Module 7

Question 1

Had Farah erected a fence made of Grade A bamboo from China not Vietnam the courts would have likely treated the contract as

Answer 1

partially performed as it was a condition of contract the bamboo was sourced from Vietnam because Tegan expressed she believed Vietnam had the best bamboo in the world

Question 2

Common law remedies

Answer 2

• termination of the agreement

- damages to compensate for loss

Question 3

Equitable remedies

Answer 3

• specific performance

- injunctions

Question 4

Choosing a remedy

Answer 4

the innocent party can choose what remedy they seek from the court

they can ask for a combination of remedies or an alternate remedy if their preference is not entertained by the court

The nature of the contract may impact the remedy that is awarded for failed performance
i.e. one off transaction vs ongoing agreement

Question 5

Termination allows the innocent party to:

Answer 5

1) reject the attempted performance

2) put an end to any further specific performance of outstanding obligations

Question 6

After termination the defendant must be

Answer 6

discharged by the payment of damages to the extent that the failure to perform has caused loss

Question 7

McDonald v Denny Lascelles (1933)

Answer 7

Facts: Plantiff was assigned rights under sale of land. He became the vendor to a future purchase by grazing co
Grazing needed more time to pay an instalment and they agreed as long as guarantor McDonald .
The contract was later repudiated and brought to an end

Issue: Did termination of Contract 2 relieve Rye of obligation to pay overdue instalment of £1000?
If so, did guarantors’ liability to guarantee Rye’s obligations also cease?

Fact: Guarantors of contractual obligations secondarily liable = guarantors only liable if purchaser primarily liable McDonald at 480-81
A guarantor not liable under guarantee where principal debt cannot be enforced. McDonald at 471
After termination, guarantor not liable for any unpaid sums as debtor no longer primarily liable

Question 8

Tramways Advertising Pty Ltd v Luna Park (NSW) (1933) 38 SR (NSW) 632

Answer 8

Facts: Luna Park paid for 8 hours a day advertisement but somedays received 3 hours and other days 15 hours-

Issue: is this a breach of contract?

Decision: on appeal the high court felt it was a breach of contract becasue the 8 hours a day advertising was at the core of the contract not average of 8 hours and allowed for termination of the contract

Question 9

Electing to terminate

Answer 9

If the innocent party elects to terminate they must communicate this decision to the defaulting party in an unambigious manner

Once the decision to terminate is made they cannot change their mind

The contact could also detail rights and obligations of terminating party

Question 10

Electing to terminate via conduct

Holland v Wiltshire

Answer 10

Facts; Sale of land, 3750 pounds on the 14th January. At Holland’s request Wiltshire extends deadline but Holland failed to meet it. Wiltshire did not immediately terminate the deadline but said if Holland didn’t settle by 28th March he would take legal action for breach of contract

Issue; Was Wiltshire entitled failing payment to terminate and claim loss failing payment

Decision: yes he was entitled to these remedies.

Question 11

Damages for breach of contract

Answer 11

Primary remedy
Damages are an award of money to compensate for loss suffered
Are not punitive in contract they just aim to put you in the position the contract entitles
Substitute for actual performance
Assessed at date of breach
Calculate on the date of breach (typically)

Question 12

Objective of awarding damages for breach

Answer 12

to put the innocent party in the financial position they would have been in had the contract been properly performed (not a better position)

Question 13

Radford v de Froberville (1978)

Answer 13

Facts: I will sell you one of my blocks of land upon the condition you build an expensive brick wall on the boundary. “I agree”
De Froberville I am suing you for damages for breach of contract i.e. cost of constructing brick wall

Issue: can he receive damages for the brick wall

Decision: Radford is entitled to damages for the whole cost of the wall.

Question 14

Tabcorp Holdings Ltd v Bowen Investments

Answer 14

Tabcorp leased a building from Bowen. They promised not to alter the building without landlords prior permission. Rebuilt the foyer without telling Bowen

Issue: was Bowen entitled to recover the full cost of rebuilding the original foyer or only the amount by which the value of the building had been reduced by demolishing it

Decision: he was entitled to claim all the $1 million in damages

Question 15

Direct and consequential losees

Answer 15

Mostly damages are direct: occur in the usual or normal course of things from the breach

Consequential loss: loss occurring as a result of special or exceptional circumstances where the risk of such loss was made known to the other party at the time the contract was entered into

Question 16

Hadley v Baxendale (1854)

Answer 16

Facts; mill in the UK, damages to the mill. Need original crankshaft to use as a template for new one. “I will deliver it to manufacturers the next day”.

Issue: was the courier back in 1854, liable for damages for consequential loss?

Decision: no, it was unfair to assume that the courier would know that late delivery of the part would cost substantial consequential loss for the mill.

Question 17

Hadley and Baxendale two limbs of damaegs

Answer 17

1. Direct: foreseeable as a loss flowing from the usual course of events
2. Consequential (remote): reasonably in the contemplation of both parties at the time they made the contract

Question 18

Direct and Consequential Loss 
Victoria Laundry (Windsor) Ltd v Newman Industries

Answer 18

Facts: NI sold a boiler to VL. The delivery was five months late, as a result of not having enough laundry capacity VL incurred a loss of profits and missed out on a lucrative cleaning contract with the govt.

Issue: could VL claim for both the loss of ordinary profits from their business and the missed lucrative cleaning contract with the govt

Decision: no they could only claim the loss of ordinary profits because at the time the contract was made the risk was not addressed to NI

Question 19

Damages for disappointment and distress

Answer 19

Damages are not usually awarded to compensate a party who has suffered disappointment and distress as a result of breach of contract

The exception to this is when the contract was for the provision of enjoyment, relaxation or pleasure e.g. pleasure cruise or day spa

Question 20

Baltic Shipping Co v Dillon (1993)

Answer 20

Facts: Ms Dillon passenger on cruise ship. 9 days in to the cruise Mrs Dillon lost her belongings and suffered injuries due to the ship sinking

Issue: Was she entitled to claim damages for disappointment and distress?

Decision: yes because the damages went to the very centre of the contract

Question 21

Mitigation of damages

Answer 21

The plaintiff will not be able to recover any loss that could have been avoided by the exercise of reasonable care

If the plaintiff takes reasonable steps to avoid loss but suffers further loss, the defendant will be liable for further loss

Where the plaintiff successfully avoids loss by taking mitigating action, the defendant is only liable for reduced loss

Question 22

Burns v MAN Automotive (Aust) Pty Ltd

Answer 22

Facts: I can provide you with this large commercial vehicle. The truck doesn’t run very well. After four year she claims damages for loss of profits

Issue: to what extent must a plaintiff take reasonable steps to mitigate loss?

Deicision: the plaintiff is not required to take steps to mitigate loss if the plaintiff does not have the means to do.

Question 23

Specific Performance

Answer 23

A court order to perform as promised under contract
Equitable remedy
Where awarding damages is inadequate
Not available for contracts of personal service
Not available if continual supervision of courts necessary
Matter of courts discretion; court does not have to provide such a remedy

Question 24

Lumley v Wagner

Answer 24

Facts: I promise that during the fixed period , I will not perform anywhere else

Issue: can the courts enforce this

Decision: no too difficult

Question 25

Dougan v Ley & Another (1946)

Answer 25

Facts: guy goes to buy a taxi (note expensive part is the number plates) for 1850 pounds. Changes his mind

Issue: Can the courts enforce the owner of the taxi to sell it

Decision: yes it was fair to impose a specific performance

Question 26

Injunctions

Answer 26

Equitable remedy available to a person who can show that the other party is about to breach contract
It is prohibitory and restrains the breach
Before the injunction is granted , plaintiff must show:
- legal right of a proprietary nature
- infringement is likely to continue or be repeated
- damages are an inadequate remedy
- contract is final expression of parties’ rights

Question 27

Buckenara v Hawthorn Football Club Ltd (1988)

Answer 27

Facts: I promise not to pay for Hawthorn FC and no other club in the league

Issue: can the courts enforce specific performance

Decision: no because it is a personal service, they instead imposed an injunction that didn’t allow him to play for any other VFL team