Under Section 73, the party in breach is liable to compensate the other for any loss or damage which
AIncludes punitive damages by default
BIncludes remote and indirect losses
CArose naturally in the usual course of things, or which the parties knew at the time of contracting to be likely to result from breach (the Hadley v Baxendale rule)
DIncludes only losses pleaded with mathematical certainty
Answer & Solution
Correct answer: C. Arose naturally in the usual course of things, or which the parties knew at the time of contracting to be likely to result from breach (the Hadley v Baxendale rule)
Section 73 codifies the two-limbed rule from Hadley v Baxendale (1854): (i) losses naturally arising and (ii) losses in the parties' reasonable contemplation. Remote/indirect losses are expressly excluded by the explanation.
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