LEGAL PRINCIPLE: CONTRACT LAW – Damages – Loss of Anticipated Profit Not Within Contemplation of Parties
PRINCIPLE STATEMENT
Loss of anticipated profit was not within the contemplation of the parties as a recoverable head of damages under the loan agreement.
RATIO DECIDENDI (SOURCE)
Per Onu, JSC, in Artra Industries Nigeria Limited v. The Nigerian Bank for Commerce and Industry (1998) NLC-271997(SC) at pp. 36; Para A.
"It was therefore not within the contemplation of the parties that the defendant has to provide working capital for the plaintiff."
EXPLANATION / SCOPE
Damages for breach of contract are limited to losses within the parties’ contemplation. Anticipated profits from a business venture are not ordinarily recoverable. The principle applies the rule in Hadley v. Baxendale. The plaintiff must show that the loss was foreseeable. The court will not award speculative damages. The rule protects defendants from disproportionate liability.
