Victoria University of Wellington - Faculty of Law
January 31, 2010
Victoria University of Wellington Legal Research Paper No. 3/2011
This article discusses the fundamental questions concerning the application and conceptual basis of remoteness of damage in the law of contract that are raised by the decision of the House of Lords in The Achilleas  1 AC 61. It commences with a review of the academic literature that had a significant influence on their Lordships’ judgments in that case. While acknowledging the obvious theoretical difference between the two main schools of thought - one treating the remoteness rule as agreement-centred (with the task of the court being to identify an implicit allocation of risk) and the other treating it as a gap-filling device or default rule - the article questions whether the distinction has practical consequences. After a close analysis of each of the judgments in The Achilleas, which reveals, contrary to the view expressed in a recent English High Court case, a majority in favour of an agreement-centred approach, the article discusses, inter alia, the factors that ought to be weighed in determining whether a loss is too remote and the correctness of their Lordships’ unanimous decision to overturn the award of damages for lost profits that had been made by the, also unanimous, lower courts.
Number of Pages in PDF File: 33
Keywords: contract, damages, remoteness
JEL Classification: K12
Date posted: June 17, 2011 ; Last revised: April 5, 2015