What determines whether losses are recoverable due to a breach of contract?

The recoverability of losses due to a breach of contract hinges significantly on whether those losses were reasonably foreseeable at the time the contract was formed. This is rooted in the principle established in common law, which asserts that only losses that the parties could have anticipated at the time of contract formation are recoverable. This requirement promotes fairness in contract law by ensuring that a party cannot claim damages for losses that were not in the contemplation of both parties when they entered the agreement.

When a breach occurs, the non-breaching party can only seek compensation for losses that were inherently linked to the breach and could have been reasonably anticipated by both parties. For example, if one party fails to deliver goods on time, if the other party could foresee that this delay would cause significant additional losses based on previously discussed or known factors, those losses may be recoverable.

The severity of the breach or whether it was intentional may allow for certain types of repercussions or remedies but does not exclusively define the recoverability of losses in terms of foreseeability. The solvency of the party in breach, while it might have practical implications for recovery, does not affect the fundamental legal principle regarding the foreseeability of losses.