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    PracticeACCAACCA LW — Corporate and Business Law Practice Exam 4Question 08
    Medium2 marksMultiple Choice
    Corporate and Business LawSection ASyllabus BObligations

    ACCA · Question 08 · Corporate and Business Law

    Which TWO of the following statements accurately reflect the rules on remoteness of damage in contract law, as established in Hadley v Baxendale?

    Answer options:

    A.

    Losses that arise naturally from the breach in the usual course of things are recoverable.

    B.

    The claimant must prove that the defendant intended to cause the specific loss.

    C.

    Unusual or special losses are only recoverable if they were reasonably in the contemplation of both parties at the time the contract was made.

    D.

    Damages are designed to punish the party in breach for their failure to perform.

    How to approach this question

    Recall the two limbs of the test for remoteness of damage in contract law from Hadley v Baxendale.

    Full Answer

    The rule in Hadley v Baxendale establishes two limbs for remoteness of damage in contract: 1) Normal loss: losses arising naturally from the breach are recoverable. 2) Special loss: unusual losses are only recoverable if the special circumstances were communicated to the defendant and were in the reasonable contemplation of both parties at the time of contracting.

    Common mistakes

    Selecting options related to tortious remoteness (Wagon Mound) or punitive damages.
    Question 07All questionsQuestion 09

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