Chapter 11: Consequential damages and exclusion clauses, UK
It is common for contracts to include clauses disclaiming liability for consequential damages. The boundary between consequential damages and normal damages has been unclear in England. Courts have invoked the two limbs of Hadley v Baxendale arguing that damages in the first limb are normal and, therefore, not excluded. This chapter argues that the courts have drawn the line at damages that arise “directly and naturally” and that this is the wrong boundary. It traces the development of the law from 1934 to the present; only in recent years have the courts questioned the framework and been more willing to enforce the exclusion clauses.
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