ABBOTT, Justice,

delivered the opinion of the Court,

in which PHILLIPS, Chief Justice, GONZALEZ, HECHT, ENOCH, OWEN and HANKINSON, Justices, join.

We overrule Respondent’s motion for rehearing and motion for voluntary remittitur. We withdraw our opinion of July 9,1997, and substitute the following in its place.

In Southwestern Bell Telephone Co. v. DeLanney, 809 S.W.2d 493, 494-95 (Tex.1991), this Court held that a cause of action for negligence could not be based on an allegation that a party had negligently failed to perform a contract because such a claim sounded in contract, not in tort. Today we are requested to apply a similar analysis to preclude a recovery in tort for a fraudulent inducement of contract claim. We decline to do so, holding instead that our DeLcmney analysis is not applicable to such a claim. However, because there is no probative evidence to support the entire amount of damages awarded by the trial court, we reverse the judgment of the court of appeals and remand the case to the trial court for a new trial.

I

In 1989, Formosa Plastics Corporation began a large construction “expansion project” at its facility in Point Comfort, Texas. Presi-dio Engineers and Contractors, Inc. received an “Invitation to Bid” from Formosa on that part of the project requiring the construction of 300 concrete foundations. The invitation was accompanied by a bid package containing technical drawings, specifications, general information, and a sample contract. The bid package also contained certain representations about the foundation job. These representations included that (1) Presidio would arrange and be responsible for the scheduling, ordering, and delivery of all materials, including those paid for by Formosa; (2) work was to progress continually from commencement to completion; and (3) the job was scheduled to commence on July 16,1990, and be completed 90 days later, on October 15,1990.

Presidio’s president, Bob Burnette, testified that he relied on these representations in preparing Presidio’s bid. Because the bid package provided that the contractor would be responsible for all weather and other unknown delays, he added another 30 days to his estimate of the job’s scheduled completion date. He submitted a bid on behalf of Presidio in the amount of $600,000. Because Presidio submitted the lowest bid, Formosa awarded Presidio the contract.

The job was not completed in 120 days. Rather, the job took over eight months to complete, more than twice Burnette’s estimate and almost three times the scheduled time provided in the bid package. The delays caused Presidio to incur substantial additional costs that were not anticipated when Presidio submitted its bid.

Presidio asserted a claim under paragraph 17 of the parties’ contract, which provided that Formosa was liable for all delay damages within the “control of the owner.” Formosa countered that, while it may have been liable for some of the delays, it was not responsible for all of the delays and losses asserted by Presidio. Because the parties were not able to resolve their dispute, Presidio sued Formosa for breach of contract and breach of a duty of good faith and fair dealing. Presidio also brought fraudulent inducement of contract and fraudulent performance of contract claims based on representations made by Formosa that Presidio discovered were false after commencing performance of the contract. Formosa counterclaimed for breach of contract, urging that Presidio had not properly completed some of its work.

*44Presidio presented evidence to the jury that Formosa had an intentional, premeditated scheme to defraud the contractors working on its expansion project. Under this scheme, Formosa enticed contractors to make low bids by making misrepresentations in the bid package regarding scheduling, delivery of materials, and responsibility for delay damages. Jack Lin, the director of Formosa’s civil department, admitted that Formosa acted deceptively by representing in the bid package that the contractors would have the ability to schedule the delivery of concrete when in truth Formosa had secretly decided to set up its own delivery schedule in order to save money. Formosa also scheduled multiple contractors, doing mutually exclusive work, to be in the same area at the same time. For instance, Formosa scheduled another contractor to install underground pipe in Presidio’s work area at the same time that Presidio was supposed to be pouring foundations. Thomas Pena, Formosa’s inspector, admitted that Formosa knew that contractors would be working right on top of each other, but this information was not passed on to the contractors. Of course, once the contractors were on the job, they would realize that, due to such unexpected delays caused by Formosa, their bids were inadequate. But when the contractors requested delay damages under the contract, Formosa would rely on its superior economic position and offer the contractors far less than the full and fair value of the delay damages. In fact, Ron Robiehaux, head of Formosa’s contract administration division, testified that Formosa, in an effort to lower costs, would utilize its economic superiority to string contractors along and force them to settle. Robiehaux added that “if [a contractor] continued to complain then [Formosa] would take the contract from him and make sure he loses his money.” Under this scheme, Formosa allegedly stood to save millions of dollars on its $1.5 billion expansion project.

The jury found that Formosa defrauded Presidio and awarded Presidio $1.5 million. The jury also found that Formosa breached a duty of good faith and fair dealing and awarded Presidio $1.5 million as a result. Based on its findings that Formosa’s fraud and breach of a duty of good faith and fair dealing were done willfully, wantonly, intentionally, or with conscious indifference to the rights of Presidio, the jury further awarded Presidio $10 million as exemplary damages. Additionally, the jury found that Formosa breached its contract with Presidio, causing $1,267 million in damages. On the other hand, the jury also concluded that Presidio did not fully comply with the contract, causing Formosa $107,000 in damages.

The trial court suggested a remittitur reducing the tort damages to $700,000 and the contract damages to $467,000, which Presidio accepted. Based on Presidio’s election to recover tort rather than contract damages, the trial court rendered a judgment in favor of Presidio for $700,000 in actual damages, $10 million in punitive damages, prejudgment interest, attorney’s fees, and costs. ' The damages caused by Presidio’s breach of contract were offset against the judgment.

Formosa appealed the judgment to the court of appeals, which affirmed the judgment of the trial court. 941 S.W.2d 138. We granted Formosa’s application for writ of error to consider, among other things, whether Presidio has a viable fraud claim when it suffered only economic losses related to the performance and subject matter of the párties’ contract, whether there was legally sufficient evidence of fraud, and whether there was legally sufficient evidence to support the entire amount of damages awarded. We conclude that, while Presidio has a viable fraud claim, it failed to present legally sufficient evidence to support the entire amount of damages awarded. Accordingly, we reverse the judgment of the court of appeals and remand the cause for a new trial.

II

Formosa asserts that Presidio’s fraud claim cannot be maintained because “Presi-dio’s losses were purely economic losses related to performance and the subject matter of the contract.” Formosa contends that our decision in Southwestern Bell Telephone Co. v. DeLanney, 809 S.W.2d 493 (Tex.1991), compels us to examine the substance of Pre-sidio’s tort claim to determine whether the *45claim is, in reality, a re-packaged breach of contract claim. Formosa urges that, in making this determination, we should analyze the nature of the alleged injury, the source of the breached duty, and whether the loss or risk of loss is contractually contemplated by the parties. Presidio counters that a DeLanney-type analysis does not apply to fraud claims. For the reasons discussed below, we agree with Presidio.

A

Over the last fifty years, this Court has analyzed the distinction between torts and contracts from two different perspectives. At first, we merely analyzed the source of the duty in determining whether an action sounded in tort or contract. For instance, in International Printing Pressmen & Assistants’ Union v. Smith, 145 Tex. 399, 198 S.W.2d 729, 735 (1946), this Court held that “ ‘an action in contract is for the breach of a duty arising out of a contract either express or implied, while an action in tort is for a breach of duty imposed by law.’ ” Id. (quoting 1 C.J.S. Actions § 44).

Later, we overlaid an analysis of the nature of the remedy sought by the plaintiff. In Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617 (Tex.1986), we recognized that, while the contractual relationship of the parties could create duties under both contract law and tort law, the “nature of the injury most often determines which duty or duties are breached. When the injury is only the economic loss to the subject of a contract itself, the action sounds in contract alone.” Id, at 618. Because a mere breach of contract cannot support recovery of exemplary damages, and because the plaintiffs did not “prove a distinct tortious injury with actual damages,” we rendered judgment that the plaintiffs take nothing on their exemplary damages claim. Id.

We analyzed both the source of the duty and the nature of the remedy in DeLanney. DeLanney asserted that Bell was negligent in failing to publish his Yellow Pages advertisement as promised. The trial court rendered judgment for DeLanney, and the court of appeals affirmed. This Court, however, held that the claim sounded in contract, not negligence, and accordingly rendered judgment in favor of Bell. We provided the following guidelines on distinguishing contract and tort causes of action:

If the defendant’s conduct — such as negligently burning down a house — would give rise to liability independent of the fact that a contract exists between the parties, the plaintiff’s claim may also sound in tort. Conversely, if the defendant’s conduct— such as failing to publish an advertisement — would give rise to liability only because it breaches the parties’ agreement, the plaintiff’s claim ordinarily sounds only in contract. In determining whether the plaintiff may recover on a tort theory, it is also instructive to examine the nature of the plaintiff’s loss. When the only loss or damage is to the subject matter of the contract, the plaintiff’s action is ordinarily on the contract.

DeLanney, 809 S.W.2d at 494. In applying these guidelines, we first determined that Bell’s duty to publish DeLanney’s advertisement arose solely from the contract. We then concluded that DeLanney’s damages, lost profits, were only for the economic loss caused by Bell’s failure to perform the contract. Thus, while DeLanney pleaded his action as one in negligence, he clearly sought to recover the benefit of his bargain with Bell such that Bell’s failure to publish the advertisement was not a tort. Id. at 495.

Most recently, in Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 13-14 (Tex.1996), we considered the intersection of the Deceptive Trade Practices Act and contract law. Ace Sign sued Bell for omission of a yellow pages advertisement, alleging negligence, DTPA misrepresentation, and breach of contract. Bell stipulated the contract breach, and was granted summary judgment on Ace Sign’s DTPA and negligence claims. The court of appeals reversed the trial court’s judgment on the DTPA claim, but this Court then reversed the court of appeals. We noted that, under DeLanney, we were to consider “both the source of the defendant’s duly to act (whether it arose solely out of the contract or from some common-law duty) and the nature of the remedy sought by the plaintiff.” Id. at 12. We then examined the *46relationship of the DTPA and contract law, concluding that an allegation of mere breach of contract, without more, does not violate the DTPA. We held that, because the alleged representations of Bell were simply representations that it would fulfill its contractual duty to publish the advertisement, and a mere failure to later perform a promise does not constitute misrepresentation, Crawford could only recover in contract.

B

Several appellate courts have considered the application of our decisions in DeLanney and Reed to fraudulent inducement claims. Some of these courts have concluded that these decisions mandate that tort damages are not recoverable for a fraudulent inducement claim unless the plaintiff suffers an injury that is distinct, separate, and independent from the economic losses recoverable under a breach of contract claim. Grace Petroleum Corp. v. Williamson, 906 S.W.2d 66, 68-69 (Tex.App.-Tyler 1995, no writ); Parker v. Parker, 897 S.W.2d 918, 924 (Tex. App.-Fort Worth 1995, writ denied); Barbouti v. Munden, 866 S.W.2d 288, 293-94 (Tex.App.-Houston [14th Dist.] 1993, writ denied); River Consulting, Inc. v. Sullivan, 848 S.W.2d 165, 170 (Tex.App.-Houston [1st Dist.] 1992, writ denied); C & C Partners v. Sun Exploration & Prod. Co., 783 S.W.2d 707, 719-20 (Tex.App.-Dallas 1989, writ denied); Hebisen v. Nassau Dev. Co., 754 S.W.2d 345, 348 (Tex.App.-Houston [14th Dist.] 1988, writ denied); Allen v. Allen, 751 S.W.2d 567, 574-75 (Tex.App.—Houston [14th Dist.] 1988, writ denied). The United States Court of Appeals for the Fifth Circuit has also adopted this view of Texas law. See, e.g., Heller Fin., Inc. v. Grammco Computer Sales, Inc., 71 F.3d 518, 527-28 (5th Cir.1996); but see Olney Sav. & Loan Ass’n v. Trinity Banc Sav. Ass’n, 885 F.2d 266, 276 (5th Cir.1989). Other Texas appellate decisions, however, have rejected the application of DeLanney and Reed to preclude the recovery of tort damages for fraudulent inducement claims. American Nat’l Ins. Co. v. International Bus. Mach. Corp., 933 S.W.2d 685, 687 (Tex.App.—San Antonio 1996, writ denied); Beneficial Personnel Servs. v. Rey, 927 S.W.2d 157, 167-68 (Tex.App.—El Paso 1996), vacated pursuant to settlement without reference to the merits, 938 S.W.2d 717 (Tex.1997); Peco Constr. Co. v. Guajardo, 919 S.W.2d 736, 738-39 (Tex.App.—San Antonio 1996, writ denied); Prudential Ins. Co. v. Jefferson Assocs., Ltd., 839 S.W.2d 866, 875-76 (Tex.App.—Austin 1992), rev’d on other grounds, 896 S.W.2d 156 (Tex.1995); Schindler v. Austwell Farmers Coop., 829 S.W.2d 283, 286, 289-91 (Tex.App.—Corpus Christi), affd as modified on other grounds, 841 S.W.2d 853 (Tex.1992); Matthews v. AmWest Sav. Ass’n, 825 S.W.2d 552, 554 (Tex.App.-Beaumont 1992, writ denied).

We too reject the application of DeLanney to preclude tort damages in fraud cases. Texas law has long imposed a duty to abstain from inducing another to enter into a contract through the use of fraudulent misrepresentations. As a rule, a party is not bound by a contract procured by fraud. E.g., Prudential Ins. Co. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 162 (Tex.1995); Weitzel v. Barnes, 691 S.W.2d 598, 601 (Tex.1985); Town North Nat’l Bank v. Broaddus, 569 S.W.2d 489, 491 (Tex.1978); Dallas Farm Mach. Co. v. Reaves, 158 Tex. 1, 307 S.W.2d 233, 239 (1957). Moreover, it is well established that the legal duty not to fraudulently procure a contract is separate and independent from the duties established by the contract itself. See Dallas Farm Mach., 307 S.W.2d at 239 (“‘[T]helaw long ago abandoned the position that a contract must be held sacred regardless of the fraud of one of the parties in procuring it.’ ”) (quoting Bates v. Southgate, 308 Mass. 170, 31 N.E.2d 551, 558 (1941)).

This Court has also repeatedly recognized that a fraud claim can be based on a promise made with no intention of performing, irrespective of whether the promise is later subsumed within a contract. For example, in Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp., 823 S.W.2d 591, 597 (Tex.1992), we noted: “As a general rule, the failure to perform the terms of a contract is a breach of contract, not a tort. However, when one party enters into a contract with no intention of performing, that misrepresentation may give rise to an -action in fraud.” Similarly, in Spoljaric v. Percival Tours, *47Inc., 708 S.W.2d 432, 434 (Tex.1986), we held that a fraud claim could be maintained, under the particular facts of that case, for the breach of an oral agreement to pay a bonus because a “promise to do an act in the future is actionable fraud when made with the intention, design and purpose of deceiving, and with no intention of performing the act.” Accord T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 222 (Tex.1992); Stanfield v. O’Boyle, 462 S.W.2d 270, 272 (Tex.1971).

Our prior decisions also clearly establish that tort damages are not precluded simply because a fraudulent representation causes only an economic loss. Almost 150 years ago, this Court held in Graham v. Roder, 5 Tex. 141, 149 (1849), that tort damages were recoverable based on the plaintiff’s claim that he was fraudulently induced to exchange a promissory note for a tract of land. Although the damages sustained by the plaintiff were purely economic, we held that tort damages, including exemplary damages, were recoverable. Since Graham, this Court has continued to recognize the propriety of fraud claims sounding in tort despite the fact that the aggrieved party’s losses were only economic losses. See, e.g., Spoljaric, 708 S.W.2d at 436; International Bankers Life Ins. Co. v. Holloway, 368 S.W.2d 567, 583 (Tex.1963); cf. Tex.Civ.PRAc. & Rem.Code § 41.003(a)(1) (expressly authorizing exemplary damages for fraud without making any exception based on the type of loss sustained by the injured party). Moreover, we have held in a similar context that tort damages were not precluded for a tortious interference with contract claim, notwithstanding the fact that the damages for the tort claim compensated for the same economic losses that were recoverable under a breach of contract claim. American Nat’l Petroleum Co. v. Transcontinental Gas Pipe Line Corp., 798 S.W.2d 274, 278 (Tex.1990).

Accordingly, tort damages are recoverable for a fraudulent inducement claim irrespective of whether the fraudulent representations are later subsumed in a contract or whether the plaintiff only suffers an economic loss related to the subject matter of the contract. Allowing the recovery of fraud damages sounding in tort only when a plaintiff suffers an injury that is distinct from the economic losses recoverable under a breach of contract claim is inconsistent with this well-established law, and also ignores the fact that an independent legal duty, separate from the existence of the contract itself, precludes the use of fraud to induce a binding agreement. We therefore disapprove of the following appellate court opinions to the extent that they hold that tort damages cannot be recovered for a fraudulent inducement claim absent an injury that is distinct from any permissible contractual damages: Grace Petroleum Corp. v. Williamson, 906 S.W.2d 66, 68-69 (Tex.App.-Tyler 1995, no writ); Parker v. Parker, 897 S.W.2d 918, 924 (Tex.App.—Fort Worth 1995, writ denied); Barbouti v. Munden, 866 S.W.2d 288, 293-94 (Tex.App.—Houston [14th Dist.] 1993, writ denied); River Consulting, Inc. v. Sullivan, 848 S.W.2d 165,170 (Tex.App.-Houston [1st Dist.] 1992, writ denied); C & C Partners v. Sun Exploration & Prod. Co., 783 S.W.2d 707, 719-20 (Tex.App.—Dallas 1989, writ denied); Hebisen v. Nassau Dev. Co., 754 S.W.2d 345, 348 (Tex.App.-Houston [14th Dist.] 1988, writ denied); Allen v. Allen, 751 S.W.2d 567, 574-75 (Tex.App.-Houston [14th Dist.] 1988, writ denied). We instead conclude that, if a plaintiff presents legally sufficient evidence on each of the elements of a fraudulent inducement claim, any damages suffered as a result of the fraud sound in tort.

We thus conclude that Presidio has a viable fraud claim that it can assert against Formosa. However, this conclusion does not end our inquiry. We must also determine whether legally sufficient evidence supports the jury’s fraud and damage findings.

Ill

A fraud cause of action requires “a material misrepresentation, which was false, and which was either known to be false when made or was asserted without knowledge of its truth, which was intended to be acted upon, which was relied upon, and which caused injury.” Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex.1994); DeSantis v. Wackenhut Corp., 793 S.W.2d *48670, 688 (Tex.1990), cert. denied, 498 U.S. 1048, 111 S.Ct. 765, 112 L.Ed.2d 775 (1991); see also Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex.1977). A promise of future performance constitutes an actionable misrepresentation if the promise was made with no intention of performing at the time it was made. Schindler v. Austwell Farmers Coop., 841 S.W.2d 858, 854 (Tex.1992). However, the mere failure to perform a contract is not evidence of fraud. See id. Rather, Presidio had to present evidence that Formosa made representations with the intent to deceive and with no intention of performing as represented. See Spoljaric, 708 S.W.2d at 434; Stanfield, 462 S.W.2d at 272; see also T.O. Stanley Boot Co., 847 S.W.2d at 222; Crim Truck & Tractor, 823 S.W.2d at 597. Moreover, the evidence presented must be relevant to Formosa’s intent at the time the representation was made. Spoljaric, 708 S.W.2d at 434.

Presidio alleges that Formosa made three representations- that it never intended to keep in order to induce Presidio to enter into the contract. First, the bid package and contract represented that Presidio would “arrange the delivery schedule of [Formosa]supplied material and be responsible for the delivery ... of all materials (this includes material supplied by [Formosa]).” Second, the bid package and the contract provided the job was scheduled to begin on July 16, 1990, and be completed on October 15, 1990, 90 days later. Third, paragraph 17 of the contract represented that Formosa would be responsible for the payment of any delay damages within its control.

The jury agreed with Presidio and found that Formosa committed fraud. In our review of this finding, all of the record evidence must be considered in a light most favorable to the party in whose favor the verdict has been rendered, and every reasonable inference deducible from the evidence is to be indulged in that party’s favor. Harbin v. Seale, 461 S.W.2d 591, 592 (Tex.1970). Anything more than a scintilla of evidence is legally sufficient to support the finding. See Continental Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex.1996); Browning-Ferris, Inc. v. Reyna, 865 S.W.2d 925, 928 (Tex.1993).

We conclude that Presidio presented legally sufficient evidence that Formosa made representations with no intention of performing as represented in order to induce Presidio to enter into this contract at a low bid price. In the bid package and the contract, Formosa represented that Presidio would have control of the delivery of the concrete necessary for the project. While Formosa argues that other more general provisions contained in the contract refute this representation, the contract and the bid package specifically and unequivocally provide that Presidio would “arrange the delivery schedule of [Formosa]-supplied material and be responsible for the delivery ... of all materials.” Further, even Formosa’s own witnesses admitted that, under the plain language of the contract, Presidio had control over the scheduling and delivery of concrete. Accordingly, there is clearly sufficient evidence that this representation was in fact made by Formosa.

In contravention of this representation, Formosa decided, two weeks before the contract was signed, to take over the delivery of the concrete without informing Presidio. Jack Lin, Formosa’s civil department director, testified that Formosa, in an effort to save money, decided to take over the concrete delivery and set up its own delivery schedule. However, Presidio was not informed of this change until after the contract was signed. Lin admitted' that Formosa acted deceptively by taking over the concrete delivery and scheduling when the bid package expressly provided that the contractor would have control. He further admitted that Formosa knew that Presidio would rely on this representation in preparing its bid.

Presidio’s president, Bob Burnette, testified that Presidio did in fact rely on this representation in preparing its bid. Bur-nette further testified that every concrete pour was delayed one-to-two days while Pre-sidio waited for Formosa to obtain the requested concrete. Because Burnette did not calculate such delays into his bid, the actual cost of the project exceeded the contract price.

*49This testimony provides more than a scintilla of evidence supporting Presidio’s contention that Formosa intentionally made representations that it never intended to keep in order to induce Presidio to enter into the contract at a low bid price and that Presidio relied on these misrepresentations to its detriment. Thus, legally sufficient evidence supports the jury’s fraud finding. We need not consider whether any other representations Formosa allegedly made were fraudulent.

Formosa contends, however, that the award of $700,000 in fraud damages to Presi-dio is excessive as a matter of law. Presidio counters that the damage award is supported by Burnette’s testimony that, if he had been told the truth about the project, he “would have bid in the neighborhood of $1,300,000” to perform the contract, and that that amount was a reasonable and necessary cost for doing the work. Presidio maintains that, by subtracting the amount they were paid on the contract, $600,000, from the $1,300,000 reasonable and necessary cost for doing the work, there is legally sufficient evidence to support the damage award of $700,000. But Formosa objected at trial to this testimony on the basis that it was both speculative and an improper measure of damages. Formosa argued again in its motion for new trial that the damages awarded were excessive because Burnette’s testimony was speculative and based on an improper measure of damages. Formosa re-urges these complaints to this Court.

Texas recognizes two measures of direct damages for common-law fraud: the out-of-pocket measure and the benefit-of-the-bargain measure. Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 817 (Tex.1997); W.O. Bankston Nissan, Inc. v. Walters, 754 S.W.2d 127, 128 (Tex.1988); Leyendecker & Assocs., Inc. v. Wechter, 683 S.W.2d 369, 373 (Tex.1984).1 The out-of-pocket measure computes the difference between the value paid and the value received, while the benefit-of-the-bargain measure computes the difference between the value as represented and the value received. Arthur Andersen, 945 S.W.2d at 817; Leyendecker, 683 S.W.2d at 373.

The out-of-pocket measure allows the injured party “to recover the actual injury suffered measured by ‘the difference between the value of that which he has parted with, and the value of that which he has received.’ ” Leyendecker, 683 S.W.2d at 373 (quoting George v. Hesse, 100 Tex. 44, 93 S.W. 107 (1906) (emphasis added)); see also Morriss-Buick Co. v. Pondrom, 131 Tex. 98, 113 S.W.2d 889, 890 (1938) (because out-of-pocket fraud damages are intended to provide actual compensation for the injury rather than profit, the proper measure of damages is the difference between the value of what was parted with and what was received). Burnette’s testimony regarding what he would have bid if he had known the truth is not the proper measure of out-of-pocket damages. Burnette computed his $1.3 million bid by taking the total amount Presidio spent on the labor, materials, supplies, and equipment used on the job, $831,-000, divided by the original expected cost of the job, $370,000, multiplied by his actual bid of $600,000. He also performed an alternative calculation that reached a similar result by dividing the 264 days the job actually took by the 134 days the job should have taken multiplied by his actual bid of $600,-000. Basically, both of these methods multiplied the actual bid price of $600,000, which included a profit margin on the job, by a ratio comparing what actually occurred to what was anticipated. Thus, both of these calculations incorporated expected lost profits on a bargain that was never made. But the out-of-pocket measure only compensates for actual injuries a party sustains through parting with something, not loss of profits on a bid not made, and a profit never realized, *50in a hypothetical bargain never struck.2 Thus, the $1.3 million hypothetical bid less the $600,000 actually received is not probative of Presidio’s out-of-pócket loss. The proper out-of-pocket calculation of damages, based on Burnette’s testimony, was $831,000 less the amount he actually received, $600,-000, for damages of $231,000.

Burnette’s testimony regarding the $1.3 million hypothetical bid is also not probative evidence of benefit-of-the-bargain damages. Under the benefit-of-the bargain measure, lost profits on the bargain may be recovered if such damages are proved with reasonable certainty. See Restatement (Second) of ToRTS § 549(2) (1977) (“The recipient of a fraudulent misrepresentation in a business transaction is also entitled to recover additional damages sufficient to give him the benefit of his contract with the maker, if these damages are proved with reasonable certainty.”). But, while a benefit-of-the-bargain measure can include lost profits, it only compensates for the profits that would have been made if the bargain had been performed as promised. Accordingly, the proper calculation of benefit-of-the-bargain damages is Presidio’s anticipated profit on the $600,000 bid plus the actual cost of the job less the amount actually paid by Formosa. Based on Burnette’s testimony, Presidio’s benefit-of-the-bargain damages are not $700,-000, but rather $461,000 (bid price of $600,-000 less original expected cost of $370,000 for profit of $230,000, plus $831,000 actual cost less $600,000 actually paid).

Burnette calculated his hypothetical $1.3 million bid by multiplying his $600,000 bid, including his anticipated profit, by a factor of about 2.2. However, this doubling of Presidio’s bid is entirely speculative because there is no evidence that Presidio would have been awarded the project if it had made a $1.3 million bid. In fact, if any inference could be drawn, it would lead to the opposite conclusion because two of the three other bids Formosa received were lower than $1.3 million. Burnette’s testimony as to what he would have bid had he known the truth simply does not establish the benefit of any bargain made with Formosa. It is not based on the expenses incurred and profits lost on this contract because of Formosa’s representations, but rather is based on an entirely hypothetical, speculative bargain that was never struck and would not have been consummated. This testimony is therefore not legally sufficient evidence supporting an award of $700,000 in damages.3

*51We accordingly hold that there is no probative evidence supporting the entire amount of damages awarded by the judgment. There is, however, clearly legally sufficient evidence that Presidio suffered some damages as a result of Formosa’s fraud; in fact, Burnette’s testimony, while it does not support a damage award of $700,000, does support an out-of-pocket damage award of $231,-000 or a benefit-of-the-bargain damage award of $461,000. But, because the issue of damages was contested by Formosa, we cannot render judgment in favor of Presidio for a lesser dollar amount. Instead, because there is no legally sufficient evidence to support the entire amount of damages, but there is some evidence of the correct measure of damages, we reverse the judgment of the court of appeals and remand the cause for a new trial. See Texarkana Mem’l Hosp. v. Murdock, 946 S.W.2d 836, 841 (Tex.1997).

In conjunction with its motion for rehearing, Presidio has also filed a motion for voluntary remittitur, offering to remit $239,-000 plus interest to comport with our determination that its evidence could support a benefit-of-the-bargain damage award of $461,000. We conclude that we cannot grant Presidio this relief.

Texas Rule of Appellate Procedure 46 delineates two means by which remittitur may be effectuated on appeal. First, the court of appeals may suggest a remittitur in lieu of ordering a new trial. Tex.R.App.P. 46.3. Second, a party may voluntarily remit if a court of appeals reverses the trial court’s judgment because of a legal error that affects only part of the damages awarded by the judgment. Tex.R.App.P. 46.5. The Texas Rules of Appellate Procedure do not expressly authorize a party to remit to this Court, although the Court has accepted re-mittitur in the past, prior to the adoption of the rules. See Redman Homes, Inc. v. Ivy, 920 S.W.2d 664, 669 (Tex.1996) (listing cases).

We were faced with an almost identical offer of voluntary remittitur in Redman Homes, Inc. v. Ivy, 920 S.W.2d 664 (Tex.1996). In that case, Mr. Ivy presented testimony regarding the damages he suffered as a result of a fire that destroyed his mobile home and his personal items in the home. Id. at 668. His testimony included inadmissible statements regarding the cost of his mobile home that were offered to establish its market value at the time of loss. Id. Recognizing that his statements were not probative of the market value of the home, the Ivys attempted to remit the difference between the jury’s verdict and the legally sufficient evidence he presented regarding the damages to the personal items in his home. Id. at 669. However, this Court rejected the Ivys’ offer of remittitur. We concluded that, because we are limited to considering questions of law, we could only consider a remitti-tur under such circumstances if the damages to the personal property had been established as a matter of law. Id.

Similarly, in this case, Burnette presented the only testimony on Presidio’s behalf regarding the damages suffered as a result of Formosa’s fraud. We have concluded that parts of his testimony were not probative of the damages awarded by the jury. Presidio has attempted to remit the difference between the jury’s verdict and the legally sufficient evidence it presented regarding damages. However, under our precedent in Redman Homes, we cannot even consider such an offer unless Presidio established as a matter of law that it suffered $461,000 in damages. But Presidio does not make any claim that it proved $461,000 in damages as a matter of law, nor could it do so under the record in this ease. Formosa clearly contested the amount of damages at both the trial and appellate level. Accordingly, because Presidio’s motion for voluntary remitti-tur does not present us with a question of law, it must be overruled.

IV

We finally consider Formosa’s argument that the submission of the good faith and fair dealing question was erroneous. The trial court submitted a jury charge question on whether Formosa failed “to comply with its *52duty of good faith and fair dealing to Presi-dio, if any.” The jury found that Formosa had failed to comply with this duty and awarded Presidio damages of $1.5 million.

Formosa contends that the submission of this question was erroneous. We agree. There is no general duty of good faith and fair dealing in ordinary, arms-length commercial transactions. See English v. Fischer, 660 S.W.2d 521, 522 (Tex.1983); Electro Assocs., Inc. v. Harrop Constr. Co., 908 S.W.2d 21, 22-23 (Tex.App.-Houston [1st Dist.] 1995, writ denied); Adolph Coors Co. v. Rodriguez, 780 S.W.2d 477, 481 (Tex.App.-Corpus Christi 1989, writ denied). We find no basis for the submission of a good faith and fair dealing question to the jury in this case. Accordingly, the jury’s affirmative answer to this question cannot support the judgment. On remand, this question should not be submitted.

‡ ‡ ‡ ‡ ‡ ‡

In conclusion, we hold that, when a party fraudulently procures a contract by making a promise without any intent of keeping the promise in order to induce another into executing the contract, a tort cause of action for that fraud exists. Accordingly, Presidio has a viable fraud claim against Formosa even though it only seeks damages for economic losses related to the subject matter and performance of the contract between the parties. We cannot affirm the court of appeals’ judgment, however, because there is no evidence to support the entire damage award. We therefore reverse the judgment of the court of appeals and remand this ease for a new trial.

BAKER, J., filed a dissenting opinion in which SPECTOR, J., joins.

BAKER, Justice,

joined by SPECTOR, Justice, dissenting.

Because the Court conducts an improper factual sufficiency review of the evidence supporting Presidio’s actual damages for Formosa’s fraud, I dissent.

I. LOST PROFITS

A. No Evidence Review

As the Court holds, the victim of common law fraud in the inducement can recover benefit-of-the bargain damages. This measure of damages allows recovery for lost profits. In reviewing damage awards for lost profits, this Court must conduct only a traditional no evidence review. See Texas Instruments, Inc. v. Teletron Energy Management, 877 S.W.2d 276, 281 (Tex.1994) (holding that there was no evidence to prove reasonable certainty of lost profits); Holt Atherton Indus. v. Heine, 835 S.W.2d 80, 84 (Tex.1992) (holding that the evidence was legally insufficient to prove lost profits); Southwest Battery Corp. v. Owen, 131 Tex. 423, 115 S.W.2d 1097, 1099 (1938) (court determined that it could not decide, as a matter of law, that facts required judgment against plaintiffs lost profits claim).

We cannot weigh the factual sufficiency of the evidence supporting the jury’s verdict. See Havner v. E-Z Mart Stores, Inc., 825 S.W.2d 456, 458 (Tex.1992). It is only when reasonable minds cannot differ that evidence lacks probative force that it is “no evidence.” See Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983). Like all cases where this Court considers the legal sufficiency of the evidence, we must consider only the evidence and inferences that tend to support the lost profits finding, and disregard all evidence and inferences to the contrary. Holt Atherton, 835 S.W.2d at 84.

B. The NatuRE of Lost Profits Evidence

Recovery of lost profits is allowed where a business relationship is established on the strength of a contract but is adversely effected by a contracting party’s misconduct under the contract. See Pace Corp. v. Jackson, 155 Tex. 179, 284 S.W.2d 340, 348 (1955). We have held that “recovery for lost profits does not require that the loss be susceptible of exact calculation.” Holt Atherton, 835 S.W.2d at 84. In fact, “[i]n their nature, profits are more or less conjectural or speculative.” Pace Corp., 284 S.W.2d at 348. Nevertheless, a party must prove lost profits by some competent evidence with “reason*53able certainty.” Holt Atherton, 835 S.W.2d at 84; Southwest Battery, 115 S.W.2d at 1098. To withstand no evidence review, “[a]t a minimum, opinions or estimates of lost profits must be based on objective facts, figures, or data ... [and] [r]ecovery of lost profits must be predicated on one complete calculation.” See Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex.1994).

Before today, this Court had held that “[i]t is impossible to announce with exact certainty any rule measuring” a party’s lost profits. Southwest Battery, 115 S.W.2d at 1099. In fact, until today, this Court hastened to “sanction any one method for determining lost profits.” Holt Atherton, 835 S.W.2d at 85. Nevertheless, today the Court conducts an improper factual sufficiency review of Presidio’s lost profits evidence by weighing Presidio’s testimony against what the Court calls “the proper calculation” of lost profits. 960 S.W.2d at 50 (emphasis added). I would affirm the jury’s verdict because Presidio presented some evidence, by providing an objective and complete calculation, to support its loss with reasonable certainty. Holt Atherton, 835 S.W.2d at 84-85.

II. PRESIDIO’S LOST PROFITS EVIDENCE

A.Peesidio’s Witness

Bob Burnette has been Presidio’s president since its formation in 1984. Burnette has a bachelors degree and a masters degree in civil engineering. He is a licensed professional engineer in California and in Texas. Burnette has negotiated contracts for Presi-dio since 1984. The contracts have ranged from a quarter million dollars to two million dollars. Before bidding jobs for Presidio he participated in other large contract bids including one for a pipeline in Iran for over $100 million.

Burnette prepared Presidio’s bid package, in reliance on Formosa’s representations about the job, and negotiated the contract with Formosa’s representatives. During the project, Burnette dealt with Formosa about the contract’s terms and handled contract disputes for Presidio. At trial, Burnette testified as an expert.

B.Presidio’s Evidence

Based on his expertise and personal knowledge, Burnette testified about how he calculated Presidio’s lost profits caused by Formosa’s fraud. Specifically, Burnette testified that had Formosa truthfully represented the project’s details, Presidio would have bid about $1.3 million. Burnette calculated the $1.3 million bid by comparing his original estimated cost to Presidio’s actual cost to obtain a ratio, and then multiplying by the original bid. After deducting what Formosa paid Presidio, this results in a figure of $700,-000, which includes lost profits. The percentage of lost profits in the $1.3 million bid is identical to the percentage of estimated profit in the original bid that Formosa fraudulently induced. In other words, Burnette’s calculation multiplied Presidio’s actual bid, which included a specific profit margin, by a ratio comparing what it took to complete the job because of Formosa’s fraudulent scheme to what Presidio relied upon under the contract.

C.Application of Law to The Evidence

Of course, Burnette’s opinions are “hypothetical” and somewhat “speculative” — he didn’t expect Formosa to commit fraud when he bid the job and won the contract for Presidio.1 Moreover, as we have recognized, by their nature, lost profits are “more or less conjectural or speculative.” Pace Corp., 284 S.W.2d at 348. Indeed, just over three years ago, this Court reaffirmed the rule that the “reasonable certainty” requirement for proof of lost profits “is intended to be flexible enough to accommodate the myriad circumstances in which claims of lost profits arise.” Texas Instruments, 877 S.W.2d at 279.

Here, Burnette’s “hypothetical” calculation or “speculation”, as the Court calls it, was not “remote” or based on the “mere hope of *54success” or some “untried enterprise.” Texas Instruments, 877 S.W.2d at 279-80. Instead, Burnette based Ms calculation on Pre-sidio’s contract with Formosa, the contract’s built in profit margin, and Presidio’s actual cost to complete the contract given Formosa’s fraudulent conduct. Burnette’s calculation was objective and complete. See Szczepanik, 883 S.W.2d at 649. Presidio presented at least the “minimum” evidence to establish lost profits with reasonable certainty. See Szczepanik, 883 S.W.2d at 649. Accordingly, there is legally sufficient evidence to support the judgment for Presidio. The Court can only find otherwise by conducting a Constitutionally proMbited factual sufficiency review of Presidio’s evidence.

III. CONCLUSION

To hold as the Court does today, allows Formosa, a proven fraud feasor, to escape liability2 simply because Presidio cannot “prove a perfect measure of damages.” See Southwest Battery, 115 S.W.2d at 1099. Besides improperly weighing in on the facts and crunching the numbers to determine the “proper calculation” of damages, the Court also ignores its rule against sanctioning any one method for determining lost profits. See Holt Atherton, 835 S.W.2d at 85. An injured party, like Presidio, “must not be deprived of [its] remedy because of the difficulties lying in the way of proving [loss profits].” Pace Corp., 284 S.W.2d at 348.

Because Presidio provided some evidence, based on an objective and complete calculation with reasonable certainty, I would affirm the court of appeals’ judgment for Presidio.

BAKER, Justice,

joined by SPECTOR, Justice, dissenting to Order Overruling Motions for Rehearing and Voluntary Remittitur.

Today the Court overrules Presidio’s motions for rehearing and voluntary remittitur. I respectfully dissent to the Court’s order. Studying the Court’s opinion again after it issued, I write to . say some things I wish I had said in my original dissent. I also write to discuss the merits of Presidio’s motions, wMch the Court overrules without comment.

I believe that the Court’s entire discussion of the damages and the conclusions the Court reaches are fundamentally flawed. First, the Court calculates Presidio’s damages based on the contract Presidio and Formosa actually made, rather than the contract they would have made but for Formosa’s fraudulent inducement. Second, although the Court recognizes that the correct criteria for measuring damages in a fraudulent inducement case is ‘Value,” the Court calculates the damages it concludes are available to Presidio based only on “costs.”

Fraud in the Inducement versus Breach of Contract

In tMs case the Court holds that a party may recover tort damages for fraudulent inducement irrespective of whether the fraudulent representations are later subsumed in a contract or whether the party oMy suffers an economic loss related to the contract’s subject matter. To allow recovery of tort fraud damages oMy when a plaintiff suffers an injury distinct from the economic losses recoverable under a breach of contract claim is inconsistent with tMs well established law. To so limit the recovery ignores the fact that an independent legal duty, separate from the contract’s existence, precludes the use of fraud to induce a binding agreement. 960 S.W.2d at 47.

The Court acknowledges that Texas recognizes two measures of direct damages for common-law fraud: (1) the out-of-pocket measure and the (2) benefit-of-the-bargain measure. See Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 817 (Tex.1997); W.O. Bankston Nissan, Inc. v. Walters, 754 S.W.2d 127, 128 (Tex.1988). The Court recognizes that the out-of-pocket measure is the difference between the value paid and the value received while the benefit of the bargain measure is the difference between the value as represented and the value received. See Arthur Andersen, 945 *55S.W.2d at 817; Leyendecker & Assocs., Inc. v. Wechter, 683 S.W.2d 369, 373 (Tex.1984). The Court states that the out-of-pocket measure allows the injured party to recover the actual injury suffered measured by the difference between the value of that with which he has parted with, and the value of that which he received. See Arthur Andersen, 945 S.W.2d at 817. The Court also concludes that while the benefit-of-the-bargain measure can include lost profits, it only compensates for the profits that would have been made if the bargain had been performed as promised.

Despite recognizing that fraudulent- inducement to enter a contract is a breach of an independent legal duty separate from the contract itself, the Court calculates both measures of damages based on Presidio’s damages as if the contract made had been performed as promised.

Costs v. Value

Presidio’s argument in its motion for rehearing is that the Court improperly computed damages based upon costs rather than value. See Leyendecker, 683 S.W.2d at 373. Presidio contends that the way the Court calculated damages, Formosa does not have to pay the full ‘Value” of what Presidio furnished Formosa. Instead, Presidio asserts Formosa will receive what Presidio furnished at “cost.” Presidio contends that Presidio will not be paid the full value of what it. gave, and thus will not be made whole.

Formosa responds that Presidio’s theory is wrong because it measures the damages after the contract is complete by striking a completely new bargain. Formosa argues that the proper measure of damages is computed as of the time of the sale, or as in this ease at the point of contract. See Leyendecker, 683 S.W.2d at 372. Formosa contends that the policy underlying fraud law is to redress actual losses. See Morriss-Buick Co. v. Pondrom, 131 Tex. 98, 113 S.W.2d 889, 890 (1938).

It is true that damages in a fraudulent inducement case are computed as of the time of the fraud. In this case, at the point of contract. However, Formosa essentially adopts the Court’s rationale; therefore, Formosa’s arguments suffer from the same fundamental flaws as those of the Court. That is, the damage calculation should be based upon the contract actually made, rather than the contract the parties would have made but for Formosa’s fraudulent inducements.

Here, Presidio was entitled to show and did show the value of its loss based upon what actually happened because of Formosa’s fraudulent inducements when the parties made the contract. Taking the known facts when Presidio completed the project, and applying Presidio’s regular calculations of costs plus profit margin as of the time the parties negotiated the fraudulently induced contract, produces a damages result based upon objective facts, figures or data, and predicated on one complete calculation. See Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex.1994).

The Court’s new writing reinforces my view, as expressed in my original dissent, that the Court has engaged in an improper factual sufficiency review. Despite its protestations, the Court weighs the evidence, which it cannot do. See Havner v. E-Z Mart Stores, Inc., 825 S.W.2d 456, 458 (Tex.1992). The Court asserts that Presidio’s damage evidence was entirely speculative because there is no evidence that Presidio would have been awarded the project if it had made a 1.3 million dollar bid. The Court then states that the evidence indicates that Presidio would not have been awarded the project because two of the three other bids Formosa received were lower than 1.3 million. The Court concludes that Presidio’s evidence is not based on expenses incurred and profits lost on this contract because of Formosa’s representations, but rather is based upon an entirely hypothetical, speculative bargain that was never struck and would never have been consummated. If this is not weighing the evidence, I do not know what is.

VOLUNTARY REMITTITUR

Alternatively, Presidio asserts that it is entitled to a remittitur of the damages the Court found excessive. Because the Court did not affirm the court of appeal’s judgment, Presidio offers a voluntary remittitur of the amount of the actual fraud damages the *56Court found to be excessive. Presidio requests the court of appeals judgment be reformed and affirmed as reformed. Alternatively, Presidio requests the judgment be reformed and remanded to the court of appeals. Presidio argues that the Court, for many years, has accepted voluntary remitti-turs from plaintiffs. See Redman Homes, Inc. v. Ivy, 920 S.W.2d 664, 669 (Tex.1996).

Formosa responds that the Court should not grant Presidio a voluntaiy remittitur because that relief from error in awarding damages unsupported by legally sufficient evidence is unavailable through' the office of voluntary remittitur. Formosa relies on Redman Homes in support of its argument.

In Redman Homes, a unanimous Court recognized that the Court has accepted re-mittiturs from plaintiffs in the past. See Redman Homes, 920 S.W.2d at 669. In Red-man Homes, the Court also said that our decisions involving voluntary remittiturs are limited by the rule that this Court can consider only questions of law. The Court observed that the plaintiffs offer in Redman Homes presumed that the Court could conclusively ascertain from the record the amount of damages untainted by what the Ivys conceded was inadmissible testimony about market value. In Redman Homes the Court concluded it was unable to ascertain the damages untainted by inadmissible testimony. Redman Homes, 920 S.W.2d at 669. I submit that such is not the case here. First, in its response to Presidio’s request for voluntary remittitur, Formosa neglects to state, but Presidio points out that in Formosa’s application for writ of error to this Court, Formosa asserted: “Presidio’s actual damages are excessive as a matter of law to the extent they exceed $467,000. The minimum relief to which Formosa is entitled for that error is excision of the excess and rendition of judgment for only $467,000. Larson v. Cactus Util. Co., 730 S.W.2d 640 (Tex.1987).” In my view, asserting to this Court that the actual damages are excessive as a matter of law to the extent that they exceed $467,000 is an express concession that Presi-dio’s actual damages are proven as a matter of law in the amount of $467,000.

Be that as it may, the facts here are distinguishable from those in Redman Homes. Here, the Court could and did conclusively ascertain from the record the damages untainted by inadmissible testimony. The substance of the Court’s damages finding in this case is that Presidio’s evidence about profits it might have earned is inadmissible testimony because it is hypothetical and speculative. The Court held that Presidio’s damages testimony does support an out-of-pocket damage award of $231,000 or a benefit-of-the-bargain damage award of $461,000. What the Court concludes amounts to a conclusive finding of damages under either measure that the court holds is permissible for a fraud in the inducement claim. However, the Gourt declines to render judgment for Presidio for a lesser dollar amount because Formosa contests the damages issue.

Based upon the Court’s finding of specific damages under either measure of damages that applies in a fraudulent inducement ease, my question is what is there left to be tried? It seems to me that the Court has conclusively ascertained the damages untainted by what it holds is the inadmissible testimony and that Presidio’s offer of a voluntary remittance is entirely in order. See Redman Homes, 920 S.W.2d at 669; see also Larson, 730 S.W.2d at 641; Texas Employers’ Ins. Ass’n v. White, 129 Tex. 659, 107 S.W.2d 360, 361 (1937); Baldwin v. Haskell Nat’l Bank, 104 Tex. 122, 134 S.W. 1178 (1911).

Conclusion

Based on my original dissent, I still believe that the Court erred in how it disposes of the damages issue. The Court should have affirmed the court of appeals’ judgment for Presidio. However, based upon the Court’s holding and Presidio’s motion for voluntary remittitur, Presidio is at least entitled to have the Court grant that remittitur. The Court should modify the court of appeals’ judgment to that extent and otherwise affirm the court of appeals’ judgment.

OPINION

GONZALEZ, Justice.

The primary issues in this case are (1) whether the statute of frauds shields a bank from liability for negligently misrepresenting that it had approved a loan secured by real property; and (2) assuming that the statute of frauds does not apply, whether the prospective borrowers can recover damages for mental anguish attributable to the bank’s alleged negligent misrepresentation. After a jury trial, the trial court rendered judgment for the prospective borrowers. The court of appeals affirmed in part and reversed and rendered in part. Specifically, the court of appeals held that the statute of frauds did not bar the claim, affirmed the part of the judgment awarding mental anguish damages, and reversed and rendered that part of the judgment awarding damages for lost profits. 793 S.W.2d 692. We reverse that part of the court of appeals’ judgment with regard to the award of mental anguish damages and otherwise affirm. This cause is remanded to the trial court for rendition of a judgment that conforms with this opinion.

In early 1986, William, Lettie, and Robert Sloane had been out of the business of raising chickens for two years when they learned they could get a contract from Pilgrim’s Pride to raise broilers for the company on the condition that they build new chicken houses on their farm.1 On March 7, 1986, the Sloanes applied for a $141,000 *441loan from the Federal Land Bank Association of Tyler. During the application process, the Sloanes obtained an estimate of $105,000 for the costs of necessary equipment and the construction of two chicken houses. They also obtained a letter from Pilgrim’s Pride stating that the company agreed to “feed out broilers” for the Sloanes once the houses were constructed according to specifications provided by Pilgrim’s Pride. The Sloanes subsequently sent the construction estimate and the letter from Pilgrim’s Pride to their loan officer at the bank.

Approximately a month after the Sloanes had applied for the loan, the loan officer informed them that the bank’s board had approved the loan, and that the Sloanes could go ahead with site preparation work. The contractor hired by the Sloanes to build the new chicken houses contacted the bank’s loan officer to see if he should begin construction, notwithstanding the pending nature of the loan. The loan officer said that there was “no problem,” and that “there was not any reason for them not to continue at that point.” (The bank officer disputes these statements; however, the jury resolved this issue in the Sloanes’ favor, and the bank subsequently did not challenge on appeal the legal or factual sufficiency of the evidence supporting the fact).

In June 1986, the Sloanes had one of their old chicken houses demolished, and they paid approximately $9,000 for further site preparation. As the work progressed they supplied the bank with receipts. In August, 1986, the Sloanes received a letter from the bank denying their loan application, giving as reasons the fact that they failed to include two outstanding debts on their application, and that they incurred additional liability for a car purchase while the loan was being processed.2 The Sloanes subsequently failed to obtain other financing. They then sued the bank alleging that the loan officer had negligently misrepresented that the bank would approve their loan application. Their claims included the financial and property damages suffered in preparing to build the chicken houses, the loss of the Pilgrim’s Pride contract, and the mental anguish caused by the bank’s allegedly negligent conduct.3

The case was tried before a jury which found that: (1) the bank negligently misrepresented to the Sloanes that the bank had approved their loan application; (2) the Sloanes justifiably relied on such misrepresentation; and (3) reliance upon such misrepresentation caused the Sloanes pecuniary loss. The jury assessed damages against the bank amounting to $26,500 for past and future monetary losses other than lost profits, $28,500 for past and future lost profits, and $15,000 for mental anguish.

The trial court rendered an $81,974.48 judgment for the Sloanes, which included $11,974.48 in prejudgment interest. The court of appeals subsequently held that there was no evidence of lost profits and certain other expenditures, and thus the court affirmed the balance of the judgment after reformation. The bank now asserts that, as a matter of law, the statute of frauds bars the Sloanes’ cause of action for all damages. The Sloanes counter that their cause of action sounds in tort, and thus the statute of frauds does not apply. They also assert that the court of appeals *442erred in reversing the trial court’s award of damages for lost profits.

The statute of frauds requires that certain specified classes of contracts be in writing to be enforceable. Tex.Bus. & Com. Code § 26.01. The Sloanes do not claim that the bank agreed to loan them money and then breached that agreement; rather, they claim that the bank did not agree to loan them money, yet negligently misrepresented that it had made such an agreement. Moreover, the Sloanes do not seek damages for breach of the loan agreement never made, but for their reasonable reliance upon the bank’s misrepresentation. Although a claim of negligent misrepresentation may not be used to circumvent the statute of frauds, under the circumstances of this case, the Sloanes’ claim does not fall within the statute of frauds. To the contrary, the premise of the claim is that the Sloanes and the bank never reached an agreement, oral or written.

NEGLIGENT MISREPRESENTATION

The Sloanes claim that the bank has a duty to use reasonable care whenever it provides information to its customers or potential customers, and that the bank breached this duty when it allegedly encouraged the Sloanes to incur expenses in reliance on the information related to their loan application. The Sloanes further allege that the bank misrepresented an existing fact rather than a promise of future conduct. Both the bank and the Sloanes rely on Restatement (Second) of ToRts § 552 (1977) to define the scope of this duty. We agree with the Restatement’s definition, as have several courts of appeal that have previously considered this question. See, e.g., Cook Consultants, Inc. v. Larson, 677 S.W.2d 718 (Tex.App.—Dallas 1984), rev’d on other grounds, 690 S.W.2d 567 (Tex.1985), on remand, 700 S.W.2d 231, 234 (Tex.App.—Dallas 1985, writ ref’d n.r.e.); Traylor v. Gray, 547 S.W.2d 644, 656 (Tex.Civ.App.—Corpus Christi 1977, writ ref’d n.r.e.); Rosenthal v. Blum, 529 S.W.2d 102, 104-05 (Tex.Civ.App.—Waco 1975, writ ref’d n.r.e.) (citing an earlier draft of the Restatement).

The elements of a cause of action for the breach of this duty are: (1) the representation is made by a defendant in the course of his business, or in a transaction in which he has a pecuniary interest; (2) the defendant supplies “false information” for the guidance of others in their business; (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information; and (4) the plaintiff suffers pecuniary loss by justifiably relying on the representation. Issues substantially conforming to these elements were submitted to the jury, which returned a verdict favorable to the Sloanes. The bank makes no challenge to the sufficiency of the evidence of liability, so the remaining issue is what damages are available for this tort.

DAMAGES

The Restatement provides damages for this tort as follows:

(1) The damages recoverable for a negligent misrepresentation are those necessary to compensate the plaintiff for the pecuniary loss to him of which the misrepresentation is legal cause, including

(a) the difference between the value of what he has received in the transaction and its purchase price or other value given for it; and

(b) pecuniary loss suffered otherwise as a consequence of the plaintiff’s reliance upon the misrepresentation.

(2) the damages recoverable for a negligent misrepresentation do not include the benefit of the plaintiff’s contract with the defendant.

Restatement (Second) of Torts § 552B (1977).

While the Sloanes adopt the Restatement’s terminology to support the basic elements of their cause of action, they reject the language of Restatement section 552B which limits damages to pecuniary loss alone. Specifically, the Sloanes argue that this court should allow them damages for mental anguish. The Restatement advances several policy reasons for limiting damages, including a lower degree of fault *443indicated by a less culpable mental state and the need to keep liability proportional to risk. Restatement (Second) of ToRts § 552, comment a. There has been no trend to reject the pecuniary loss rule in what is essentially a commercial tort.4 We decline to extend damages beyond those limits provided in Restatement section 552B.5

The Sloanes complain that they should receive damages for the profits they anticipated from the Pilgrim’s Pride contract. As discussed above, Restatement (Second) section 552B allows for damages suffered in reliance upon negligent misrepresentation, but not for the failure to obtain the benefit of the bargain. Restatement (Second) §§ 552B(l)(a) & (2). The Sloanes would not have received the contract regardless of whether the misrepresentation was made. Under the legal theory of this section of the Restatement, they should not, therefore, receive the benefit of a bargain that would never have taken place. The sole reason the Sloanes did not get the Pilgrim’s Pride contract is because the bank did not give them the loan money to build acceptable chicken houses. The Sloanes’ claim to these damages is imper-missibly predicated on giving them the benefit of the loan.6

For the foregoing reasons, we reverse the judgment of the court of appeals insofar as it includes an award for mental anguish. In all other respects, the judgment of the court of appeals is affirmed. We remand this cause to the trial court for rendition of judgment for $11,427.03 for past pecuniary losses other than lost profits, plus prejudgment interest.

MAUZY, Justice,

concurring and dissenting.

I agree that the statute of frauds does not shield the bank from liability for negligent misrepresentation. I disagree, however, with the court’s conclusion that damages for negligent misrepresentation can never include lost profits. I would hold that the Sloanes are entitled to recover damages sufficient to give them the benefit of their contract with Pilgrim’s Pride.

*444In a number of jurisdictions, benefit-of-the-bargain damages are clearly available in actions for fraudulent misrepresentation. See, e.g., Freeman v. Bonnes Trucking, 337 N.W.2d 871, 879 (Iowa 1983). Under the circumstances of this case, I disagree with the suggestion that negligent misrepresentation is a lesser cause for concern than fraudulent misrepresentation.

The distinction between negligent misrepresentation and fraudulent misrepresentation is a thin one. Texas courts have recognized the negligent misrepresentation action as a form of “remedial fraud.” See Rosenthal v. Blum, 529 S.W.2d 102, 104 (Tex.Civ.App.—Waco 1975, writ ref’d n.r.e.), and cases cited therein. Where circumstances are such that the defendant is presumed to know the facts to which his misrepresentation relates, a misrepresentation is fraudulent even if it is not made knowingly, willfully, or with actual intent to deceive. See Dugan v. Jones, 615 P.2d 1239, 1250 (Utah 1980).

I see no reason to maintain an artificial distinction between remedial fraud actions and actions for fraudulent misrepresentation. Here, the bank was in complete control of the Sloanes’ loan application, and presumably knew the facts to which its misrepresentation related. Since the Sloanes altered their position in reliance on the bank’s representations, they are entitled to damages based on the benefit-of-the-bargain rule. See LeFlore v. Reflections of Tulsa, 708 P.2d 1068, 1076 (Okla.1985). Thus, I would affirm the trial court’s judgment on the jury verdict awarding the Sloanes damages for lost profits.

POSNER, Circuit Judge.

The question — one of first impression — in this diversity case is the extent of a bank’s liability for failure to make a transfer of funds when requested by wire to do so. The essential facts are undisputed. In 1972 Hyman-Michaels Company, a large Chicago dealer in scrap metal, entered into a two-year contract to supply steel scrap to a Brazilian corporation. Hyman-Michaels chartered a ship, the Pandora, to carry the scrap to Brazil. The charter was for one year, with an option to extend the charter for a second year; specified a fixed daily rate of pay for the hire of the ship during both the initial and the option period, payable semi-monthly “in advance”; and provided that if payment was not made on time the Pandora’s owner could cancel the charter. Payment was to be made by deposit to the owner’s account in the Banque de Paris et des Pays-Bas (Suisse) in Geneva, Switzerland.

The usual method by which Hyman-Michaels, in Chicago, got the payments to the Banque de Paris in Geneva was to request the Continental Illinois National Bank and Trust Company of Chicago, where it had an account, to make a wire transfer of funds. Continental would debit Hyman-Michaels’ account by the amount of the payment and then send a telex to its London office for retransmission to its correspondent bank in Geneva — Swiss Bank Corporation — asking Swiss Bank to deposit this amount in the Banque de Paris account of the Pandora’s owner. The transaction was completed by the crediting of Swiss Bank’s account at Continental by the same amount.

When Hyman-Michaels chartered the Pandora in June 1972, market charter rates were very low, and it was these rates that were fixed in the charter for its entire term — two years if Hyman-Michaels exercised its option. Shortly after the agreement was signed, however, charter rates began to climb and by October 1972 they were much higher than they had been in June. The Pandora’s owners were eager to get out of the charter if they could. At the end of October they thought they had found a way, for the payment that was due in the Banque de Paris on October 26 had not arrived by October 30, and on that day the Pandora’s owner notified Hyman-Michaels that it was canceling the charter because of the breach of the payment term. Hyman-Michaels had mailed a check for the October 26 installment to the Banque de Paris rather than use the wire-transfer method of payment. It had done this in order to have the use of its money for the period that it *953would take the check to clear, about two weeks. But the check had not been mailed in Chicago until October 25 and of course did not reach Geneva on the twenty-sixth.

When Hyman-Michaels received notification that the charter was being canceled it immediately wired payment to the Banque de Paris, but the Pandora’s owner refused to accept it and insisted that the charter was indeed canceled. The matter was referred to arbitration in accordance with the charter. On December 5, 1972, the arbitration panel ruled in favor of Hyman-Michaels. The panel noted that previous arbitration panels had “shown varying degrees of latitude to Charterers”; “In all cases, a pattern of obligation on Owners’ part to protest, complain, or warn of intended withdrawal was expressed as an essential prerequisite to withdrawal, in spite of the clear wording of the operative clause. No such advance notice was given by Owners of M/V Pandora.” One of the three members of the panel dissented; he thought the Pandora ’s owner was entitled to cancel.

Hyman-Michaels went back to making the charter payments by wire transfer. On the morning of April 25,1973, it telephoned Continental Bank and requested it to transfer $27,000 to the Banque de Paris account of the Pandora’s owner in payment for the charter hire period from April 27 to May 11, 1973. Since the charter provided for payment “in advance,” this payment arguably was due by the close of business on April 26. The requested telex went out to Continental’s London office on the afternoon of April 25, which was nighttime in England. Early the next morning a telex operator in Continental’s London office dialed, as Continental’s Chicago office had instructed him to do, Swiss Bank’s general telex number, which rings in the bank’s cable department. But that number was busy, and after trying unsuccessfully for an hour to engage it the Continental telex operator dialed another number, that of a machine in Swiss Bank’s foreign exchange department which he had used in the past when the general number was engaged. We know this machine received the telexed message because it signaled the sending machine at both the beginning and end of the transmission that the telex was being received. Yet Swiss Bank failed to comply with the payment order, and no transfer of funds was made to the account of the Pandora’s owner in the Banque de Paris.

No one knows exactly what went wrong. One possibility is that the receiving telex machine had simply run out of paper, in which event it would not print the message although it had received it. Another is that whoever took the message out of the machine after it was printed failed to deliver it to the banking department. Unlike the machine in the cable department that the Continental telex operator had originally tried to reach, the machines in the foreign exchange department were operated by junior foreign exchange dealers rather than by professional telex operators, although Swiss Bank knew that messages intended for other departments were sometimes diverted to the telex machines in the foreign exchange department.

At 8:30 a.m. the next day, April 27, Hyman-Michaels in Chicago received a telex from the Pandora’s owner stating that the charter was canceled because payment for the April 27-May 11 charter period had not been made. Hyman-Michaels called over to Continental and told them to keep trying to effect payment through Swiss Bank even if the Pandora’s owner rejected it. This instruction was confirmed in a letter to Continental dated April 28, in which Hyman-Michaels stated: “please instruct your London branch to advise their correspondents to persist in attempting to make this payment. This should be done even in the face of a rejection on the part of Banque de Paris to receive this payment. It is paramount that in order to strengthen our position in an arbitration that these funds continue to be readily available.” Hyman-Michaels did not attempt to wire the money directly to the Banque de Paris as it had done on the occasion of its previous default. Days passed while the missing telex message was hunted unsuccessfully. Finally Swiss Bank suggested to Continental that it retransmit the telex message to the machine in the *954cable department and this was done on May 1. The next day Swiss Bank attempted to deposit the $27,000 in the account of the Pandora’s owner at the Banque de Paris but the payment was refused.

Again the arbitrators were convened and rendered a decision. In it they ruled that Hyman-Michaels had been “blameless” up until the morning of April 27, when it first learned that the Banque de Paris had not received payment on April 26, but that “being faced with this situation,” Hyman-Michaels had “failed to do everything in [its] power to remedy it. The action taken was immediate but did not prove to be adequate, in that [Continental] Bank and its correspondent required some 5/6 days to trace and effect the lost instruction to remit. [Hyman-Michaels] could have ordered an immediate duplicate payment — or even sent a Banker’s check by hand or special messengers, so that the funds could have reached owner’s Bank, not later than April 28th.” By failing to do any of these things Hyman-Michaels had “created the opening” that the Pandora’s owner was seeking in order to be able to cancel the charter. It had “acted imprudently.” The arbitration panel concluded, reluctantly but unanimously, that this time the Pandora’s owner was entitled to cancel the agreement. The arbitration decision was confirmed by a federal district court in New York.

Hyman-Michaels then brought this diversity action against Swiss Bank, seeking to recover its expenses in the second arbitration proceeding plus the profits that it lost because of the cancellation of the charter. The contract by which Hyman-Michaels had agreed to ship scrap steel to Brazil had been terminated by the buyer in March 1973 and Hyman-Michaels had promptly subchartered the Pandora at market rates, which by April 1973 were double the rates fixed in the charter. Its lost profits are based on the difference between the charter and subcharter rates.

Swiss Bank impleaded Continental Bank as a third-party defendant, asking that if it should be ordered to pay Hyman-Michaels, then Continental should be ordered to indemnify it. Continental filed a cross-claim against Hyman-Michaels seeking to shift back to Hyman-Michaels the cost of any judgment that Swiss Bank might obtain against it, on the ground that any errors by Continental were caused by Hyman-Michaels’ negligence. Hyman-Michaels in turn counterclaimed against Continental, alleging that Continental had both been negligent and broken its contract with Hyman-Michaels in failing to effect payment on April 26, and was therefore liable to Hyman-Michaels along with Swiss Bank.

The case was tried to a district judge without a jury. In his decision, 522 F.Supp. 820 (N.D.Ill.1981), he first ruled that the substantive law applicable to Hyman-Michaels’ claim against Swiss Bank was that of Illinois, rather than Switzerland as urged by Swiss Bank, and that Swiss Bank had been negligent and under Illinois law was liable to Hyman-Michaels for $2.1 million in damages. This figure was made up of about $16,000 in arbitration expenses and the rest in lost profits on the subcharter of the Pandora. The judge also ruled that Swiss Bank was not entitled to indemnification from Continental Bank, which made Continental's cross-claim moot; and lastly he dismissed Hyman-Michaels’ counterclaim against Continental on the ground that Continental had not breached any duty to Hyman-Michaels. The case comes to us on Swiss Bank’s appeal from the judgment in favor of Hyman-Michaels and from the dismissal of Swiss Bank’s claim against Continental Bank, and on Hyman-Michaels’ appeal from the dismissal of its counterclaim against Continental Bank.

Logically the first question we should address is choice of law. The parties seem agreed that if Swiss law applies, Hyman-Michaels has no claim against Swiss Bank, because under Swiss law a bank cannot be held liable to someone with whom it is not in privity of contract and there was no contract between Swiss Bank and Hyman-Michaels. Illinois does not have such a privity requirement. But this creates a conflict of laws only if Hyman-Michaels has a good claim against Swiss Bank under *955Illinois law; if it does not, then our result must be the same regardless of which law applies. Because we are more certain that Hyman-Michaels cannot recover against Swiss Bank under Illinois law than we are that Swiss rather than Illinois law applies to this case under Illinois choice-of-law principles (which we must apply in a diversity suit tried in Illinois, see Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941)), we shall avoid the choice-of-law question and discuss Swiss Bank’s liability to Hyman-Michaels under Illinois law without deciding — for, to repeat, it would make no difference to the outcome — whether it really is Illinois law or Swiss law that governs.

When a bank fails to make a requested transfer of funds, this can cause two kinds of loss. First, the funds themselves or interest on them may be lost, and of course the fee paid for the transfer, having bought nothing, becomes a loss item. These are “direct” (sometimes called “general”) damages. Hyman-Michaels is not seeking any direct damages in this case and apparently sustained none. It did not lose any part of the $27,000; although its account with Continental Bank was debited by this amount prematurely, it was not an interest-bearing account so Hyman-Michaels lost no interest; and Hyman-Michaels paid no fee either to Continental or to Swiss Bank for the aborted transfer. A second type of loss, which either the payor or the payee may suffer, is a dislocation in one’s business triggered by the failure to pay. Swiss Bank’s failure to transfer funds to the Banque de Paris when requested to do so by Continental Bank set off a chain reaction which resulted in an arbitration proceeding that was costly to Hyman-Michaels and in the cancellation of a highly profitable contract. It is those costs and lost profits — “consequential” or, as they are sometimes called, “special” damages — that Hyman-Michaels seeks in this lawsuit, and recovered below. It is conceded that if Hyman-Michaels was entitled to consequential damages, the district court measured them correctly. The only issue is whether it was entitled to consequential damages.

If a bank loses a check, its liability is governed by Article 4 of the Uniform Commercial Code, which precludes consequential damages unless the bank is acting in bad faith. See Ill.Rev.Stat. ch. 26, § 4-103(5). If Article 4 applies to this transaction, Hyman-Michaels cannot recover the damages that it seeks, because Swiss Bank was not acting in bad faith. Maybe the language of Article 4 could be stretched to include electronic fund transfers, see section 4-102(2), but they were not in the contemplation of the draftsmen. For purposes of this case we shall assume, as the Second Circuit held in Delbrueck & Co. v. Manufacturers Hanover Trust Co., 609 F.2d 1047, 1051 (2d Cir. 1979), that Article 4 is inapplicable, and apply common law principles instead.

Hadley v. Baxendale, 9 Ex. 341,156 Eng. Rep. 145 (1854), is the leading common law case on liability for consequential damages caused by failure or delay in carrying out a commercial undertaking. The engine shaft in plaintiffs’ corn mill had broken and they hired the defendants, a common carrier, to transport the shaft to the manufacturer, who was to make a new one using the broken shaft as a model. The carrier failed to deliver the shaft within the time promised. With the engine shaft out of service the mill was shut down. The plaintiffs sued the defendants for the lost profits of the mill during the additional period that it was shut down because of the defendants’ breach of their promise. The court held that the lost profits were not a proper item of damages, because “in the great multitude of cases of millers sending off broken shafts to third persons by a carrier under ordinary circumstances, such consequences [the stoppage of the mill and resulting loss of profits] would not, in all probability, have occurred; and these special circumstances were here never communicated by the plaintiffs to the defendants.” 9 Ex. at 356, 156 Eng.Rep. at 151.

The rule of Hadley v. Baxendale — that consequential damages will not be awarded unless the defendant was put on notice of the special circumstances giving rise to *956them — has been applied in many Illinois cases, and Hadley cited approvingly. See, e.g., Underground Constr. Co. v. Sanitary Dist. of Chicago, 367 Ill. 360, 369, 11 N.E.2d 361, 365 (1937); Western Union Tel. Co. v. Martin, 9 Ill.App. 587, 591-93 (1882); Siegel v. Western Union Tel. Co., 312 Ill.App. 86, 92-93, 37 N.E.2d 868, 871 (1941); Spangler v. Holthusen, 61 Ill.App.3d 74, 80-82, 18 Ill.Dec. 840, 378 N.E.2d 304, 309-10 (1978). In Siegel, the plaintiff had delivered $200 to Western Union with instructions to transmit it to a friend of the plaintiffs. The money was to be bet (legally) on a horse, but this was not disclosed in the instructions. Western Union misdirected the money order and it did not reach the friend until several hours after the race had taken place. The horse that the plaintiff had intended to bet on won and would have paid $1650 on the plaintiff’s $200 bet if the bet had been placed. He sued Western Union for his $1450 lost profit, but the court held that under the rule of Hadley v. Baxendale Western Union was not liable, because it “had no notice or knowledge of the purpose for which the money was being transmitted.” 312 Ill.App. at 93, 37 N.E.2d at 871.

The present case is similar, though Swiss Bank knew more than Western Union knew in Siegel; it knew or should have known, from Continental Bank’s previous telexes, that Hyman-Michaels was paying the Pandora Shipping Company for the hire of a motor vessel named Pandora. But it did not know when payment was due, what the terms of the charter were, or that they had turned out to be extremely favorable to Hyman-Michaels. And it did not know that Hyman-Michaels knew the Pandora’s owner would try to cancel the charter, and probably would succeed, if Hyman-Michaels was ever again late in making payment, or that despite this peril Hyman-Michaels would not try to pay until the last possible moment and in the event of a delay in transmission would not do everything in its power to minimize the consequences of the delay. Electronic funds transfers are not so unusual as to automatically place a bank on notice of extraordinary consequences if such a transfer goes awry. Swiss Bank did not have enough information to infer that if it lost a $27,000 payment order it would face a liability in excess of $2 million. Cf. Snell v. Cottingham, 72 Ill. 161, 169-70 (1874); Flug v. Craft Mfg. Co., 3 Ill.App.2d 56, 67, 120 N.E.2d 666, 671 (1954).

It is true that in both Hadley and Siegel there was a contract between the parties and here there was none. We cannot be certain that the Illinois courts would apply the principles of those cases outside of the contract area. As so often in diversity cases, there is an irreducible amount of speculation involved in attempting to predict the reaction of a state’s courts to a new issue. The best we can do is to assume that the Illinois courts would look to the policies underlying cases such as Hadley and Siegel and, to the extent they found them pertinent, would apply those cases here. We must therefore ask what difference it should make whether the parties are or are not bound to each other by a' contract. On the one hand, it seems odd that the absence of a contract would enlarge rather than limit the extent of liability. After all, under Swiss law the absence. of a contract would be devastating to Hyman-Michaels’ claim. Privity is not a wholly artificial concept. It is one thing to imply a duty to one with whom one has a contract and another to imply it to the entire world.

On the other hand, contract liability is strict. A breach of contract does not connote wrongdoing; it may have been caused by circumstances beyond the promisor’s control — a strike, a fire, the failure of a supplier to deliver an essential input. See Globe Ref. Co. v. Landa Cotton Oil Co., 190 U.S. 540, 543-44, 23 S.Ct. 754, 755-56, 47 L.Ed. 1171 (1903). And while such contract doctrines as impossibility, impracticability, and frustration relieve promisors from liability for some failures to perform that are beyond their control, many other such failures are actionable although they could not *957have been prevented by the exercise of due care. The district judge found that Swiss Bank had been negligent in losing Continental Bank’s telex message and it can be argued that Swiss Bank should therefore be liable for a broader set of consequences than if it had only broken a contract. But Siegel implicitly rejects this distinction. Western Union had not merely broken its contract to deliver the plaintiff’s money order; it had “negligently misdirected” the money order. “The company’s negligence is conceded.” 312 Ill.App. at 88, 91, 37 N.E.2d at 869, 871. Yet it was not liable for the consequences.

Siegel, we conclude, is authority for holding that Swiss Bank is not liable for the consequences of negligently failing to transfer Hyman-Michaels’ funds to Banque de Paris; reason for such a holding is found in the animating principle of Hadley v. Baxendale, which is that the costs of the untoward consequence of a course of dealings should be borne by that party who was able to avert the consequence at least cost and failed to do so. In Hadley the untoward consequence was the shutting down of the mill. The carrier could have avoided it by delivering the engine shaft on time. But the mill owners, as the court noted, could have avoided it simply by having a spare shaft. 9 Ex. at 355-56, 156 Eng.Rep. at 151. Prudence required that they have a spare shaft anyway, since a replacement could not be obtained at once even if there was no undue delay in carting the broken shaft to and the replacement shaft from the manufacturer. The court refused to imply a duty on the part of the carrier to guarantee the mill owners against the consequences of their own lack of prudence, though of course if the parties had stipulated for such a guarantee the court would have enforced it. The notice requirement of Hadley v. Baxendale is designed to assure that such an improbable guarantee really is intended.

This case is much the same, though it arises in a tort rather than a contract setting. Hyman-Michaels showed a lack of prudence throughout. It was imprudent for it to mail in Chicago a letter that unless received the next day in Geneva would put Hyman-Michaels in breach of a contract that was very profitable to it and that the other party to the contract had every interest in canceling. It was imprudent thereafter for Hyman-Michaels, having narrowly avoided cancellation and having (in the words of its appeal brief in this court) been “put ... on notice that the payment provision of the Charter would be strictly enforced thereafter,” to wait till arguably the last day before payment was due to instruct its bank to transfer the necessary funds overseas. And it was imprudent in the last degree for Hyman-Michaels, when it received notice of cancellation on the last possible day payment was due, to fail to pull out all the stops to get payment to the Banque de Paris on that day, and instead to dither while Continental and Swiss Bank wasted five days looking for the lost telex message. Judging from the obvious reluctance with which the arbitration panel finally decided to allow the Pandora’s owner to cancel the charter, it might have made all the difference if Hyman-Michaels had gotten payment to the Banque de Paris by April 27 or even by Monday, April 30, rather than allowed things to slide until May 2.

This is not to condone the sloppy handling of incoming telex messages in Swiss Bank’s foreign department. But Hyman-Michaels is a sophisticated business enterprise. It knew or should have known that even the Swiss are not infallible; that messages sometimes get lost or delayed in transit among three banks, two of them located 5000 miles apart, even when all the banks are using reasonable care; and that therefore it should take its own precautions against the consequences — best known to itself — of a mishap that might not be due to anyone’s negligence.

We are not the first to remark the affinity between the rule of Hadley v. Baxendale and the doctrine, which is one of tort as *958well as contract law and is a settled part of the common law of Illinois, of avoidable consequences. See Dobbs, Handbook on the Law of Remedies 831 (1973); cf. Benton v. J. A. Fay & Co., 64 Ill. 417 (1872). If you are hurt in an automobile accident and unreasonably fail, to seek medical treatment, the injurer, even if negligent, will not be held liable for the aggravation of the injury due to your own unreasonable behavior after the accident. See, e.g., Slater v. Chicago Transit Auth., 5 Ill.App.2d 181, 185, 125 N.E.2d 289, 291 (1955). If in addition you failed to fasten your seat belt, you may be barred from collecting the tort damages that would have been prevented if you had done so. See, e.g., Mount v. McClellan, 91 Ill.App.2d 1, 5, 234 N.E.2d 329, 331 (1968). Hyman-Michaels’ behavior in steering close to the wind prior to April 27 was like not fastening one’s seat belt; its failure on April 27 to wire a duplicate payment immediately after disaster struck was like refusing to seek medical attention after a serious accident. The seat-b.elt cases show that the doctrine of avoidable consequences applies whether the tort victim acts imprudently before or after the tort is committed. See Prosser, Handbook of the Law of Torts 424 (4th ed. 1971). Hyman-Michaels did both.

The rule of Hadley v. Baxendale links up with tort concepts in another way. The rule is sometimes stated in the form that only foreseeable damages are recoverable in a breach of contract action. E.g., Restatement (Second) of Contracts § 351 ' (1979). So expressed, it corresponds to the tort principle that limits liability to the foreseeable consequence of the defendant’s carelessness. See, e.g., Neering v. Illinois Cent. R.R. Co., 383 Ill. 366, 380, 50 N.E.2d 497, 503 (1943). The amount of care that a person ought to take is a function of the probability and magnitude of the harm that may occur if he does not take care. See, e.g., United States v. Carroll Towing Co., 159 F.2d 169, 173 (2d Cir. 1947); Bezark v. Kostner Manor, Inc., 29 Ill.App.2d 106, 111-12, 172 N.E.2d 424, 426-27 (1961). If he does not know what that probability and magnitude are, he cannot determine how much care to take. That would be Swiss Bank’s dilemma if it were liable for consequential damages from failing to carry out payment orders in timely fashion. To estimate the extent of its probable liability in order to know how many and how elaborate fail-safe features to install in its telex rooms or how much insurance to buy against the inevitable failures, Swiss Bank would have to collect reams of information about firms that are not even its regular customers. It had no banking relationship with Hyman-Michaels. It did not know or have reason to know how at once precious and fragile Hyman-Michaels’ contract with the Pandora’s owner was. These were circumstances too remote from Swiss Bank’s practical range of knowledge to have affected its decisions as to who should man the telex machines in the foreign department or whether it should have more intelligent machines or should install more machines in the cable department, any more than the falling of a platform scale because a conductor jostled a passenger who was carrying fireworks was a prospect that could have influenced the amount of care taken by the Long Island Railroad. See Palsgraf v. Long Island R.R., 248 N.Y. 339, 162 N.E. 99 (1928); cf. Ney v. Yellow Cab Co., 2 Ill.2d 74, 80-84, 117 N.E.2d 74, 78-80 (1954).

In short, Swiss Bank was not required in the absence of a contractual undertaking to take precautions or insure against a harm that it could not measure but that was known with precision to Hyman-Michaels, which could by the exercise of common prudence have averted it completely. As Chief Judge Cardozo (the author of Palsgraf) remarked in discussing the application of Hadley v. Baxendale to the liability of telegraph companies for errors in transmission, “The sender can protect himself by insurance in one form or another if the risk of nondelivery or error appears to be too great.. . . The company, if it takes out insurance for itself, can do no more than *959guess at the loss to be avoided.” Kerr S.S. Co. v. Radio Corp. of America, 245 N.Y. 284, 291-92, 157 N.E. 140, 142 (1927).

But Kerr is a case from New York, not Illinois, and Hyman-Michaels argues that two early Illinois telegraph cases compel us to rule in its favor against Swiss Bank. Postal Tel. Cable Co. v. Lathrop, 131 Ill. 575, 23 N.E. 583 (1890), involved the garbled transmission of two telegrams from a coffee dealer — who as the telegraph company knew was engaged in buying and selling futures contracts — to his broker. The first telegram (there is no need to discuss the second) directed the broker to buy 1000 bags of August coffee for the dealer’s account. This got changed in transmission to 2000 bags, and because the price fell the dealer sustained an extra loss for which he sued the telegraph company. The court held that the company had had notice enough to make it liable for consequential damages under the rule of Hadley v. Baxendale. It knew it was transmitting buy and sell orders in a fluctuating market and that a garbled transmission could result in large losses. There was no suggestion that the dealer should have taken his own precautions against such mistakes. In Providence-Washington Ins. Co. v. Western Union Tel. Co., 247 Ill. 84, 93 N.E. 134 (1910), a telegram from an insurance company canceling a policy was misdirected, and before it turned up there was a fire and the insurance company was liable on the policy. This was the precise risk created by delay, it was obvious on the face of the telegram, and the telegraph company was therefore liable for the insurance company’s loss on the policy. Again there was no suggestion that the plaintiff had neglected any precaution. Both cases are distinguishable from the present case: the defendants had more information and the plaintiffs were not imprudent.

The legal principles that we have said are applicable to this case were not applied below. Although the district judge’s opinion is not entirely clear, he apparently thought the rule of Hadley v. Baxendale inapplicable and the imprudence of Hyman-Michaels irrelevant. See 522 F.Supp. at 833. He did state that the damages to Hyman-Michaels were foreseeable because “a major international bank” should know that a failure to act promptly on a telexed request to transfer funds could cause substantial damage; but Siegel — and for that matter Lathrop and Providence-Washington — make clear that that kind of general foreseeability, which is present in virtually every case, does not justify an award of consequential damages.

We could remand for new findings based on the proper legal standard, but it is unnecessary to do so. The undisputed facts, recited in this opinion, show as a matter of law that Hyman-Michaels is not entitled to recover consequential damages from Swiss Bank.

Since Hyman-Michaels’ complaint against Swiss Bank must be dismissed, Swiss Bank’s third-party complaint against Continental Bank and Continental Bank’s cross-claim against Hyman-Michaels are moot. That leaves only Hyman-Michaels’ counterclaim against Continental Bank still to be considered. Although it puts us in the peculiar position of deciding a case between two citizens of Illinois that involves only Illinois law, the counterclaim is within our ancillary jurisdiction. Continental Bank’s complaint against Hyman-Michaels — a third-party defendant’s complaint against the original plaintiff, arising out of the same transaction as the original suit, see Fed.R.Civ.P. 14(a) — is within that jurisdiction, Mayer Paving & Asphalt Co. v. General Dynamics Corp., 486 F.2d 763, 772 (7th Cir. 1973), and Hyman-Michaels’ counterclaim against Continental, being a compulsory counterclaim, did not require an independent federal jurisdictional basis and is therefore also within our ancillary jurisdiction.

It is true that if Hyman-Michaels’ claim against Continental had been based *960on Rule 14(a) rather than Rule 13(a), it would have required an independent federal jurisdictional basis. Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978). But there is no inconsistency. A plaintiff cannot confer federal jurisdiction to decide a state-law claim by asserting such a claim under Rule 14(a) against a third-party defendant who is a citizen of the same state, when if he had sued that party originally he would have had to bring his entire suit in state court because complete diversity would have been lacking. See 437 U.S. at 374-75, 98 S.Ct. at 2402-03. But so far as appears Hyman-Michaels did not want to sue Continental Bank originally; it was induced to do so by Continental’s claim against it. That claim was within the ancillary jurisdiction of the federal courts because, like a compulsory counterclaim, it arose out of the same transaction as Hyman-Michaels’ claim against Swiss Bank, which was indirectly a claim against Continental via Swiss Bank’s indemnity claim against Continental. See Revere Copper & Brass Inc. v. Aetna Cas. & Sur. Co., 426 F.2d 709, 716 (5th Cir. 1970). And Hyman-Michaels’ claim against Continental, which was a compulsory counterclaim, did not require an independent jurisdictional basis. See Moore v. New York Cotton Exch., 270 U.S. 593, 46 S.Ct. 367, 70 L.Ed. 750 (1926). Continental may not invoke the jurisdiction of the federal courts in order to bring a state-law claim against a nondiverse party and then use the lack of diversity to force that party to bring its identical claim agáinst Continental in a state court.

On the merits, we agree with the district judge that Hyman-Michaels did not prove its case. Continental did not break any contract with Hyman-Michaels. All it undertook to do on April 25 was to transmit a telex message to Swiss Bank, and it did so. All it undertook to do on April 27, by the evidence of Hyman-Michaels’ own confirming letter, was to advise its correspondent — that is, Swiss Bank — to “persist in attempting to make . . . payment,” and it did so advise its correspondent. Nor was Continental negligent on either occasion. Its telex operator had used the machine in Swiss Bank’s foreign department before, for the same purpose and without incident; he had no reason to expect a mishap. And Continental used due care in assisting Swiss Bank in the latter’s vain hunt for the missing telex. The district court’s findings on these issues were skimpy but the facts are clear and a remand is unnecessary.

No other issues need be decided. The judgment in favor of Hyman-Michaels against Swiss Bank is reversed with directions to enter judgment for Swiss Bank. The judgment in favor of Continental Bank on Swiss Bank’s third-party complaint is vacated with instructions to dismiss that complaint as moot. The judgment dismissing Continental’s cross-claim against Hyman-Michaels as moot, and the judgment in favor of Continental on Hyman-Michaels’ counterclaim, are affirmed. The costs of the appeals shall be borne by Hyman-Michaels (EVRA Corporation).

SO ORDERED.

POSNER, Circuit Judge.

The plaintiffs husband was a patient at the Belleville Family Practice Clinic, in southern Illinois. The clinic is jointly operated by the U.S. Air Force and St. Louis University, the defendants in this suit for wrongful death arising from alleged medical malpractice. Our jurisdiction over the United States is conferred by the Federal Tort Claims Act, and the claim against the university is within both the supplemental jurisdiction of the district court, 28 U.S.C. § 1367, and the court’s diversity jurisdiction. After a three-day bench trial, the district judge found the defendants jointly and severally liable and awarded the plaintiff damages in excess of $8 million, consisting of some $500,000 for medical care and lost wages, $750,000 for pain and suffering, and $7 million for loss of consortium by her and the couple’s four children. The appeals challenge both the finding of liability and the amount of damages awarded for loss of consortium.

Ronald Arpin, age 54, diabetic and overweight, fell while working at his job as a welder and landed heavily and painfully on his right hip. He finished his shift, went home, took some Advil for the pain, went to bed — but awoke early in the morning experiencing unbearable pain and was taken by ambulance to St. Elizabeth’s Hospital in Belleville. X-rays were taken but were negative and he was sent home with a prescription for a stronger painkiller, Vicodin. Over the next three days his pain worsened despite the painkiller and he developed additional symptoms — sweating, pallor, shortness of breath, loss of appetite.

*772On the fourth day he was taken to the Belleville Family Practice Clinic by his wife and daughter and was seen by a second-year resident, Dr. Asra Khan, who is employed by St. Louis University. After a brief examination, she concluded that Arpin had a muscle strain. She refused the family’s request for an MRI, prescribed no medication, and did not ask her supervising physician (“preceptor”), Dr. James Haynes, an air force officer, to examine Arpin. She denied that she observed Arpin’s other symptoms or was told about them by the family.

Dr. Khan had a three-minute discussion of Arpin’s case with Dr. Haynes, and according to her testimony told him that Arpin’s pain was increasing. He denied that she told him that and added that if she had, he probably would have examined the patient himself and ordered a CAT scan and that if he had done these things he would have discovered that Arpin had an infection of the psoas, a muscle in the hip. Such an infection is extremely rare— and can be deadly. The symptoms are pain, fever, and a limp, but diagnosis requires a CT scan or an MRI. Treatment consists of administering broad-spectrum antibiotics and draining the abscess. See, e.g., T. Thongngarm & R.W. McMurray, “Primary Psoas Abscess,” 60 Annals of Rheumatic Diseases 173 (2001); H. Mallick et ah, “Iliopsoas Abscesses,” 80 Postgraduate Medical J. 459 (2004); M. van den Berge et al., “Psoas Abscess: Report of a Series and Review of the Literature,” 63 Netherlands J. Medicine 413 (2005); J.P. Garner et al., “Psoas Abscess — Not as Rare as We Think?” 9 Colorectal Disease 269 (2007).

Dr. Haynes agreed with Khan’s diagnosis of muscle strain and did not examine Arpin himself.

Arpin had returned home after his examination by Dr. Khan. His condition continued to worsen, and two days after returning home he was re-admitted to St. Elizabeth’s Hospital with symptoms of septic shock and multi-organ failure. He could not be saved. Within two weeks he was dead.

The Belleville clinic, though jointly operated by the air force and the university, has two “sides,” one for air force patients and one for civilian patients from the local community; Arpin was a “community side” patient. The plaintiff does not argue that either defendant is responsible for the negligence of an employee of the other defendant — -the air force for Dr. Khan, the university’s employee, or the university for Dr. Haynes, the air force officer. We therefore need not consider whether Dr. Haynes might have been deemed a “borrowed employee” of the university, which would depend on whether the university had “the right to control [Haynes] with respect to the work performed.” Haight v. Aldridge Electric Co., 215 Ill.App.3d 353, 159 Ill.Dec. 14, 575 N.E.2d 243, 252 (1991); Restatement (Second) of Agency § 227, comment a (1958).

Dr. Khan should have realized that increasing pain was inconsistent with her diagnosis of muscle strain and that there were also symptoms of infection that should have been attended to. That much is clear. But the United States is concerned with the district judge’s further finding that it is the duty of a resident’s preceptor (Dr. Haynes in this case) personally to examine a patient who has already been examined by the resident and also to assess the resident’s medical knowledge and experience before giving any weight to her diagnosis. The judge based this finding entirely on testimony by the plaintiffs expert witness, Dr. Alan Pollock, a specialist in infectious disease at New York University Medical Center. Pollock’s testimony about the duties of physicians who supervise residents concerned *773hospitalized patients, however, not outpatients. His experience of supervising residents had been limited to hospitals. The average hospitalized patient is much sicker than the average person who goes to see a doctor at the doctor’s office or clinic. Pollock’s testimony was insufficient to establish that the standard of care in Illinois for clinic physicians requires the preceptor to examine all walk-in patients himself and to assess the knowledge and experience of all residents whom he supervises before accepting any of their diagnoses.

Surprisingly, no cases define the preceptor’s duty of care with respect to supervision of residents. All one can gather from the case law is that a supervising physician need not be present (at a birth, at a surgery, etc.) if his presence is not required for the patient’s safety, Brooks v. Leonardo, 204 Ill.App.3d 97, 149 Ill.Dec. 399, 561 N.E.2d 1095, 1098-99 (1990); Young v. United States, 648 F.Supp. 146, 151 (E.D.Va.1986); Rogers v. Black, 121 Ga.App. 299, 173 S.E.2d 431, 432-33 (1970); cf. Powell v. Risser, 375 Pa. 60, 99 A.2d 454, 456 (1953), and must be if it is. Thomas v. Corso, 265 Md. 84, 288 A.2d 379, 388-89 (1972). Medicare reimbursement rules endorse a “primary care exception” that excuses an attending physician from routinely having to examine or otherwise observe a resident’s patient. Association of American Medical Colleges, “Medicare Teaching Physician Question and Answer” (Dec.2003), www. aamc.org/advocacy/library/teachphys/ medicareqal21603.pdf (visited Mar. 25, 2008). Although the rules have been said to have established “the standard for the level of supervision that must be provided [by the attending physician] to the resident physician,” Paul M. Paulman, Precepting Medical Residents in the Office 59 (2006); see also Leonard Berlin, “Liability of Attending Physicians When Supervising Residents,” 171 Am. J. Roentgenology 295, 296, 299 (1998), we cannot be certain that the Supreme Court of Illinois would adopt the “primary care exception” as a rule of the Illinois common law of medical malpractice. But it was the plaintiffs burden to establish a violation of the standard of care, and she has failed to establish that the standard is any higher than the standard that the Medicare rules create.

The United States argues that the district judge’s erroneous reliance on Dr. Pollock’s testimony vitiates the finding that Dr. Haynes was negligent. We do not agree. The judge’s essential findings, which his erroneous reliance on Dr. Pollock’s testimony does not undermine because they were simple findings of fact based on credibility and independent of medical controversy, were that Arpin was exhibiting symptoms of infection and that Dr. Khan told Dr. Haynes that Arpin’s pain was increasing. Haynes admitted that had he known that Arpin’s pain was increasing he would have examined him and that had he done so he would have noticed the symptoms of infection and ordered tests that in all likelihood would have revealed the psoas infection in time for Arpiris life to be saved. Although a psoas infection is very rare, both Haynes and Khan were familiar with it and it is readily treatable if caught early. Thongngarm & McMurray, supra, at 175. Once the infection was allowed to spread untreated through Arpin’s body, he was doomed.

The United States argues that Dr. Haynes’s testimony about what he would have done had Dr. Khan told him that Arpin’s pain was increasing was not an admission that he would have been required by the applicable standard of care to do those things; and that in any evident his testimony alone was insufficient to establish what the applicable standard of care in such a ease is. These turn out to be the same argument. They amount to *774saying that if a resident tells her preceptor what she knows about the patient and then offers a diagnosis that he realizes is inconsistent with what she has told him he can nevertheless accept the diagnosis without conducting his own examination. That is a breach of the duty of care so fundamental as not to require expert evidence to establish. For a case similar in that respect to this one, see Mozingo v. Pitt County Memorial Hospital, Inc., 331 N.C. 182, 415 S.E.2d 341 (1992); see also Voykin v. Estate of DeBoer, 192 Ill.2d 49, 248 Ill.Dec. 277, 733 N.E.2d 1275, 1280 (2000); Walski v. Tiesenga, 72 Ill.2d 249, 21 Ill.Dec. 201, 381 N.E.2d 279 (1978); Ohligschlager v. Proctor Community Hospital, 55 Ill.2d 411, 303 N.E.2d 392, 396 (1973); Evans v. Roberts, 172 Iowa 653, 154 N.W. 923 (Iowa 1915); Baker v. Story, 621 S.W.2d 639, 642 (Tex.App.1981); cf. Thomas v. Corso, supra, 288 A.2d at 388.

Suppose Khan had told Haynes that Ar-pin had fallen on his hip and was experiencing severe and increasing pain and that she thought the cause of his pain was that his shoes were a size too small. Haynes could not have accepted the diagnosis without examining Arpin. The actual case is less extreme, but not so much less so that we can say that it was clear error for the district judge to find medical negligence. Increasing pain after a fall, as Haynes acknowledged and the medical literature confirms, is not a symptom of a mere muscle strain, David S. Smith, Field Guide to Bedside Diagnosis 185-86 (2d ed.2006); cf. Scott Kahan, Signs & Symptoms 102 (2004), unless the patient continues to use the muscle. Arpin, who was bedridden, did not.

The defendants make much of the fact that psoas infections are extremely rare. In 1992, only 12 cases were reported in the entire world, I. Gruenwald et al., “Psoas Abscess: Case Report and Review of the Literature,” 147 J. Urology 1624 (1992); Babafemi Taiwo, “Psoas Abscess: A Primer for the Internist,” 94 Southern Med. J. 2, 3 (2001), though they may be underreported. Garner et al., supra, at 273; van den Berge et al., supra, at 416. Physicians are not charged with knowledge of every disease, however rare. All that matters is they have a duty to conduct a competent search for the cause of a patient’s symptoms, which they failed to do here. Their failure makes both the prevalence of the disease and the fact that both physicians were acquainted with this rare disease irrelevant. Had Haynes realized that Arpin had symptoms of infection, a search for the cause would have ensued, and soon revealed it. Even before the cause was discovered, antibacterial medication would have been administered, as in any case of a serious infection, and would have prevented the infection from spreading to Arpin’s other organs while the search for the cause proceeded. See Robert F. Betts et al., A Practical Approach to Infectious Diseases 453 (5th ed.2003); C.H. Chern et al., “Psoas Abscess: Making an Early Diagnosis in the ED,” 17 Am. J. Emergency Medicine 83 (2007).

Likewise had Khan grasped the significance of the symptoms of infection that were exhibited by Arpin and were disclosed to her by Arpin’s wife and daughter (or so they testified, and the judge was entitled to credit their testimony, as he did, over Khan’s conflicting testimony), she would have been duty-bound to treat the infection and begin a search for its cause, or at least report the symptoms to Dr. Haynes (or perhaps all three steps would have been required). Wingo v. Rockford Memorial Hospital, 292 Ill.App.3d 896, 226 Ill.Dec. 939, 686 N.E.2d 722, 729 (1997).

It is true that she was just a resident. But the majority rule, which in default of any Illinois case we’ll assume is the *775rule in Illinois as well, holds residents to the same standard of care as physicians who have completed their residency in the same field of medicine. McBride v. United States, 462 F.2d 72, 73-74 (9th Cir. 1972); Ayers v. United States, 750 F.2d 449, 455-56 (5th Cir.1985); Eureka-Maryland Assurance Co. v. Gray, 121 F.2d 104, 107 (D.C.Cir.1941); Centman v. Cobb, 581 N.E.2d 1286, 1290 (Ind.App.1991); Green v. State Through Southwest Louisiana Charity Hospital, 309 So.2d 706, 709 (La. App.1975); contra, Rush v. Akron General Hospital, 171 N.E.2d 378, 381 (1957); see generally Joseph H. King, “The Standard of Care for Residents and Other Medical School Graduates in Training,” 55 Am. U.L.Rev. 683, 751 (2006); Justin L. Ward, “Medical Residents: Should They be Held to a Different Standard of Care,” 22 J. Legal Med. 283 (2001). The majority rule seems sensible, when one considers the amount of responsibility for patient care that attending physicians delegate to residents, as illustrated by the “primary care exception” that we noted earlier and the fact that residents are physicians, not students. A physician who like Dr. Khan has completed her first year as a resident (that is, has completed her internship, as the first year of a residency used to be called), is eligible to be licensed to practice medicine without supervision. 225 ILCS 60/ll(A)(l)(a).

So both defendants were liable for Ar-pin’s death, and the liability was joint and several; we now consider whether the judge’s award of $7 million in damages for loss of consortium was so excessive as to “shock the judicial conscience,” which is the test under Illinois law. Richardson v. Chapman, 175 Ill.2d 98, 221 Ill.Dec. 818, 676 N.E.2d 621, 628 (1997); Velarde v. Illinois Central R.R., 354 Ill.App.3d 523, 289 Ill.Dec. 529, 820 N.E.2d 37, 55 (2004). The awarding of damages, such as for pain and suffering and loss of consortium, that do not merely replace a financial loss has been criticized, especially in medical malpractice cases because of concern with the high and rising costs of health care. Damages awards in malpractice cases drive up liability insurance premiums and, what may be the greater cost, promote “defensive medicine” that costs a lot but may do patients little good. Daniel P. Kessler & Mark B. McClellan, “Do Doctors Practice Defensive Medicine?,” Ill Q.J. Econ. 353 (1998). A reaction has set in that includes the recent passage of an Illinois law capping noneconomic damages in malpractice cases at $1 million for hospitals and hospital affiliates and $500,000 for physicians and other health-care professionals, 735 ILCS 5/2-1706.5(a)(l), (2), though the law was passed too recently to be applicable to this case and a judge has ruled that it violates the Illinois constitution. LeBron v. Gottlieb Memorial Hospital, 2007 WL 3390918 (Ill. Cir. Ct. Nov 13, 2007).

It used to be thought that noneconomic losses were arbitrary because incommensurable with any dollar valuation. That is not true. People are constantly trading off hazards to life and limb against money; consider combat pay and re-enlistment bonuses in the army. Even when the tradeoff is between two nonmonetary values, such as danger and convenience (as when one crosses a street against the lights because one is in a hurry, or drives in excess of the speed limit), it may be possible to express the tradeoff in monetary terms, for example by estimating, on the basis of hourly wage rates, the value of the time saving. And if we know both the probability of a fatal accident and the benefit that a person would demand to bear it we can estimate a value of life and use that value to calculate damages in wrongful death cases. See W. Kip Viscusi and Joseph E. Aldy, “The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World,” 27 J. Risk & Uncertainty 5 (2003); Paul Lanoie, Carmen *776Pedro & Robert Latour, “The Value of a Statistical Life: A Comparison of Two Approaches,” 10 J. Risk & Uncertainty 235 (1995); W. Kip Viscusi, “The Value of Risks to Life and Health,” 31 J. Econ. Lit. 1912 (1992). Suppose a person would demand $7 to assume a one in one million chance of being killed. Then we would estimate the value of his life at $7 million. Not that he would sell his life for that (or for any) amount of money, but that if the risk could be eliminated at any cost under $7 he would be better off. Suppose it could be eliminated by the potential injurer at a cost of only $5. Then we would want him to do so and the prospect of a $7 million judgment if he failed to would give him the proper incentive.

Loss of life is a real loss even when it has no financial dimension (the decedent might have had no income). So is the loss of the companionship (“consortium”) of a loved one. The problem is the lack of a formula for calculating appropriate damages for loss of consortium. The plaintiffs lawyer presented a good deal of evidence of the close and loving relationship between Mr. Arpin and his wife and children, but did not attempt — how could he? — to connect the evidence to the specific figures that he requested in his closing argument. He requested $5 million for Arpin’s widow and $1 million for each of the children; the judge awarded $4 million to her and $750,000 to each child. All the judge said in explanation of his award of these amounts was that “it is difficult to put a value on something that is priceless. Mrs. Arpin is far more dependent on her husband than are her children. Her children have suffered the loss of a father that is great and the devastation to this family is immeasurable.”

When a federal judge is the trier of fact, he, unlike a jury, is required to explain the grounds of his decision. Fed. R.Civ.P. 52(a). “This means, when the issue is the amount of damages, that the judge must indicate the reasoning process that connects the evidence to the conclusion.” Jutzi-Johnson v. United States, 263 F.3d 753, 758 (7th Cir.2001). One cannot but sympathize with the inability of the district judge in this case to say more than he did in justification of the damages that he assessed for loss of consortium. But the figures were plucked out of the air, and that procedure cannot be squared with the duty of reasoned, articulate adjudication imposed by Rule 52(a).

The judge should have considered awards in similar cases, both in Illinois and elsewhere. It is true that the Supreme Court of Illinois does not require or even encourage such comparisons. E.g., Richardson v. Chapman, supra, 221 Ill.Dec. 818, 676 N.E.2d at 628; Velarde v. Illinois Central R.R., supra, 289 Ill.Dec. 529, 820 N.E.2d at 55-56; Epping v. Commonwealth Edison Co., 315 Ill.App.3d 1069, 248 Ill.Dec. 625, 734 N.E.2d 916, 918-19 (2000). It is also true, though denied by the United States, that in a suit under the Federal Tort Claims Act, as in a diversity suit, the damages rules of the state whose law governs the substantive issues in the case bind the federal court; damages law is substantive law. But whether or not to permit comparison evidence in determining the amount of damages to award in a particular case is a matter of procedure rather than of substance, as it has no inherent tendency (as does a rule requiring heightened review of damages awards challenged as excessive, as in Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996)) either to increase or decrease the average damages award; the tendency is merely to reduce variance. The policy of permitting such comparison evidence is based, as suggested above, on the requirement in Fed.R.Civ.P. 52(a) that *777judges explain their reasoning. Rule 52(a) is of course a rule of procedure, rather than anything to do with how stingy or how generous damages awards should be.

And so in Jutzi-Johnson v. United States, supra, 263 F.3d at 759-60, we ruled that Illinois’s rule on comparison evidence in damages cases does not bind the federal courts even in cases such as this where the rule of decision is given by Illinois law. A later decision of this court, without citing Jutzi-Johnson — nor had the parties cited it to the court — contains dicta to the effect that the rule does bind the federal courts. The court nevertheless upheld the district judge’s refusal to set aside the jury’s award even though the judge had based his ruling in part on a comparison with awards in like cases. Naeem v. McKesson Drug Co., 444 F.3d 593, 611-12 (7th Cir. 2006).

Courts may be able to derive guidance for calculating damages for loss of consortium from the approach that the Supreme Court has taken in recent years to the related question of assessing the constitutionality of punitive damages. The Court has ruled that such damages are presumptively limited to a single-digits multiple of the compensatory damages, and perhaps to no more than four times those damages. State Farm Mutual Automobile Ins. Co. v. Campbell, 538 U.S. 408, 424-25, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003); see, e.g., International Union of Operating Engineers, Local 150 v. Lowe Excavating Co., 225 Ill.2d 456, 312 Ill.Dec. 238, 870 N.E.2d 303, 320-22 (2006). The first step in taking a ratio approach to calculating damages for loss of consortium would be to examine the average ratio in wrongful-death cases in which the award of such damages was upheld on appeal. The next step would be to consider any special factors that might warrant a departure from the average in the case at hand. Suppose the average ratio is 1:5 — that in the average case, the damages awarded for loss of consortium are 20 percent of the damages awarded to compensate for the other losses resulting from the victim’s death. The amount might then be adjusted upward or downward on the basis of the number of the decedent’s children, whether they were minors or adults, and the closeness of the relationship between the decedent and his spouse and children. In the present case the first and third factors would favor an upward adjustment, and the second a downward adjustment because all of Ar-pin’s children were adults when he died.

We suspect that such an analysis would lead to the conclusion that the award in this case was excessive, cf. Brown v. Arco Petroleum Products Co., 195 Ill.App.3d 563, 142 Ill.Dec. 262, 552 N.E.2d 1003, 1010 (1990); Bart v. Union Oil Co., 185 Ill.App.3d 64, 132 Ill.Dec. 848, 540 N.E.2d 770, 773 (1989), but it is not our place to undertake the analysis. It is a task for the trial judge in the first instance, though we cannot sustain the award of damages for loss of consortium on the meager analysis in the judge’s opinion; it does not satisfy the requirements of Rule 52(a). We have suggested (without meaning to prescribe) an approach that would enable him to satisfy them.

We affirm the joint and several liability of the defendants, and the award of damages other than for loss of consortium. With regard to those damages we vacate the judgment and remand the case for further proceedings consistent with this opinion.

AFFIRMED IN PART, VACATED IN PART, AND Remanded with Directions.

RE, Chief Judge.

In this diversity action, plaintiffs-appellants, Carl Jerry Hampton, individually and on behalf of his deceased son, Carl Gerome Hampton (collectively, Hampton), Missouri residents, sued defendant-appellee, Federal Express Corporation, a Delaware corporation, in the United States District Court for the Western District of Missouri, seeking a total of $3,081,000, for personal injury, wrongful death, and loss of services.

Hampton alleged that Federal Express, a common carrier, negligently failed to deliver blood samples of Carl Gerome Hampton, a cancer patient in need of a bone marrow transplant, that had to be matched with a potential bone marrow donor. Hampton appeals from judgment of the district court which granted the partial summary judgment motion of the carrier, Federal Express, limiting Hampton’s recovery to $100 in damages.

The question presented is whether the district court erred in determining that the carrier, Federal Express, is entitled to partial summary judgment under the released value doctrine, limiting its liability to $100, the amount stated in the contract of carriage between it and the shipper.

Since, on the facts presented, the nature and extent of damages suffered by plaintiff Hampton were not reasonably foreseeable to the carrier, Federal Express, we affirm the judgment of the district court granting Federal Express’ motion for partial summary judgment.

I. BACKGROUND

In March, 1988, Carl Gerome Hampton, a 13-year old cancer patient at Children’s Memorial Hospital in Omaha, Nebraska, was awaiting a bone marrow transplant. A transplant operation was scheduled at the University of Iowa Hospital in Iowa City, Iowa, where five potential bone marrow donors had been found.

On March 21, 1988, in order to match Carl with the most suitable donor, five samples of Carl’s blood were sent by the shipper, the Children’s Memorial Hospital in Omaha, to Dr. Nancy Goeken, at the Veterans Administration Medical Center in Iowa City. The shipper, the Children’s Me*1121morial Hospital, entered into a contract with the carrier, Federal Express, for the transport of the blood samples.

In a paragraph entitled “Damages or Loss,” the contract of carriage, set forth in the airbill, stated:

We are liable for no more than $100 per package in the event of physical loss or damage, unless you fill in a higher Declared Value to the left and document higher actual loss in the event of a claim. We charge 30<t for each additional $100 of declared value up to the maximum shown in our Service Guide.

The reverse side of the airbill contains several paragraphs, entitled “Limitations On Our Liability,” which state that:

Our liability for loss or damage to your package is limited to your actual damages or $100, whichever is less, unless you pay for and declare a higher authorized value. We do not provide cargo liability insurance, but you may pay thirty cents for each additional $100 of declared value. If you declare a higher value and pay the additional charge, our liability will be the lesser of your declared value or the actual value of your package.

It is not disputed that the blood samples were never received by Dr. Goeken, that Carl Hampton, the infant cancer patient, never obtained a bone marrow transplant, and that he died on May 19, 1988.

Alleging causes of action for personal injury, wrongful death, and loss of services, Carl Jerry Hampton, individually and on behalf of his deceased son, Carl Gerome Hampton, filed suit in the United States District Court for the Western District of Missouri, seeking $3,081,000 in damages. On the basis of the released value doctrine, the district court granted Federal Express’ motion for partial summary judgment, and entered judgment in favor of Hampton for $100.

II. DISCUSSION

A. The “Released Value Doctrine”

We have held that, under federal common law, “[a] common carrier may not exempt itself from liability for its negligence; however, a carrier may limit its liability.” Hopper Furs, Inc. v. Emery Air Freight Corp., 749 F.2d 1261, 1264 (8th Cir.1984). As stated by the Supreme Court in the leading case of Hart v. Pennsylvania R.R., 112 U.S. 331, 343, 5 S.Ct. 151, 157, 28 L.Ed. 717 (1884):

where a contract * * * signed by the shipper, is fairly made, agreeing on the valuation of the property carried, with the rate of freight based on the condition that the carrier assumes liability only to the extent of the agreed valuation, even in case of loss or damage by the negligence of the carrier, the contract will be upheld as a proper and lawful mode of securing a due proportion between the amount for which the carrier may be responsible and the freight he receives, and of protecting himself against extravagant and fanciful valuations.

See generally First Pa. Bank, N.A. v. Eastern Airlines, Inc., 731 F.2d 1113, 1115-16 (3d Cir.1984). This body of law, which has come to be known as the “released value doctrine” of federal common law, requires that in order to limit its liability “the carrier must present the shipper with a reasonable opportunity to declare a value for the shipment above the maximum value set by the carrier, pay an additional fee, and thereby be insured at a higher rate should the shipment go awry.” Husman Constr. Co. v. Purolator Courier Corp., 832 F.2d 459, 461 (8th Cir.1987).

In this case, the contract entered into by the shipper, the Children’s Memorial Hospital, with the carrier, Federal Express, clearly limited the liability of the carrier to $100, and provided the shipper with an opportunity to declare a higher value. Furthermore, it is not disputed that the shipper never declared a higher value for the blood samples. Hence, should the released value doctrine apply, the liability of the carrier, Federal Express, would be limited to $100.

There is a question, however, as to whether the released value doctrine applies in a suit brought by a plaintiff not a party to the contract of carriage. Hampton con*1122tends that his damages should not be limited by the released value doctrine since he was not the shipper of the blood samples, and, therefore, was not a party to the contract with the carrier, Federal Express. In support of his contention, Hampton cites the decision of this court in Arkwright-Boston Mfrs. Mut. Ins. Co. v. Great Western Airlines, Inc., 767 F.2d 425 (8th Cir.1985). It is clear, however, that Arkwright is distinguishable from the present case.

In Arkwright, TRW purchased electronic goods from a dealer in Cedar Rapids, Iowa. Pursuant to TRW’s specific instructions, the goods were shipped from the dealer, to TRW, in four packages by the carrier, Federal Express. Upon tender of the goods to Federal Express, title passed from the dealer to TRW. The airbills with Federal Express contained a clause limiting Federal Express’ liability to $100 per package, in the absence of a greater declared value. As in this case, the airbills did not declare a value greater than $100 for each package. See id. at 426.

In Arkwright, Federal Express entered into a subcontract, for the delivery of the packages, with the defendant, Great Western. Subsequently, the goods were destroyed in transit in the crash of the defendant’s airplane. See id. The plaintiff, Arkwright, TRW’s insurer and the subrogee of TRW’s rights against the defendant, then sued the defendant for $99,000, the amount the plaintiff paid to TRW for the goods destroyed in the crash. See id. at 425. Although the opinion does not indicate whether the plaintiff proceeded under a tort or contract theory, the district court granted summary judgment for the defendant, and limited its liability for each package to $100, the limitation on liability contained in the airbills. See id. at 426.

On appeal, we reversed and remanded for a trial. Since the airbill did not expressly extend the liability limitation to a subcontractor of the carrier, such as the defendant, we held that, under federal common law, the defendant could not benefit from the limitation on liability contained in the airbill, which stated the contract between the parties. See id. at 428. In effect, the contract limitation did not inure to the benefit of the subcontractor, who also was not relieved of its liability in tort.

This case, however, differs from Arkwright since Hampton is suing the carrier, Federal Express, rather than a defendant who is not a party to the contract of carriage. In addition, in this case, unlike Arkwright, the contract between the shipper, the Children’s Memorial Hospital, and the carrier, Federal Express, expressly limited the liability of the defendant, Federal Express, to $100. Hence, Arkwright does not support Hampton's assertion that the released value doctrine does not apply to this case.

In further support of his contention that the released value doctrine should not apply, Hampton cites two district court cases. In the first, a carrier was held liable to the consignee of the shipped goods, after the consignee brought an action for breach of contract. In the second, a carrier was held liable in tort to a plaintiff not a party to the contract of carriage. Neither case, however, is persuasive, since they are both factually distinguishable.

In the first case, New Dawn Natural Foods, Inc. v. Natural Nectar Corp., 655 F.Supp. 475 (E.D.Mo.1987), the plaintiff, the consignee of a shipment of ice cream, sued the defendants, including a carrier, on a breach of contract claim for damages caused by late delivery. The defendant carrier moved to dismiss for failure to state a claim for relief. The carrier contended that the plaintiff consignee was not a party to the contract between the carrier and its subcontractor and, hence, could not maintain an action on that contract. The court applied Missouri law, and concluded that “a consignee not in privity with a carrier has a cause of action against the carrier for damages arising out of the carrier’s negligent performance of the contract to deliver.” Id. at 476. Accordingly, the court denied the defendant carrier’s motion to dismiss. In this case, however, unlike in New Dawn, the plaintiff is not the consignee of the shipment.

In the second case cited by Hampton, Reece v. Delta Air Lines, Inc., 686 F.Supp. *112321 (D.Me.1988), the plaintiffs, the widow and two sisters of the decedent, sought damages for emotional distress caused by the defendant carrier’s negligence in mishandling the remains of the plaintiffs’ decedent, which were shipped in a coffin. The carrier moved for dismissal on the grounds that the waybill, which contained the contract entered into by the defendant carrier and the shipper, a funeral home, limited the total damages recoverable to fifty cents per pound. See id. at 22. The court concluded that “the contractual language cannot limit [the defendant carrierjs liability for any tort which is independent of the shipping contract.” Id. (emphasis in original). From the nature of the shipment in Reece, however, it is clear that the carrier in that case knew the contents of the coffin, and could foresee that the mishandling of the coffin would cause injuries of the type or nature suffered by the plaintiffs. Hence, in Reece, in contrast to this case, the damages suffered by the plaintiffs were reasonably foreseeable. Cf. Johnson v. State, 37 N.Y.2d 378, 383, 334 N.E.2d 590, 593, 372 N.Y.S.2d 638, 642 (1975) (A defendant is liable under “special circumstances,” such as the negligent transmission of message of death and negligent mishandling of a corpse, because the injury suffered is “within the ‘orbit of danger’ and therefore within the ‘orbit of the duty’ for the breach of which a wrongdoer may be held liable.” (citing Palsgraf v. Long Island R.R., 248 N.Y. 339, 343, 162 N.E. 99, 100 (1928)).

In a case factually similar to Reece, however, another district court granted a defendant carrier’s motion to dismiss. In Neal v. Republic Airlines, Inc., 605 F.Supp. 1145 (N.D.Ill.1985), the plaintiffs, the children and heirs at law of the decedent, sued the defendant carrier for damages caused by the carrier’s negligence in misdelivering the remains of the plaintiffs’ decedent. In granting the defendant’s motion, the court stated that “[wjhere * * * it is clear plaintiffs seek damages for breach of the carriage contract with [the defendant carrier], they may not avoid that contract’s liability limits by framing their complaint in terms of bailment and tort.” Id. at 1148. Stating that the plaintiffs “must proceed, if at all, on a breach of contract theory,” id., the court concluded that since the plaintiffs were not parties to the contract of carriage, they could not sue the carrier. See id. at 1150.

Apart from the district court cases discussed, Hampton has failed to cite any authority in support of his position that the released value doctrine does not apply. Even if the released value doctrine does not apply, in this case, Hampton still cannot prevail under general principles of the common law.

B. Recovery in Contract

The arguments raised present important questions in contrasting a recovery based on contract or tort. English legal history shows that classifications and concepts that today seem absolutely distinct, were once blended and spring from a common source. Tort and contract law is an example, since the law of contracts began with the common law action of assumpsit, which traces its origins to the law of tort. See 3 W. Holdsworth, A History of English Law 428-29 (3d ed.1923). Furthermore, in modern times, the difference between tort and contract liability “has become an increasingly difficult distinction to make.” W. Keeton, Prosser and Keeton on the Law of Torts § 92 (5th ed.1984) (hereinafter Prosser). Although it may be true that “general propositions do not decide concrete cases,” Lochner v. New York, 198 U.S. 45, 76, 25 S.Ct. 539, 547, 49 L.Ed. 937 (1905) (Holmes, J., dissenting), it is basic that, in contract law, the defendant’s liability to a plaintiff arises from the contractual agreement between the parties. Tort liability, however, arises from “general obligations that are imposed by law— apart from and independent of promises made and therefore apart from the manifested intention of the parties — to avoid injury to others.” Prosser at § 92.

In this case, even if it were to be assumed that Hampton may sue as a third party beneficiary of the contract between the shipper and the carrier, on the facts presented he still cannot recover in con*1124tract. See Osmond State Bank v. Uecker Grain, Inc., 227 Neb. 636, 639, 419 N.W.2d 518, 520 (1988) (under Nebraska law, the rights of a third party beneficiary depend on the liability of the promisor contained in the contract); Bridgman v. Curry, 398 N.W.2d 167, 170 (Iowa 1986) (under Iowa law, third party beneficiary must show that contract was formed for his express benefit). See also Restatement (Second) of Contracts § 302 (1981).

It is a fundamental principle of the law of damages that, in contract eases, a plaintiff can only recover for a loss which, in the ordinary course of events, would result from the defendant’s breach or for a loss which was in the contemplation of the parties. In the words of the Restatement, “[djamages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.” Restatement (Second) of Contracts § 351(1) (1981). This rule of damages may be traced to Hadley v. Baxendale, 9 Ex. 341, 156 Eng.Rep. 145 (1854), in which:

the plaintiffs, who were owners of a steam mill, delivered to defendant, a carrier, a broken shaft essential to the function of the mill. The defendant agreed to transport the shaft to an engineer who would make a new shaft using the former as a model. The defendant delayed and plaintiffs brought action for special damages equal to the loss of profits resulting from the idle steam mill. Since the defendant was not made aware that delay in carriage of the indispensable part would result in an idle mill and loss of profits, plaintiffs could not recover.

E. Re, Cases and Materials on Remedies 758 (2d ed.1987). See also Victoria Laundry (Windsor) Ld. v. Newman Indus., 2 K.B. 528, 539 (1949) (“In cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach.”). Hampton, in this ease, cannot dispute that Federal Express had no knowledge of Hampton or of the contents of the package that it accepted for delivery. Hence, even apart from the limitation of liability provision, since the damages suffered by Hampton were not reasonably foreseeable, they would not be recoverable in a breach of contract action.

C. Recovery in Tort

The tort law of negligence, however, does not provide as clear a rule as to whether a defendant may be held liable for injuries or damages that are not reasonably foreseeable. Indeed, the wealth of literature on the subject is illustrative of the differences of opinion on the subject. Tort scholars state that, on the question of the recovery of damages that are not reasonably foreseeable, “there are two basic, fundamental, opposing and irreconcilable views, which have been in conflict for more than a century * * Prosser at § 43. Under the first theory, a defendant is liable only for damages that are the natural and probable consequences of the negligent act. See, e.g., Milwaukee and St. P. Ry. v. Kellogg, 94 U.S. 469, 476, 24 L.Ed. 256 (1876). Under the second theory, the defendant may be liable to a plaintiff for all resulting damages, but only if the defendant owes a duty to the plaintiff. See Prosser at § 43. The seminal case under this second theory is Palsgraf v. Long Island R.R., 248 N.Y. 339, 162 N.E. 99 (1928).

In Palsgraf, a passenger was running to board one of the defendant’s trains. An employee of the defendant, in assisting the passenger to board the train, caused a package being held by the passenger to fall. The package, unknown to the employee, contained fireworks which exploded. The resulting concussion (or “stampede of frightened passengers”) caused some scales on the platform, a considerable distance away, to fall on the plaintiff and injure her. See Palsgraf, 248 N.Y. at 340-41, 162 N.E. at 99; Prosser at § 43 n. 35.

In denying the plaintiff recovery, Justice Cardozo, then a judge of the Court of Appeals of the State of New York, stated that the package itself did not provide notice that, if it fell, it could cause injuries to persons at the other end of the platform. *1125See id. at 341, 162 N.E. at 99. The court noted that “[t]he conduct of the defendant's guard, if a wrong in its relation to the holder of the package, was not a wrong in its relation to the plaintiff, standing far away[,]” and concluded that “[njegligence is not actionable unless it involves the invasion of a legally protected interest, the violation of a right.” Id. Hence, the court held that the defendant was not liable to the plaintiff since the defendant, under the circumstances, could not reasonably foresee any injury to the plaintiff.

Under Palsgraf, it is only when the defendant owes a duty to the plaintiff that the defendant is liable for all damages, whether or not reasonably foreseeable, caused by the defendant’s negligent act. Notwithstanding the variety of views that have emerged from Palsgraf and related cases, the Restatement has adopted the Palsgraf approach. See Restatement (Second) of Torts § 281 comment c, illustration 1 (1965). See also Prosser at § 43; Pizarro v. Hoteles Concorde Int’l, C.A., 907 F.2d 1256, 1259-60 (1st Cir.1990) (“ ‘[T]he touchstone is foreseeability: [conduct results in] liability if, and to the extent that, a foreseeable risk of harm materializes.’ ” (quoting Peckham v. Continental Casualty Ins. Co., 895 F.2d 830, 836 (1st Cir.1990))).

Clearly, Federal Express had no knowledge of Hampton, and did not know that the package contained blood samples. It is equally clear that the shipper, Children’s Memorial Hospital, did not declare a value higher than $100 for the package. Under these circumstances, Federal Express could not reasonably foresee any injury to Hampton, or the nature and extent of the injury. In accordance with the reasoning in Palsgraf, since there was no duty, there could be no recovery for negligence, and therefore the defendant, Federal Express, could not be held liable to the unforeseeable plaintiff, Hampton. Indeed, under any of the general principles and theories of the common law that have been considered and applied, it would seem clear that Hampton has no cause of action.

Finally, we note that the case at bar is analogous to a case decided in the United States District Court for the Middle District of Florida, Gibson v. Greyhound Bus Lines, Inc., 409 F.Supp. 321 (M.D.Fla.), aff'd mem., 539 F.2d 708 (5th Cir.1976). In Gibson, the plaintiff, a Florida wildlife officer, suffered injuries on duty when he was scratched by a racoon. In order to determine whether the plaintiff had been exposed to rabies, the racoon’s head was shipped by the Hamilton County Department of Health to a Florida state laboratory in Jacksonville, Florida. The shipper, the Department of Health, entered into a contract of carriage with the defendant carrier. The defendant was given no special instructions on the handling of the package, which contained the racoon’s head, and the shipper did not obtain insurance. See 409 F.Supp. at 322. The racoon’s head was never delivered, and, as a result, the plaintiff received a precautionary series of rabies vaccinations. Because of an adverse reaction to the vaccinations the plaintiff suffered injuries, and sued for damages. See id. at 323.

In moving for summary judgment, the defendant contended that, as a carrier, it was subject to Florida state regulations which, in the absence of a declaration of greater value, limited its liability to $50 for a shipment of less than 100 pounds. See id. at 323. It is noteworthy that the district court stated that “[t]he special importance of the shipment was not known to defendant.” Id. at 324. As a consequence, the court concluded that the “[djefendant assumed no special duty towards the goods[,] [and] * * * is, therefore, entitled to the limitation of liability.” Id. Hence, the court granted the defendant’s motion for summary judgment, and entered judgment for $50 in favor of the plaintiff.

Under the circumstances of this case, involving a contract of carriage, it would also seem unreasonable and unjust to hold Federal Express liable to Hampton. If Federal Express had known of the contents of the package, it might have charged a higher rate, exercised additional care, have obtained insurance, or might not have accepted the responsibility. Since Federal *1126Express had no knowledge of the contents, and hence could not reasonably foresee the injury and damages that could be suffered, plaintiff Hampton cannot recover on its cause of action founded in tort.

III. CONCLUSION

Since we hold that there was no duty owed to Hampton, and that the injury and damages suffered were not reasonably foreseeable, Hampton is not entitled to recover. Federal Express, however, does not appeal from the district court’s award of $100 in damages to Hampton, on partial summary judgment. Hence, Federal Express’ liability is limited to $100, the amount declared in the airbill. Accordingly, the order of the district court is affirmed.