scotland Plc CA 25-Jul-2003
The court considered an an application to strike out a claim for damages for the loss of profits which the claimant said he would have made if the bank had complied with its agreement to provide him with funds for a property development.
Held: . .
Cited – South Australia Asset Management Corporation v York Montague Ltd etc HL 24-Jun-1996
Limits of Damages for Negligent Valuations
Damages for negligent valuations are limited to the foreseeable consequences of advice, and do not include losses arising from a general fall in values. Valuation is seldom an exact science, and within a band of figures valuers may differ without . .
Cited – Monarch Steamship Co Ltd v Karlshamns Oljefabriker A/B HL 1949
Damages were sought for breach of contract.
Held: After reviewing the authorities on remoteness of damage, the court reaffirmed the broad general rule that a party injured by the other’s breach of contract is entitled to such money . .
Cited – Transworld Oil Ltd v North Bay Shipping Corpn (The Rio Claro) 1987
Staughton J said that for a loss arising from a breach of contract to be recoverable: ‘It must be such as the contract breaker should reasonably have contemplated as not unlikely to result. To that direction must be added the point that the precise . .
Cited – Victoria Laundry (Windsor) Ltd v Newman Industries CA 1949
The plaintiffs claimed for loss of the profits from their laundry business because of late delivery of a boiler.
Held: The Court did not regard ‘loss of profits from the laundry business’ as a single type of loss. They distinguished losses . .
Cited – Banco de Portugal v Waterlow and Sons Ltd HL 28-Apr-1932
Lord Macmillan said: ‘Where the sufferer from a breach of contract finds himself in consequence of that breach placed in position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in . .
Cited – The ‘Pegase’ 1981
The court considered the measure of damages for breach of contract in the light of the cases in the Heron II and Victoria Laundry: ‘the principle in Hadley v Baxendale is now no longer stated in terms of two rules, but rather in terms of a single . .
Cited – Torvald Klaveness A/S v Arni Maritime Corporation (The Gregos) ChD 1991
The ship was returned late from a charter. The court was asked whether or not the legitimacy of the last voyage fell to be established at the date when the order was given or at the time when the last voyage began.
Held: It was the second: . .
Cited – Torvald Klaveness A/S v Arni Maritime Corporation (The Gregos) CA 4-Jun-1993
The ship was returned by the charterer after the expiry of the time charter. The court was asked as to when the validity of the last order was to be tested.
Held: The legitimacy of the charterer’s final order was to be tested at the date it . .
Lists of cited by and citing cases may be incomplete.
Contract, Damages
Leading Case
Updated: 01 November 2021; Ref: scu.270659