First Principles of Business Law

Question 6

X, the owner of a dry-cleaning business, tells B that he needs to upgrade his cleaning equipment because C has offered to buy his business if an end-of-month review is positive.  X orders a new dry-cleaning machine from B, who undertakes to deliver and install it.  When installed the machine functions badly and it takes B an extra six working days to find and fix the faults.  During this time X's normal business operations are disrupted, causing many customer complaints.  When C reviews X's business and discovers these problems, he decides not to proceed with the purchase of X's business.  X sues B for breach of contract (a breach which B admits), claiming damages to compensate for C’s decision not to buy his business.  Which is the leading case in which it was laid down that damages for losses of this type can be claimed in such circumstances?

(a)   Baltic Shipping Co v Dillon (1933) 176 CLR 344

(b)   Dougan  v Ley & another (1946) 71 CLR 142

(c)    Hadley v Baxendale (1854) 9 Exch 341; 1566 ER 145

(d)    Holland & another v Wiltshire (1954) 90 CLR 409

(e)    Koufos v C Czarnikow Ltd [1969] 1 AC 350 (HL)