ExpertACCA · Question 07 · The law of obligations
Section A
CloudNet provides server hosting for a major e-commerce retailer. Due to CloudNet's breach of contract, the servers go down for 24 hours. The retailer loses £50,000 in standard daily sales, and also loses a highly lucrative, one-off £500,000 secret government contract that required 100% uptime. CloudNet knew nothing of the government contract. Applying the rule in Hadley v Baxendale, what damages can the retailer recover?
Section A
CloudNet provides server hosting for a major e-commerce retailer. Due to CloudNet's breach of contract, the servers go down for 24 hours. The retailer loses £50,000 in standard daily sales, and also loses a highly lucrative, one-off £500,000 secret government contract that required 100% uptime. CloudNet knew nothing of the government contract. Applying the rule in Hadley v Baxendale, what damages can the retailer recover?
Answer options:
Both the £50,000 standard sales and the £500,000 government contract.
Only the £50,000 in standard daily sales.
Only the £500,000 government contract, as it represents the primary financial loss.
No damages, as server outages are an accepted risk in IT contracts.
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