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Excluding the Recovery of

Author: Akshai FOFARIA

Type: Article

ref: 52006597-615

N0:5 of 2006

Pages: 597-615

Both English and French laws limit recovery of unusual losses, resulting from a breach of contract. English law allows the claimant to recover all losses flowing naturally from a breach of contract (Rule 1), plus the full extent of ordinarily unforeseeable losses which the parties reasonably contemplated would result from the breach (Rule 2). French law, though espousing similar principles, limits the intensity of recovery, to the extent foreseeable. The breadth of recovery in English law has encouraged the inclusion of clauses excluding consequential or indirect losses, which the courts narrowly interpret to exclude only those within Rule 2, and not the true sense of consequential loss which is loss occasioned by the breach, as opposed to simply the value of the party's performance. Interestingly, French law adaptations of anglo saxon forms, increasingly include such exclusions. They may operate – in the absence of wilful misfeasance (dol) – to exclude the full extent to consequential and indirect losses. Added to the existing legal limitation on the intensity of recovery, French law may be a formidable choice for parties seeking to limit their liability.