Critically examine the development of the law relating to the Remoteness of Damages. Which test do you prefer for deciding the questions of the remoteness of damages? Give reason for your answer.

Question: Critically examine the development of the law relating to the Remoteness of Damages. Which test do you prefer for deciding the questions of the remoteness of damages? Give reason for your answer.

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Answer

The Principle of remoteness of damages is an essential aspect of tort law. It determines the extent to which a defendant may be held liable for losses or harm caused to the plaintiff. The Principle seeks to limit the scope of the defendant's liability to losses that are reasonably foreseeable and are directly caused by the defendant's actions. Over time, the law relating to the remoteness of damages has evolved, and several tests have been developed to determine the extent of the defendant's liability.

The Traditional test for the remoteness of damages is the "reasonable foresight" test, established in the case of Hadley v. Baxendale, (1854) 9 Exch. 341. According to this test, a defendant can only be held liable for losses that are within the reasonable contemplation of the parties at the time the contract was made or the tort was committed. The test has two limbs: the first limb covers losses that arise naturally from the breach of the contract or the tort, and the second limb covers losses that arise from special circumstances that were communicated to the defendant at the time of the contract or the tort.

The "reasonable foresight" test was criticized for being too restrictive and not taking into account the practical realities of modern life. As a result, courts have developed other tests to determine the extent of the defendant's liability. One such test is the "direct consequences" test, which focuses on whether the loss suffered by the plaintiff is a direct consequence of the defendant's actions. This test was established in Re Polemis and Furness, Withy & Co. Ltd. (1921) 3 KB 560, where the Court held that the defendant was liable for the damage caused to the plaintiff's ship, even though the damage was not foreseeable.

Another test that has been developed is the "reasonable contemplation" test, which is a modification of the "reasonable foresight" test. This test was established in The Heron II, (1969) 1 AC 350, where the House of Lords held that a defendant could be held liable for losses that were reasonably contemplated by the parties, even if they were not foreseeable.

In my opinion, the "direct consequences" test is the most appropriate for deciding the questions of the remoteness of damages. This test takes into account the practical realities of modern life and is more flexible than the "reasonable foresight" test. It allows the courts to consider the direct consequences of the defendant's actions, rather than focusing solely on whether the loss was foreseeable at the time of the contract or the tort.

Moreover, the "reasonable contemplation" test is a modification of the "reasonable foresight" test, and it may still be too restrictive in some cases. It is not always possible to foresee all the possible consequences of one's actions, and it is not fair to hold a defendant liable only for losses that were reasonably contemplated by the parties.

In conclusion, while the traditional "reasonable foresight" test remains a relevant consideration in determining the extent of the defendant's liability for damages, the more flexible "direct consequences" test is the preferable approach. It is fairer, more practical, and takes into account the direct consequences of the defendant's actions.