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The rule in Hadley v. Baxendale establishes that loss of profits (special loss) is recoverable only if:
AThe special circumstances were communicated to the other party when the contract was made
BThe contract was in writing
CThe breach was deliberate
DThe claimant suffered no other loss
Answer & Solution
Correct answer: A. The special circumstances were communicated to the other party when the contract was made
In Hadley v. Baxendale the mill's lost profits were not recoverable because the special circumstances were not communicated; special damages need prior notice of such circumstances.
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