D was contracted to give P a container for storing pig-feed, but they failed to put ventilation in it. As a result the food stored in it turned mouldy and when given to the pigs it caused them E-Coli. Many pigs died and P sued D for lost profits. CA allowed P’s claim.
Denning MR (minority approach to same conclusion): There is a distinction between “loss of profit” cases and “physical damage” (whether to person or property) cases. In loss of profit cases the test is whether D ought reasonably to have contemplated, at the time of the contract, consequences which were a “real possibility” or a “serious danger”. In physical damage cases D is liable for consequences which, at the time of the contract, he ought reasonably to have foreseen, even if the possibility of their occurring was only slight. He draws this distinction because this is used in tort and he says that the test for remoteness should be the same (otherwise the amount recoverable in a situation where there is a contract with no exemption clauses, where damage is inflicted, would differ depending on the legal classification: unfair). This was a case of physical damage and the foresight requirement was satisfied.
Scarman LJ (majority): There is no authority for the distinction between economic harm and physical harm. To be recoverable, harm done to P may reasonably be supposed to have been in contemplation as a serious possibility (Hadley). There is no real difference between “reasonably foresee” and “reasonably contemplate” tests in contract and tort. The difference is in the probability (which is what Denning objects to and hence makes his distinction so as to reconcile contract and tort). In asking what it was reasonable for D to have contemplated we are imputing to him foresight which may be contrary to fact. Nevertheless we do it to maintain the “reasonableness” requirement.