Consequential Loss: The Approach In NSW

Dangers of drafting liability clauses

Hadley & Anor v Baxendale & Ors [1854] EWHC J70 (Hadley v Baxendale) was a landmark decision in English law defining the classification of different types of loss. However, both the UK courts and academia and the Australian courts and academia have been pursuing modified and newly developed principles in this area of law.

As the Australian line of cases develops, contracting parties need to be more careful in the drafting of their liability clauses regardless of whether the party is trying to include or exclude liability.

What is consequential loss?

The idea of consequential loss first emerged in Hadley v Baxendale, as that case categorised loss into two different limbs: