This may occur when the upper limb is suddenly pulled superiorly, resulting in a stretching or tearing of the inferior parts of the brachial plexus (C8 and T1 roots, which comprise the inferior trunk of the brachial plexus)

Most of the small muscles of the hand supplied by the ulnar nerve are affected.

This results in hyperextended metacarpophalangeal joints, an inability to flex digits 4 at the DIPs (Distal InterPhalangeal joints) when making a fist,

An inability to extend IP (interphalangeal) joints when straightening the fingers results in a clawhand deformity.

Muscles of the forearm and hand are chiefly affected.

Grasp is weak and the affected limb becomes small.

Horner's Syndrome is present due to the interruption of fibres to the cervical sympathetic trunk.

- Excessive upward traction on the upper limb can result in injury to the T1 root.  As the latter is the nerve supply to the intrinsic muscles of the hand this injury results in 'clawing' (extension of the metacarpophalangeal joints and flexion of the interphalangeal joints) due to the unopposed action of the long flexors and extensors of the fingers.  There is often an associated Horner's syndrome (ptosis, pupillary constriction and ipsilateral anhidrosis) as the traction injury often involves the cervical sympathetic chain.

Reference:
1. Anatomy at a Glance. Omar Faiz and David Moffat.  Blackwell Science. 2002.