Stuart Pty Ltd v Condor Commercial Insulation Pty Ltd [2006] NSWCA 334

Facts: There was a contract between Stuart, the plaintiff (P), and the Commonwealth for work. Stuart contracted to Condor, the defendant (D). Condor was negligent and a fire broke out, so the Commonwealth cancelled the main contract with P. P sued D for loss of contract with Commonwealth.

Held: The loss was not within reasonable contemplation of the parties at contract formation because it is not possible to infer that D assumed responsibility for this risk. D may rely on the fact that the contract price (price for performance) is out of proportion with the risk implied by the knowledge obtained (the loss that might flow from breach of contract).