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Unpublished Paper
Recovery of Damages for Lost Profits: The Historical Development
ExpressO (2015)
  • Robert M Lloyd, University of Tennessee, Knoxville
  • Nicholas J. Chase
ABSTRACT Recovery of Damages for Lost Profits: The Historical Development The rule of Hadley v. Baxendale is widely considered the most important rule of contract damages. In fact, however, the rule that damages must be proven with reasonable certainty is far more important in the modern practice of law. The reasonable certainty rule originated in Roman law and came to the common law through the civil law of Western Europe, developing first in the United States and spreading from the United States to England. The rule of Hadley v. Baxendale developed much in the same way, and, contrary to popular belief, it too developed first in the United States. The famous opinion of the Court of the Exchequer that is in every contracts casebook is simply the British recognition of a rule that was already established in the courts of the United States. Much of the scholarship about the history of contract damages in the United States is wrong. In spite of what many writers assert without support, American courts of the eighteenth and early nineteenth centuries did not given juries unfettered discretion to award contract damages as they saw fit. Instead, judges of the time instructed juries in accordance with rigid rules. These rules limited damages much more severely than does modern law. At that time, the rule of Hadley v. Baxendale did not function the way it does now, as a limitation on consequential damages. Instead, it was a recognition that consequential damages, which had not previously been allowed, could be awarded in the appropriate circumstances.
  • lost profits,
  • contracts,
  • damages,
  • history,
  • remedies,
  • Hadley v. Baxendale
Publication Date
March 2, 2015
Citation Information
Robert M Lloyd and Nicholas J. Chase. "Recovery of Damages for Lost Profits: The Historical Development" ExpressO (2015)
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