Remoteness Re-Invented?

33 Pages Posted: 17 Jun 2011 Last revised: 5 Apr 2015

David McLauchlan

Victoria University of Wellington - Faculty of Law

Date Written: January 31, 2010

Abstract

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 [2009] 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.

Keywords: contract, damages, remoteness

JEL Classification: K12

Suggested Citation

McLauchlan, David, Remoteness Re-Invented? (January 31, 2010). Victoria University of Wellington Legal Research Paper No. 3/2011. Available at SSRN: https://ssrn.com/abstract=1866167 or http://dx.doi.org/10.2139/ssrn.1866167

David McLauchlan (Contact Author)

Victoria University of Wellington - Faculty of Law ( email )

PO Box 600
Wellington, 6140
New Zealand

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