Loss of Profit in UK Law

Mr. Stuart-Smith says that it is any detriment, liability or loss capable of assessment in money terms and it includes liabilities which may arise on a contingency, particularly a contingency over which the plaintiff has no control; things like loss of earning capacity, loss of a chance or bargain, loss of profit, losses incurred from onerous provisions or covenants in leases. They are all illustrations of a kind of loss which is meant by "actual" damage.

In actions of negligence, when the plaintiff has suffered no damage to his person or property, but has only sustained economic loss the law does not usually permit him to recover that loss. He gave this illustration: When a mine is flooded by negligence, thousands of men may be thrown out of work. So here I would ask: When an electric cable is damaged, many factories may be stopped from working. It is not sensible to saddle losses on this scale on to one sole contractor.

The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation.

But the Appellants' actual loss in so far as it was due to their impecuniosity arose from that impecuniosity as a separate and concurrent cause, extraneous to and distinct in character from the tort; the impecuniosity was not traceable to the Respondents' acts, and in my opinion was outside the legal purview of the consequences of these acts.

The true rule seems to be that the measure of damages in such cases is the value of the ship to her owner as a going concern at the time and place of the loss. The rule, however, obviously requires some care in its application; the figure of damage is to represent the capitalised value of the vessel as a profit earning machine not in the abstract but in view of the actual circumstances.

But, when this mill was destroyed, the Plasticine Company had no choice. They were bound to replace it as soon as they could, not only to keep their business going, but also to mitigate the loss of profit (for which they would be able to charge the defendants). True it is they got new for old, but I do not think the wrongdoer can diminish the claim on that account. If they bad added extra accommodation or made extra improvements, they would have to give credit.

This question has often arisen with regard to clauses excluding liability, in whole or in part, of the party in breach. Then the whole contract has ceased to exist including the exclusion clause, and I do not see how that clause can then be used to exclude an action for loss which will be suffered by the innocent party after it has ceased to exist, such as loss of the profit which would have accrued if the contract had run its full term.