This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If the party in default is not advised of a special course of circumstances, he is not liable for the damages which follow breach by reason of such special course.1 If greater damages than would be indicated by the rules for estimating ordinary damages are in fact sustained, such additional damages cannot be recovered "unless the special circumstances which made it reasonable to expect that the greater damages would naturally ensue were, at the time when the contract was made within the knowledge of both parties."2 Thus if there is a delay in furnishing machinery and the vendor does not know the vendee's business, or the interruption of such business caused by such delay, he is not liable for damages by reason of such interruption.3 So no recovery can be had on breach of a contract of sale for loss of profits on a resale if the original vendor did not know of vendee's intention to resell.4 The notice to the party whom it is sought to hold must be direct and unequivocal. In a leading case,5 it was held that knowledge that the factory of a shipper was not in operation and that such shipper had forwarded a piece of broken machinery was not sufficient to notify the carrier that the suspension of such factory was due to the carrier's failure to transport such broken machinery; though such suspension was in fact due to such delay, as the broken machinery was to be used as a model in making a duplicate part. So if a lessor does not know that lessee is unable to obtain another house and that in consequence thereof he will be obliged to give up his employment, he is not liable, on breach of a contract to lease a dwelling house, for damages arising out of such loss of employment.6 Such notice, however, may be implied from the entire transaction and need not be given by express words. Thus if a carrier knows that goods are intended for market, and that their arrival on time is important to the vendor, he may be held liable for the difference between the market price of such goods if delivered at the time agreed upon and their market price when delivered.7
6 Kramer v. Messner, 101 la. 88; 69 N. W. 1142.
7 See Sec. 1578.
1 Swift River Co. v. R. R., 169 Mass. 326; 61 Am. St. Rep. 288; 47 N. E. 1015; Harvey v. R. R.. 124 Mass. 421; 26 Am. Rep. 673; Scott v. S. S. Co., 106 Mass. 468; Batchel-der v. Sturgis, 3 Cush. (Mass.) 201.
2 Lonergan v. Waldo. 179 Mass. 135, 139; 88 Am. St. Rep. 3G5; 60 N. E. 479.
3 Creamery Package Mfg. Co. v Creamery Co., 120 la. 584; 95 N. W. 188; Puget Sound, etc., Works v. Clemmons, 32 Wash. 36; 72 Pac. 465.
4 Lynch v. Wright, 94 Fed. 703; Denhard v. Hirst, 111 Ky. 546; 64 S. W. 393; Pennypacker v. Jones, 106 Pa. St. 237.
5 Hadley v. Baxendale, 9 Exch. 341.