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C. Czarnikow, Ltd. v. Koufos | 2 Lloyd’s Rep. 457 (1967)

In both tort and contract law, damages must be, to some degree, foreseeable. In C Czarnikow versus Koufos, the House of Lords, an upper house of parliament in the United Kingdom, considered whether certain damages were too remote to be foreseeable.

Koufos chartered the Heron Two, a container ship owned by C. Czarnikow, to deliver three thousand tons of sugar to Basra. But, due to delays, the voyage took nine days longer than planned. By the time the ship reached Basra, the price of sugar had dropped, thanks to the arrival of another sugar laden cargo ship. As a result, instead of receiving thirty two pounds per ton for the sugar, Koufos received thirty one pounds per ton.

Although Czarnikow was aware of a sugar market in Basra, it didn’t know that Koufos intended to sell the sugar immediately upon the ship’s arrival there.

Koufos filed suit against Czarnikow for breach of contract and sought to recover the difference between the market price it would’ve received had the ship been on time and the actual price received. The trial court held in favor of Czarnikow, finding that Koufos’s loss due to the fall in market price was too remote to be recoverable. The court of appeal reversed. Czarnikow appealed to the House of Lords.

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