remoteness of damage

Not all damages are recoverable by a claimant has suffered loss or damage at the hands of a defendant by reason of breach of contract. There are two tests in assessing remoteness of damages: causation and reasonable foreseeability. There must be a sufficient connection between the breach and the loss in order to recover damages for the breach of contract. The damage or loss itself must be caused by the breach of contract. Damage suffered by reason of an intervening act by a third party which the defendant could not have reasonably foreseen will not be recoverable from the defendant.  

In the event that the loss is sufficiently caused by the breach of contract, damages claims are also limited by the losses that the defendant reasonably ought to have foreseen to have flowed from the breach, and is judged at the time the contract was formed, not the time of the breach.

The successful claimant is entitled to recover all the losses that would naturally flow from the breach - the losses that are reasonably and fairly considered to arise in as a result of the breach that any claimant would suffer. That is, the losses that would be suffered by any claimant  for the particular type of  contract. In addition to this, where special knowledge is possessed by the defendant at the time of the contract, further damages are able to be recovered as the defendant is deemed to have an "expanded" knowledge of the claimant's circumstances and thus the reasonable foreseeability of damage likely to be suffered is wider.

Usage: The damage was not able to be recovered from the defendant as the damage was considered too remote.

Related Words: liquidated damages; mitigation of damage; assessment of damages; penalties; mitigation of loss; breach of contract; quantum meruit; contributory negligence; contract; injunction; copyright infringement; locus standi.