What is the test for damages that extend beyond the normal, foreseeable consequences of a breach?

Ontario, Canada


The following excerpt is from 1802248 Ontario Ltd. v. 2487048 Ontario Limited, 2017 ONSC 7041 (CanLII):

According to the first (objective) prong of the rule in Hadley v. Baxendale, damages that extend beyond the normal, foreseeable consequences of a breach are generally considered too remote to be recoverable.

There may, however, be special circumstances present at the time the contract was formed that justify more extensive damages. This is where the second (subjective) prong of the test in Hadley v. Baxendale applies. Where the likelihood of otherwise unforeseeable damages is actually known to or within the contemplation of the parties when they entered the contract, they may be recoverable in the result of a breach. Piercing the Corporate Veil

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