Breach of Contract and Award of Damages - Essay Example

Law of Contract: Breach of Contract and Award of Damages Name: Institution: Course Title: Instructor: Date: Introduction Contract is said to be “exchange relationship created by oral or written agreement between two or more persons, containing at least one promise, and recognised in law as enforceable” (Blum, 2007, p.2). The premise that contractual relationship is tied on is to be bound and reach agreement on the essential terms of relationship. This is equally pegged on non coercion. Apart from reaching agreement, the other critical element is reciprocal exchange relationship where there is give and take or a promise. These conditions once met, it means the process is legally recognised and thus, can be legally enforced (Blum, 2007, p.5). However owing numerous dynamics in the society at times these conditions are not met by one side of the signatories of the contract. The unique observation about the law of contract is that it does not pinpoint the rights and duties which it will guarantee. To contrary, it only avails wide ranging limiting principles. It is based on these principles that the two parties create the rules for their engagement. In a nutshell, contract law allows for the involved parties to define their level of engagement so long those rules do not surpass the established principles in the legislation (Simpson Solicitors, 2000), but this can be counteracted in event of non fulfilment. Justice Spigelman (2011, p.3) notes that legal words cannot be equated with ordinary words spoken in the course of our daily lives. The essence of this argument is based on the fact that contractual engagement is an indication of having legally binding agreement that can be enforced in a court of law. Australian contract law is governed by common law. However, written statutes are gaining prominence. Common law is a judge made law where he or she is able to make rulings and have implied terms so long as he or she in within the supreme law (Svantensson, 2008, p.3). If a signatory to a contractual agreement feels that the other party has not met the expectations that resulted into losses as outlined in the agreement, one can sue for damages in the court of law. However, for a court to establish damages under common law there are parameters used to identify cases to be awarded payment as result of loss or deny it by just directing the party which has breached the contract to fulfil its part. By using a case law, the goal of the paper is to discuss the phrase that damages is the only remedy for a breach of contract that has any value where the parties are not able to complete the contract by disputing the same or affirming it in reference to the other remedies available. Discussion: Remoteness of Damage In legal context, damage is termed as the payment given to aggrieved party as a result of loss so as to restore him to the position he would have been had the same gone as expected and not to punish the offending party (Evans, 2004, p.19). On the other hand, when people engage in contractual agreement there is value involved irrespective of how small or big the deal is (Emanuel, 2010, p.114). The context that emerges that can be used to answer the contention is that do court only award damages as the remedy for a breach of contract or there are other remedies. To answer this, the paper will look at which case laws qualifies for damage award and which cases despite of breach of contract are not remedied through award of damage. This will then be able to show if the statement is true that in Australia, “damages is the only remedy for a breach of contract that has any value” or to show if it is false by using other case laws which are contradictory to the statement and have provided other options. To indulge in this discourse, it important to examine the concept of remoteness rule in a contract. This concept helps in explaining the fact that awarding of damages by a court of law is limited to an extent. The precinct is that in common law, damages are only offered to breaches that are not too remote. This concept makes it the onus of the applicant to prove that it is the breach of the contract that directly caused the damage being complained of (Harpwood, 2009, p.161).Under this concept, not all losses encountered by a party because of contract breach can be compensated through award of damages. The basis of building the argument for remoteness of a contract is show that the loss was within the reasonable contemplation of both entities when they were engaging each other as the likelihood result of its breach. This allows the jury to establish if it was a normal loss or abnormal loss so that the rule of remoteness can be considered. Awards are only given in situations where the loss came as result of natural breach of the contract and were actually contemplated as a likelihood outcome by the aggrieving party (Evans, 2004, p.19). The case of Victoria Laundry (Windsor) Ltd v Newman Industries Ltd Evans cited in (2004, p.19) highlights this argument. This then proves that all losses experienced as a result of a breach of contract that has got any value are not remedied through award of damages. The applicant (Victoria Laundry (Windsor) Ltd) contracted the respondent (Newman Industries Ltd Evans) to supply them with a boiler as stipulated in the agreement. In the court the plaintiff accused the defendant of not meeting kits obligation and thus, contributing to losses. The losses that the plaintiff sued for as a result of the delay are loss of profit that would have been made while doing normal laundry work had the defendant delivered the boiler on time and the loss of a dying contract. The court concurred with the applicant for the first claim of loss because they were not too remote. However, the second claim for damage was denied since the defendant was not aware of any dying contract. To offer another paradigm for this discussion and dispute the fact that damages is the only remedy for a breach of contract, let’s introduce two perspectives of case laws and how they are handled by common law in Australia. The two case laws still revolve around the remoteness and non remoteness for the claims for damages incurred. The two cases are tied to commercial agreement and the first is the application for damage for injured feelings, disappointment and or distress. The second still under commercial agreements is the need for compensation to provide entertainment and or enjoyment. When one is contracted to provide entertainment or enjoyment to other party, the “offeree” can seek for damages since the request is not too remote. This affirms the topic in contention. On the other hand when one seeks damages as a result of distress, this is considered too remote and is not remedied through award of damages the subsequent discussions and examples affirms or disapprove this. Whenever the other party cannot fulfil its obligation it is likely to cause distress to the next party because the expectations have not been met. The claim on mere distress and injury is not admissible as reason for compensation because it a mental reaction (Evans, 2004, p.20). The only point where this can be admitted is when the two parties agreed in a contract of providing entertainment or enjoyment (Evans, 2004, p.20 & 21). The basis for rejecting the admissibility of such claims in common law is grounded on the fact that these claims are too remote and it is common for one to react whenever an agreement cannot be fulfilled. The case of Falco v James McEwan & Co Pty Ltd cited in Evans (2004, p.20) affirms this argument. The only exception to these kinds of scenarios is when it involves contract of offering entertainment. The same is admissible because entertainment is a mental status. In the case of Baltic Shipping Company v Dillion [1993], the appellant sought the indulgence of appeal court of New South Wales so that they could quash the earlier judgement delivered in favour of the respondent. In the case, the defendant had engaged the company to offer her and others holiday travel services before the completion of days booked the ship struck a shoal in Cape Jackson leading to cancellation of the trip and loss of property. In the lower court, the defendant had applied for restitution of the fare and the court ruled in her favour. The same judgement passed by the lower court was upheld by the court of appeal and thus the appeal not granted. Conclusion The aim of the paper was to discuss the phrase that damages is the only remedy for a breach of contract that has any value where the parties are not able to complete the contract. By using case laws the paper sought to answer the same. To dispute the phrase in contention, the paper majored on remoteness of claim in damages. In this case it was found out that when the claim is too remote, the court will not award damage as a solution to the breach of contract. To corroborate the statement the paper used case law involving claims of distress and injured feelings. On the other hand to offer a balanced view, the paper introduced another twist by bringing in loss of entertainment. This showed that in loss of entertainment one can sue for damage since the claims are not too remote. In a nutshell, the paper found out that award of damages is not only the remedy for a breach of contract. References Blum, A. Brian. 2007. Contracts: Examples & Explanations. New York: Aspen Publishers. Emanuel, S. 2010. Emanuel Law Outlines: Contracts. New York: Aspen Publisher. Evans, P. 2004. Spoiled Holidays: Damages for Disappointment or Distress. Legal Issues in Business Vol. 6, No. 1, pp. 19-25. High Court of Australia (1993). Baltic Shipping Company v Dillion [1993] HCA 4; (1993) 176 CLR 344 (10 February 1993). Harpwood, V. 2009. Modern Tort Law 7 Edition. Abingdon, Oxon: Routledge-Cavendish. Simpson Solicitors, 2000. The Principles of Contract. Retrieved on 2 October, 2012 from: http://www.simpsons.com.au/documents/visarts/visarts89/1Princip.pdf. Spigelman, J. J. 2011. Contractual Interpretation: A Comparative Perspective. A Paper Presented to the Third Judicial Seminar on Commercial Litigation. Svantensson, J. B. D. 2008. Codifying Australia’s Contract Law: Time for a Stock Take in the Common Law Factory, Bond Law Review Vol. 20, No. 2, pp. 1-26. Read More