Hadley v. Baxendale vs. Hawkins v. McGee
A side-by-side comparison of two landmark contracts cases
Hadley v. Baxendale
9 Ex. 341, 156 Eng. Rep. 145 (1854) (1854)
Holding
The court held that damages for breach of contract should be limited to those that arise naturally from the breach itself (general damages) or those that were reasonably within the contemplation of both parties at the time the contract was made as the probable result of the breach (special damages). Because the carrier did not know that the mill would remain idle during the delay, lost profits were not recoverable.
Doctrine Established
Foreseeability Limitation on Consequential Damages
Hawkins v. McGee
84 N.H. 114, 146 A. 641 (1929) (1929)
Holding
The court held that the proper measure of contract damages is the difference between the value of what was promised (a perfect hand) and the value of what was received (a hairy, disfigured hand). The plaintiff was not entitled to recover damages measured by the difference between his condition before the operation and after, as that would be a tort measure. Pain and suffering incidental to any surgery were not recoverable, but pain and suffering beyond what would have been expected even with a successful operation could be recovered.
Doctrine Established
Expectation Damages (Benefit of the Bargain)
Comparison Analysis
Hadley v. Baxendale (1854) and Hawkins v. McGee (1929) are both foundational cases on contract damages, but they address different aspects of the remedies framework. Hadley established the foreseeability limitation on consequential damages, holding that a breaching party is liable only for damages that were reasonably foreseeable at the time of contract formation -- either arising naturally from the breach or within the contemplation of both parties due to special circumstances communicated at formation. Hawkins v. McGee ('the hairy hand case') established the expectation damages measure, holding that the proper remedy for breach puts the plaintiff in the position they would have occupied had the contract been performed.
Hadley functions as a limiting principle on the scope of recoverable damages, while Hawkins defines the baseline measure. A plaintiff invoking Hawkins asks: what was I promised and what would it be worth to me? A defendant invoking Hadley responds: even if those are your losses, you can only recover the ones I could reasonably have foreseen when we made the deal. In practice, every contract damages calculation begins with the Hawkins expectation measure and then applies the Hadley foreseeability limitation to determine which categories of loss are recoverable.
Students often conflate these two doctrines, but they serve distinct analytical purposes. The expectation interest from Hawkins tells us the ideal outcome (a perfect hand, in the case's facts). The foreseeability rule from Hadley tells us whether the defendant can be held responsible for all the consequences of failing to deliver that outcome. The interplay between these doctrines means that a plaintiff may have suffered real losses (lost profits, consequential harms) that are nonetheless unrecoverable because they were not within the breaching party's contemplation at formation.
Similarities
- Both are foundational cases in the law of contract remedies, taught in every first-year Contracts course
- Both address how courts calculate money damages when a contract has been breached
- Both involve situations where the plaintiff suffered losses beyond the direct value of the promised performance
- Both establish rules that remain the governing standards for contract damages in American and English law
Differences
- Hawkins establishes the measure of damages (expectation interest: the value of the promised performance), while Hadley limits the scope of damages (only foreseeable losses are recoverable)
- Hawkins focuses on what was promised and its value, while Hadley focuses on what the breaching party knew or should have known at the time of contracting
- Hawkins involves a breach of an express guarantee (a specific surgical outcome), while Hadley involves a failure of performance (late delivery of a crankshaft) with consequential losses
- The Hawkins analysis is plaintiff-focused (what did the promisee expect?), while the Hadley analysis is defendant-focused (what could the promisor foresee?)
Why This Comparison Matters
Contract damages questions almost always require applying both Hawkins and Hadley. The typical exam pattern presents a breach with multiple categories of loss and asks students to determine which are recoverable. Start with Hawkins to identify the expectation interest, then apply Hadley to determine whether consequential damages were foreseeable. Also consider whether reliance damages (under Sullivan v. O'Connor) or restitution might be more appropriate alternative measures.
More Contracts Comparisons
Lucy v. Zehmer vs. Raffles v. Wichelhaus
Lucy v. Zehmer (1954) and Raffles v. Wichelhaus (1864) are both seminal cases on mutual assent and the role of subjective intent in contract formation, but they reach opposite conclusions about when a valid contract exists. Lucy held that a contract existed for the sale of a farm even though the seller claimed he was joking, because the objective manifestations of intent -- signing a written agreement, discussing terms over an extended period, involving the seller's wife -- indicated a serious transaction. Raffles held that no contract existed for the sale of cotton to arrive on the ship 'Peerless' because there were two ships named Peerless and each party had a different ship in mind, creating a latent ambiguity that prevented mutual assent.
Hamer v. Sidway vs. Mills v. Wyman
Hamer v. Sidway (1891) and Mills v. Wyman (1825) both involve promises made in recognition of some prior or existing relationship, but they reach different conclusions about whether the promises are supported by sufficient consideration. Hamer held that an uncle's promise to pay his nephew $5,000 if the nephew refrained from drinking, smoking, and gambling until age 21 was supported by consideration, because the nephew's forbearance from legal activities constituted a legal detriment. Mills held that a father's promise to pay a Good Samaritan who had cared for his sick adult son was not enforceable because the care had already been rendered before the promise was made -- past consideration is not consideration.
Taylor v. Caldwell vs. Krell v. Henry
Taylor v. Caldwell (1863) and Krell v. Henry (1903) are the foundational English cases establishing the doctrines of impossibility and frustration of purpose, respectively. Taylor held that when a music hall was destroyed by fire before the date of a scheduled concert, the contract was discharged because its performance had become impossible through no fault of either party. The implied condition that the hall would continue to exist failed, excusing both parties from their obligations. Krell extended this reasoning to situations where performance remains physically possible but the entire purpose of the contract has been frustrated by an unforeseen event -- specifically, the cancellation of King Edward VII's coronation procession, which eliminated the reason the defendant had rented an apartment overlooking the parade route.
Williams v. Walker-Thomas Furniture Co. vs. ProCD, Inc. v. Zeidenberg
Williams v. Walker-Thomas Furniture (1965) and ProCD v. Zeidenberg (1996) both address the enforceability of contract terms in consumer transactions where one party has significantly less bargaining power, but they reach contrasting conclusions that reflect different judicial attitudes toward standard-form contracts. Williams held that a cross-collateral clause in a furniture installment contract was potentially unconscionable because of the gross inequality of bargaining power, the buyer's lack of meaningful choice, and the unreasonably favorable terms to the seller. ProCD held that 'shrinkwrap' license terms inside a software box were enforceable even though the buyer could not review them before purchase, reasoning that such layered contracting is a reasonable commercial practice.