Final answer:
Carl could potentially avoid liability for the hotel costs due to Hugh's wedding guests under the Hadley v. Baxendale rule, which limits recoverable damages to those that were reasonably foreseeable at the time the contract was made.
Step-by-step explanation:
In the scenario posed, we are examining whether Carl would likely be held liable for the additional damages incurred due to his unfinished construction work. According to the principles established in the landmark case Hadley v. Baxendale, Carl may avoid liability if the damages were not reasonably foreseeable at the time the contract was made. This ruling states that only those damages which can be reasonably contemplated by both parties when the contract is formed are recoverable. Option 2, referring to this rule, would likely be the strongest argument for Carl to avoid liability for the hotel costs paid by Hugh for wedding guests.
The first option suggests Carl never agreed to take on such liability. However, this alone may not be sufficient to avoid responsibility for consequential damages because the contract could implicitly include the general obligation to perform by a certain deadline, particularly where there's a clear consequence for delay, as in the case of guests needing accommodation. The third option, arguing the harm is too unusual or remote, might not apply here, as it is not uncommon for delays in construction to result in a need for alternative accommodations.
In conclusion, while Carl never explicitly stated he would take on such liability, the Hadley v. Baxendale rule requires foreseeability of damages, which could apply here. Therefore, Carl has a strong argument under option 2 to avoid liability for the unforeseen hotel costs. Nevertheless, the specifics of the contract and the expectations of the parties may heavily influence the outcome, and each case must be considered on its circumstances.