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limitation_of_liability

Limitation of Liability

Consequential Loss

  • Hadley v Blaxendale 1)
    • first limb
      • Where two parties have made a contract which one of them has broken,
      • the damages which the other party ought to receive in respect of such breach of contract should be
      • such as may fairly and reasonably be considered either arising naturally,
      • i.e., according to the usual course of things,
      • from such breach of contract itself,
      • or such as may reasonably be supposed to have been in the contemplation of both parties,
      • at the time they made the contract, as the probable result of the breach of it.
    • second limb
      • Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants,
      • and thus known to both parties,
      • the damages resulting from the breach of such a contract,
      • which they would reasonably contemplate,
      • would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances
      • so known and communicated.
      • But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract,
      • he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally,
      • and in the great multitude of cases not affected by any special circumstances, from such a breach of contract.
      • For, had the special circumstances been known
      • the parties might have specially provided for the breach of contract by special terms as to the damages in that case;
      • and of this advantage it would be very unjust to deprive them arising out of any breach of contract.
  • Bellgrove v Eldridge 2)
  • Darlington Futures Ltd v Delco Australia Pty Ltd| 3) Mason, Wilson, Brennan, Deane and Dawson JJ.
    • the interpretation of an exclusion clause is to be determined by construing the clause according to its natural and ordinary meaning,
    • read in the light of the contract as a whole,
    • thereby giving due weight to the context in which the clause appears including the nature and object of the contract, and,
    • where appropriate, construing the clause contra proferentem in case of ambiguity.
    • …the same principle applies to the construction of limitation clauses.
  • Environmental Systems v Peerless Holdings Pty Ltd (Court of Appeal) 5)
  • Allianz Australia Insurance Limited v Waterbrook at Yowie Bay Pty Ltd (Court of Appeal) 8)
    • Allianz Australia Insurance Limited v Waterbrook at Yowie Bay Pty Ltd (first instance) 9)
1) (1854) 9 Exch 341
2) [1954] HCA 36
3) [1986] HCA 82
4) [2004] 291 CLR 165
5) [2008] 19 VR 358
6) [2006] VSC 194
7) [2006] VSC 245
8) [2009] NSWCA 224
9) [2008] NSWSC 1451

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