When a black hole stays black: the limits of the transferred loss rule

By Ian Yule2019-06-13T10:38:00

The transferred loss rule can fill the black hole of damages claims where parties have no direct contract, but it has its limits

Last month the newspapers carried remarkable images from space of a black hole. In legal circles, sadly, the term “black hole” has a more prosaic meaning. It is sometimes used in a scenario where, for example, a contractor has carried out defective work but then someone other than the employer has paid for the repair work. The original contractor may then argue that the company that had the benefit of the contract has not suffered any loss, whereas the company that has suffered the loss did not have any contract (with the original contractor, that is). Both companies may then find that any claim they might have for damages has disappeared, so it is said, into a black hole.

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