## Facts

- Jackson and Davies, trading as “Samson Lancastrian,” imported dog chews from Thailand and sold them to Economy Bag, their principal customer.
- Royal Bank of Scotland plc banked both Samson and Economy Bag and facilitated transactions using transferable letters of credit that concealed Samson’s markup from Economy Bag.
- The Bank mistakenly disclosed documentation to Economy Bag revealing Samson’s invoices and profit margin (about a 19% markup).
- Economy Bag reacted negatively to the disclosure, ended its relationship with Samson, and began buying directly from the Thai supplier.
- Samson lost its main source of income and ceased trading.
- Samson sued the Bank for breach of contract, alleging breach of an implied contractual duty of confidence, and sought damages for loss of the opportunity to earn future profits from continued trading with Economy Bag.

## Issues

1. Whether loss of future profits from the termination of Samson’s relationship with Economy Bag was too remote to be recoverable under the contract remoteness test.
2. If recoverable in principle, whether the evidence supported damages based on a multi-year expected continuation of the relationship, or whether loss should be limited to a shorter period.

## Decision

- The House of Lords allowed Samson’s appeal and dismissed the Bank’s cross-appeal.
- The Lords held that loss of future profits from lost repeat business was not too remote and was within the reasonable contemplation of the parties given the nature of the confidentiality obligation.
- The Lords restored the trial judge’s damages assessment based on a likely four-year continuation of the trading relationship (with reducing profits), rejecting the Court of Appeal’s one-year limitation.
- The Lords held that, once recoverable loss satisfies the remoteness test, courts should not impose an arbitrary temporal cut-off; duration and amount are evidentiary and evaluative questions.

## Legal Principles

- A bank may owe an implied contractual duty of confidence in handling customer-related documentation; breach can ground contractual damages where causation is proved.
- Contract damages are recoverable for losses that were within the reasonable contemplation of the parties at contract formation under the remoteness rule associated with *Hadley v Baxendale*.
- Remoteness analysis is not a rigid two-category code; it focuses on what loss can fairly and reasonably be contemplated in light of the transaction and the character of the breach.
- Loss of a chance of repeat business with a third party can be compensable in contract if the type of loss is not too remote and the probability and value of the lost opportunity are supported by evidence.
- Appellate courts should not replace a trial judge’s evidence-based, evaluative assessment of the likely duration and profitability of a commercial relationship with an arbitrary alternative period.

## Conclusion

The House of Lords held that a bank’s breach of a contractual duty of confidence can support recovery for lost future trading profits where that type of loss was reasonably contemplated, and it reinstated a trial judge’s four-year, evidence-based assessment of the lost opportunity after rejecting an appellate one-year cap as arbitrary.


Jackson v. Royal Bank of Scotland plc, [2005] UKHL 3, [2005] 1 W.L.R. 377 (H.L.)