Rewriting the rules on remoteness?

SYLVIA SHIPPING CO v PROGRESS BULK CARRIERS [2010]

This case looks at the potentially differing rules on assessing remoteness of damages that can be claimed for breach of contract. An appeal from an arbitration award was dismissed and damages associated with the delay in readiness of a vessel, which resulted in the cancellation of a sub-charter, were held to be foreseeable and hence could be claimed. In the Transfield v Mercator [2008] case, however, a broader approach based on an assumption of responsibility test was applied.

issues:

The generally accepted test for remoteness has traditionally been whether the loss claimed was of a kind or type which would have been within the reasonable contemplation of the parties at the time that the contract was made as being likely to result (the first limb of Hadley v Baxendale [1854]). However, the outcome of Transfield called into question whether that remained the primary test. In that case, the Court said it was necessary to consider whether the loss was a type of loss for which a party can reasonably be expected to have ‘assumed responsibility’ and concluded that it was not. That having been said, there was clearly some confusion as to whether the Judges in Transfield had intended to change the law.

decision:

points to note:

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