#6596 - Cory V. Thames Ironworks - Commercial Remedies BCL

Cory v. Thames Ironworks

Facts

The defendants agreed to sell and deliver to the plaintiffs within a certain time the hull of a floating boom derrick; but they did not deliver it till six months after the specified time. The plaintiffs, who were large coal merchants in the port of London, purchased the hull in order to place in it, as they in fact did, large hydraulic cranes and machinery for the purpose of transhipping their coals direct from colliers into barges. The hull was the first vessel of the kind ever built, and the plaintiffs' special purpose was entirely novel, and was unknown to the defendants. The defendants believed that the plaintiffs were purchasing the hull for the purpose of using her as a coal store. If the plaintiffs had been prevented using the hull for their special purpose, they would either have sold her to be used, in the hulk trade, as a coal store, or, if unable to do so, would have used her themselves as a store, and this was the most obvious use to which such a vessel was capable of being applied by persons in the coal trade: but the hulk trade is a distinct branch of the coal trade, and was no part of the plaintiffs' business. Had the hull been purchased for this purpose, the delay in the delivery would have occasioned loss to the amount of 420l. The plaintiffs actually suffered damage to a much larger amount from not having the hull ready for their special purpose at the time fixed for the delivery.

Holding

Cockburn CJ

I think the construction which Mr. Coleridge seeks to put upon the case of Hadley v. Baxendale, is not the correct construction as applicable to such a case as this. If that were the correct construction, it would be attended with most mischievous consequences, because this would follow, that whenever the seller was not made aware of the particular and special purpose to which the buyer intended to apply the thing bought, but thought it was for some other purpose, he would be relieved entirely from making any compensation to the buyer…. My Brother Blackburn has pointed out that that is not the true construction of the language which the Court used in delivering judgment in that case. As I said in the course of the argument, the true principle is this, that although the buyer may have sustained a loss from the non-delivery of an article which he intended to apply to a special purpose, and which, if applied to that special purpose, would have been productive of a larger amount of profit, the seller cannot be called upon to make good that loss if it was not within the scope of his contemplation that the thing would be applied to the purpose from which such larger profit might result; and although, in point of fact, the buyer does sustain damage to that extent, it would not be reasonable or just that the seller should be called upon to pay it to that extent; but to the extent to which the seller contemplated that, in the event of his not fulfilling his contract by the delivery of the article, the profit which would be realised if the article had been delivered would be lost to the other party, to that extent he ought to pay.

Blackburn J

But Mr. Coleridge's argument would come to this, that the damages could never be anything but what both parties contemplated; and where the buyer intended to apply the thing to a purpose which would make the damages greater, and did not intend to apply it to the purpose which the seller supposed he intended to apply it, the consequence would be to set the defendant free altogether. That would not be just, and I do not think that was at all meant to be expressed in Hadley v. Baxendale. Here the arbitrator has found that what the defendants supposed when they were agreeing to furnish the derrick was that it was to be employed in...