Whose Loss is it Anyway? Transferred Loss in the Court of Appeal
Author | |
DOI | 10.3366/elr.2019.0576 |
Published date | 01 September 2019 |
Date | 01 September 2019 |
Pages | 401-406 |
A damages “black hole” arises where there is a contract between A and B, B breaches the contract, and the resultant loss wholly or partly transfers to C. The transferred loss doctrine resolves these black holes by allowing A to claim against B in respect of C's loss.
In 2015, the USA suffered an avian flu epidemic. Rembrandt Enterprises Inc. (“Rembrandt”) was forced to destroy over half of its birds. In order to honour its contractual commitments, it engaged BV Nederlandse Industrie van Eiprodukten (“NIVE”) to supply various dry egg products over a two-year period. Following re-negotiation of the price of the products, NIVE commenced shipments from the Netherlands on 6 September 2015. Later that month, NIVE advised that a portion of egg white powder would be supplied by Henningsen van den Burg (“Henningsen”), a fellow member of the Interovo company group.
Shortly thereafter, Rembrandt suspended performance of the contract due to NIVE's alleged non-compliance with US regulatory standards. NIVE sued to recover the resulting loss of profit suffered by it and Henningsen. The transferred loss claim in respect of Henningsen's loss was rejected because NIVE and Rembrandt had not intended to benefit Henningsen when the contract was concluded.
In the course of renegotiating the price of the products, NIVE indicated that a price increase was required due to unanticipated regulatory costs. Rembrandt sued NIVE for breach of warranty, alleging that these statements amounted to fraudulent misrepresentation. Lord Justice Longmore provided detailed comment on whether inducement is a requirement of fraudulent misrepresentation.
Lord Justice Coulson ascertained, based on the “clear guidance” in
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