Contract damages are limited to foreseeable loss at formation; undisclosed resale loss from export was too remote to recover.

Damages for breach of contract were confined to loss that naturally arose in the usual course of things or was within the parties' contemplation at the time of contracting under Section 73 of the Indian Contract Act. Where the buyer did not disclose that the scrap iron was intended for export, later notice of that purpose did not enlarge the seller's liability. The claimed loss from a separate onward resale arrangement was treated as remote and indirect, and Illustration (k) to Section 73 was applied to exclude recovery of that export-related loss.

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Issues: Whether the appellant could recover as damages the loss suffered on his onward sale to a third party, when the respondent had not been informed at the time of contracting that the scrap iron was being purchased for export, and whether such loss was too remote under Section 73 of the Indian Contract Act, 1872.

Analysis: The controlled price regime under the Scrap Control Order was held applicable, on the facts found, to the transaction in question. The decisive question was not whether the appellant had suffered some loss in his commercial dealings, but whether that loss was the kind of loss which naturally arose in the usual course of things from the breach, or which the parties knew, when they made the contract, to be likely to result from the breach. The respondent had no knowledge, when the contract was made, that the appellant was buying the scrap iron for export. The later communication of that purpose was belated and could not enlarge the respondent's liability. The loss claimed by the appellant flowed from his separate resale arrangement with the Export Corporation and was therefore a remote and indirect consequence of the breach. Illustration (k) to Section 73 was treated as directly governing the point.

Conclusion: The appellant was not entitled to recover the claimed export-related loss, because it was too remote and not within the contemplation of the parties at the time of contracting.

Final Conclusion: The appeal failed, and the decree in favour of the respondent stood affirmed on the ground that only loss naturally arising from the breach, or within the parties' contemplation, is compensable under Section 73.

Ratio Decidendi: Damages for breach of contract are recoverable only for loss that naturally arises in the usual course of things or that was within the parties' contemplation when the contract was made; a subsequent resale loss to a third party is not recoverable unless the promisor knew of that special purpose at the time of contracting.

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