Stuart Pty Limited v Condor Commercial Insulation Pty Limited

[2006] NSWCA 334

NSW Court of Appeal

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Interrogate

Catchwords

1. Contract
2. › Damages
3. › Remoteness of damage
4. › Second limb of Hadley v Baxendale
5. › Loss of profits on head contract caused by breach of subcontract
6. › Whether loss within reasonable contemplation of parties
7. › Whether subcontractor knew of special circumstances
8. › Whether contract price disproportionate to risk
1. Contract
2. › Damages
3. › Remoteness of damage
4. › Second limb of Hadley v Baxendale
5. › Event giving rise to loss
6. › Whether event was 'not unlikely to occur'
7. › Fire caused by faulty workmanship
1. Contract
2. › Damages
3. › Remoteness of damage
4. › Second limb of Hadley v Baxendale
5. › Rationale for liability
6. › Implied undertaking to bear risk of enhanced loss
7. › Knowledge of special circumstances
8. › Rebuttal of presumption

Quick Take

A subcontractor's knowledge that a head contract exists and is expected to be profitable is not, without more, sufficient to establish that loss of the head contract was within the reasonable contemplation of the parties under the second limb of Hadley v Baxendale. The disproportion between the subcontract price and the potential liability for loss of the head contract, combined with the head contractor's retained supervisory responsibility, may rebut any inference of an implied undertaking to bear the risk of enhanced damages. The 'not unlikely to occur' test applies to the event giving rise to the loss, not just the type of loss.