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Re The Heron II

[1969] 1 AC 350

Case summary last updated at 04/01/2020 13:08 by the Oxbridge Notes in-house law team.

Judgement for the case Re The Heron II

D was contracted to bring P’s sugar to Basrah where D knew there was a sugar market but did not know that P intended to sell it. He brought the sugar later than the contract stipulated, by which time the price of sugar had fallen and P sued him for lost profits. HL allowed P’s claim, saying that the lost profits resulting from the late delivery was NOT too remote. 

Lord Reid: he says that Lord Asquith’s use of the “reasonably foreseeable” is wrong, since a result, however unlikely, might be reasonably foreseeable. What is really required is that D did foresee the harm and that, had the defendant thought about it, he would have seen the likelihood of it occurring as having a “very substantial degree of probability”. He also says that the phrases such as “on the cards” or “serious possibility” etc are unhelpful as they set the standard of risk of the harm occurring too low. 

Lord Morris: as a reasonable businessman D must have known that late delivery of the sugar would cause P some loss. He says that Lord Asquith’s phrase that a reasonable preson would have foreseen that the breach was “liable to result” in harm was bad as it is vague and doesn’t set a standard of likelihood. 

Lord Hodson: the phrase “liable to result” is good and no more vague than the use of the word “likelihood”. 

Lord Pearce: “liable to result” = “serious possibility” or a “real danger”. These phrases lower the standard of probability that the breach has to cause the loss and this is good (unlike the requirement of Hadley that the breach had to be “probable” i.e. more likely than not). 

Lord Upjohn: “serious possibility” or “real danger” are good tests, but reasonable foreseeability is not the test in contract. 

Professor Burrows: the best explanation of the judgments is that whereas a slght risk of harm occurring is all that’s needed in tort, a serious possibility of loss occurring is needed in contract. 

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