Hadley v. Baxendale: Contract Doctrine or Compensation Rule?

Abstract

There is little doubt that historically the 'reasonable foreseeability' criterion in Hadley v. Baxendale was thought of as a fairly general damages limitation exercise whose chief function was to prevent liability for consequential loss getting out of control, and that it was only somewhat later that lawyers got the idea that there should be a fundamental cleavage between tort and contract. The aim of this article has been to show that, despite what has since become modern orthodoxy, the arguments against applying Hadley to non-contractual claims do not stand up. The way should therefore be open to regard Hadley as what it was always intended to be: a general rule applying to all forms of compensation for non-deliberate damage, whatever the formal source of the defendant's liability. Whether courts will explicitly accept my common sense proposition remains, of course, to be seen.