Victoria Laundry v Newman Industries

Legal Case Summary

Victoria Laundry v Newman Industries Ltd [1949] 2 KB 528

Delayed delivery of boiler to laundry company; whether lost profits recoverable

Facts

Victoria Laundry Ltd (VLL) ordered a large boiler from Newman Industries Ltd (NIL) in contemplation of some lucrative dyeing contracts. NIL were aware of the nature of VLL’s business, and that it was intended for the boiler to be put to use as soon as possible. The delivery of the boiler was delayed by five months and VLL claimed for breach of contract.

Issues

VLL claimed damages for their lost profits caused by the delay. They argued losses which would reasonably foreseeably flow from the breach would be recoverable and, therefore, since NIL knew the boiler was required as soon as possible for business purposes, they must have contemplated the use for which the boiler was to be put. VLL claimed it was not necessary to prove actual knowledge of the precise loss. NIL argued they had no special knowledge of running a laundry business or that the boiler was necessary for immediate profit making and, therefore, they were not liable for lost profits. NIL claimed that lost profits amounted to special circumstances which must have been explicitly brought to their attention prior to the breach if they were to be held liable. They could not be assumed to have known the delay would cause lost profits.

Decision/Outcome

VLL successfully recovered the lost profits. NIL knew the boiler was required for VLL’s business and had promised delivery by a specific date. They could not reasonably argue they could not foresee that lost profits would result from the delay. It was unnecessary to prove NIL had specific knowledge of the specific contracts which had been lost. Damages would be awarded for losses which could reasonably have been expected to be lost.