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.
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd ⁴⁾
Environmental Systems v Peerless Holdings Pty Ltd (Court of Appeal) ⁵⁾
- Peerless Holdings Pty Ltd v Environmental Systems Pty Ltd (first instance) ⁶⁾
- Peerless Holdings Pty Ltd v Environmental Systems Pty Ltd (No 2) (first instance) ⁷⁾
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