Question

"Where two parties have made a contract which one of them has broken the damage which the other party ought to receive in respect of such breach of contract should be either such as may fairly and reasonably be considered arising naturally i.e. according to the usual course of things from such breach of contract itself or such as may reasonably be supposed to have been in the contemplation of the parties at the time they made the contract as the probable result of breach of it." In which case the principle was down so:

• A. Clegg v. Hands
• B. Kapur Chand v. Himayat Ali khan
• C. Frost v.Knight
• D. Hadley v.Baxendale

Hint:

Associate \textbf{Hadley v. Baxendale} with the two-part test for remoteness of damage in contract law: (1) Natural/Ordinary losses and (2) Contemplated/Special losses. This rule is fundamental to contract law.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
The question quotes the foundational principle of the law relating to the remoteness of damages in cases of breach of contract. This principle determines which losses suffered by the non-breaching party are recoverable from the breaching party. It limits recovery to those losses that are not too remote.
Step 2: Detailed Explanation:
The statement quoted is the classic formulation of the rule laid down by Baron Alderson in the English case of Hadley v. Baxendale (1854) 9 Exch 341. This case is the cornerstone of the modern law of damages for breach of contract in common law jurisdictions, including India. The principles are largely codified in Section 73 of the Indian Contract Act, 1872. The rule has two limbs: \begin{enumerate} \item The First Limb (General Damages): Damages that arise naturally, "in the usual course of things," from the breach. These are losses that any reasonable person would expect to occur from such a breach. \item The Second Limb (Special Damages): Damages that may not arise naturally but were in the "reasonable contemplation of both parties" at the time they made the contract as the probable result of its breach. This requires the breaching party to have special knowledge of the potential for such loss. \end{enumerate} The quote in the question perfectly summarizes these two limbs.
Step 3: Final Answer:
The principle was laid down in the case of Hadley v.Baxendale.