A laundry company bought a boiler that was delivered five months late. The seller knew the laundry needed it urgently but did not know of an especially lucrative government dyeing contract. Following Victoria Laundry v Newman Industries, which losses could the laundry recover?

Correct answer: C) The normal profits lost through the delay, but not the exceptional profits from the government contracts

Explanation

The seller knew the boiler was needed for immediate use, so ordinary lost profits were within reasonable contemplation and recoverable. The highly lucrative government contracts were not known to the seller, so the extra profits were too remote under the second limb of Hadley v Baxendale. Lost profits are recoverable in principle if not too remote.