Syllabus B: The law of obligations — ACCA Practice Question 06

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Apply the two limbs of the remoteness of damage test from Hadley v Baxendale.

Full Answer

B.Only the normal lost profits, as they arise naturally from the breach.✓ Correct

Hadley v Baxendale establishes two limbs for remoteness of damage: 1) losses arising naturally from the breach (normal profits), which are recoverable; and 2) losses arising from special circumstances, which are only recoverable if communicated to the defendant at the time of contracting. The secret contract was not communicated, so it is too remote.

Common mistakes

Assuming all consequential losses are recoverable regardless of foreseeability.

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Full Answer

Common mistakes

Practice the full ACCA LW — Corporate and Business Law Practice Exam 3

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