Delay in carriage: claim for loss of profit

Law. Under section 73 of the Indian Contract Act, 1872, compensation for breach is given for loss which naturally arose in the usual course of things from the “breach, or which the parties knew, when they made the contract, to be likely to result from” it; nothing is given for remote or indirect loss. Special damage can be claimed only where the special circumstances were made known beforehand. In Hadley v. Baxendale, a carrier delayed delivery of a mill's broken crankshaft, and the mill stayed idle; the mill-owner could recover only ordinary damages, not the loss of profits, because the carrier had not been told that delay would stop the mill. By contrast, where a carrier is told that the mill is stopped for want of a machine, the average profit lost during the delay is recoverable.

Application. Mr. Farhan handed the clothes to the railways for carriage, needing them by the end of November because orders for sherwanis peak then. He did not bring this to the railways' notice. The loss of the season's profit is therefore a special loss arising from circumstances the railways did not know of when they accepted the consignment; it did not arise naturally in the usual course of things from a month's delay.

Decision. Mr. Farhan is not entitled to claim the loss of profit. He can recover only ordinary damages that arise naturally from the delay (for example, any deterioration of the goods).