Transfield Shipping Inc v Mercator Shipping Inc (“The Achilleas”) [2008] UKHL 48

[daniel...@gmail.com]

Remoteness of damage

Ship-owners let a ship on a time charter, to end no later than 2 May
2004. In April2004 market rates on the charter had more than doubled.
The owners therefore arranged a new charter with a third party,
promising delivery of the ship no later than 8th May. The ship was not
returned by the charterers until 11 May. By this time market rates had
again fallen, and the third party took the ship at a rate reduced by
$8,000 per day. The owners claimed damages from the charterers at the
rate of $8,000 per day for the whole six month contract with the third
party. The defendant charterers argued that this damage was too remote
and that they were only responsible for damages during the period of
delay (9 days).

The House of Lords held that there is more to remoteness than just a
factual issue of probability or likelihood, and that it is also a
question of what the parties had in mind. As the charterers had no
knowledge of the third party contract, they could not have had the
sort of loss sued for in mind. They were only liable for the damages
during the 9 days delay.


PLEASE WHAT ARE YOUR COMMENTS ON THIS CASE?

DANIEL.......................

[frank smart]

By Raymond Clackson Attrah;
The area of Law is contract with specific reference to recovery of
damages for breach of contract.
Issue; whether or not the ship owner is entitle to $8000 per day for
six month or $8000 per day for 9 days.
Fact; above
Analyses; A contract is an agreement between two or more people to
transact on the offeror's term, upon when accepted will become binding
on both parties for want of breach for damages.
The general objective for of the court in awarding damages is to place
the injured party, as far as money can do to it , in the position he
would have been in if the breach had not occurred, that is if the
contract had been performed.
Please Read the case of Royal Dutch Airline (KLM) and Another v Farmex ltd.
The trial judge and the court of appeal held for the plaintiffs to
recover damages. On an appeal to the Supreme Court, it was held that ,
with regard to the measure of damages for breach of contract, the
principle adopted by the courts was restitution in intergrum. i.e if
the plaintiff has suffered damage-not too remote-he must , as far as
money could do so, be restored to the position he would have been in
had that particular damage not occurred.
In fact, it is very clear that the plaintiff in ship-owner would have
loss 9 days hire and therefore need to be restored to the position he
should have been if the the ships were to be returned on the 2nd May
2004.
Also, read the case of Hadley v Baxendale which is about the
remoteness and coverage of damages.
In my view I shall concord to the decision of the learned judges as
equitably decided.