| The Heron II | |
|---|---|
| Court | House of Lords |
| Date decided | 17 October 1967 |
| Citation(s) | [1969] 1 AC 350, [1967] 3 WLR 1491, [1967] 3 All ER 686, [1976] 2 Lloyd’s Rep 555 |
| Case opinions | |
| Lord Reid, Lord Morris, Lord Hodson, Lord Pearce and Lord Upjohn | |
| Keywords | |
| Remoteness | |
C Czarnikow Ltd v Koufos or The Heron II [1967] UKHL 4 is an English contract law case, concerning remoteness of damage. The House of Lords held that the "remoteness" test, as a limit to liability, is in contract more generous to defendants than it is in tort.
Contents |
Koufos chartered a ship (the Heron II) from Czarnikow to bring 3,000 tons of sugar to Basra. It was nine days late. The sugar price had dropped from £32 10s to £31 2s 9d. Koufos claimed the difference in the loss of profit. Czarkinow knew there was a sugar market, but not that Koufos intended to sell it straight away.
House of Lords held that the loss was not too remote. They said the contractual test is narrower than the remoteness test in tort. A higher degree of probability is needed for the loss to be in the contemplation of the parties. Lord Reid disapproved of Asquith LJ’s judgment in Victoria Laundry v Newman in that the term "foreseeability" was employed. He emphasised that he would ‘use the words ‘not unlikely’ as denoting a degree of probability considerably less than an even chance but nevertheless not very unusual and easily foreseeable. He emphasised that the tests in tort and contract were very different, on the basis that where there is a contract the parties will have had the opportunity to apportion their liabilities already. Therefore, the test for remoteness should be more generous than in tort, where consequential losses must be very remote to preclude compensation.
Lord Morris, Lord Hodson, Lord Pearce and Lord Upjohn were generally approving of Asquith LJ’s language.