Hadley v. Baxendale
In the Court of Exchequer
9 Exch. 341 (1854)
Hadley (plaintiff) ran a mill whose crank shaft broke, halting all operations, and needed to ship the broken shaft to an engineering firm to serve as the model for a replacement. He arranged shipping through Pickford & Co., owned by Baxendale (defendant), and was told next-day delivery was available if he delivered the shaft before noon, which he did. Pickford negligently delayed shipment by several days, keeping the mill closed longer than expected. Hadley sued for damages including the lost profits caused by the delay, and the jury awarded them; Baxendale appealed.
Whether an award of damages for breach of contract may include losses stemming from special circumstances that were not communicated to and known by both parties at the time of contract formation.