Victoria Laundry v. Newman Ind.
2 K.B. 528 (CA 1949)

  • Victoria ordered a new dye machine from Newman.
    • The contract included a provision for installation and Newman agreed in the contract to have the dye machine installed and operational by a certain date.
  • It took several months longer to set up than the contract stipulated. Victoria sued.
    • Victoria argued that they lost a lot of business from not having the dye machine operation on time, and Newman was liable for those lost profits.
    • Newman argued that although it was pretty obvious that Victoria would lose some business from not having the dye machine, the exact amount of profits they would have lost was not reasonably foreseeable, and so, based on Hadley v. Baxendale (9 Ex. 341 (Ex.Ct. 1854)), they were not liable.
  • The Canadian Court found for Victoria.
    • The Canadian Court awarded Victoria damages for business profits.
      • But not for any unusual profits (such as special jobs) that might have been realized if the dye machine had been installed on time.
    • The Court found that what was reasonably foreseeable at the time depended on the knowledge of the various parties. The Court agreed that Newman could not be expected to know the specific details of Victoria’s business.
    • However, the Court found that in order to be liable for damages from a breach of contract, it is not necessary that they know exactly what the damages of the breach would be. The party is liable as long as a reasonable man would have concluded that some losses were likely to occur.