Contract Law: Damages and Certainty

This assignment delves into the complexities of contract law, specifically examining the concept of damages and the requirement of 'reasonable certainty' for their calculation. It requires analysis of seminal cases like Smith v Land and House Property Corp., Derry v Peek, Bisset v Wilkinson, Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B), and Hadley v Baxendale, illustrating how courts have interpreted and applied the principles of damages in various scenarios. The assignment also references scholarly works that provide further insight into the subject matter.

LAW

Table of Contents
LETTER OF ADVISE ....................................................................................................................1
REFERENCES................................................................................................................................7

LETTER OF ADVICE
To, Beata
Date:
From: City lawyer
Subject: Regarding legal remedies against the actions of Agro Ltd.
Dear Beata,
This letter is written to you as you have requested for getting a legal advice over your
issue with Agro Ltd, on behalf of City lawyers. The firm City Lawyers is happy to help you in
finding out a legal solution for your current problems and issues in your professional practices. I
am a trainee solicitor at this law firm and is pleased to assist you in this matter. In this letter, an
assistance will be provided to you regarding the damages and claims that you can bring against
Agro Ltd arising from your contract with this firm.
Firstly, I will define your commercial relationship with Agro Ltd. As defined by you it
can be stated that you have entered into an agreement with Agro Ltd where the company agreed
to style 6 of your models for a fashion show in London on 1st June 2019. Generally, for a valid
contract there are 4 basic elements which are required to be fulfilled. These are offer, acceptance,
consideration and intention to create a legal relation1. For commercial and business contract there
are presumptions that parties have intention to make the contract enforceable by law. So for your
contract as this is an established fact it is a commercial contract which is enforceable under law
and also that both parties to contract are liable to get legal remedy for any issue arising out of
contract.
In this section you are presented with the legal provisions related contract law which
are defined under the legal framework of UK. The contractual agreements and its provisions are
guided by the rules of Contract (Applicable law) Act 1999. This act defines the rules and
provision of duties and obligation of the parties to contract along with their rights and getting a
compensation in case breach of the contract. This law defines that contract is a binding
agreement between the parties. The rights and obligations are enforceable through court. The
courts can give decision either as compelling the performance of contractual obligation to award
damage from the breach of contract.
1 Golden, J. M., 2016. Reasonable Certainty in Contract and Patent Damages. Harv. JL &
Tech. 30. p.257.
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Now, let’s points out the facts of case to clearly understand your position in this dispute.
You have entered into a contract with Agro Ltd, where they promised to provide services of
hairstyling to six of your modes on 1st June 2019 for a fashion show taken place in London.
Before you agree for taking the services a statement was made by the manager of Agro that he
was sure about the product to be used on your models are free from animal testing hair products.
And here it is essential to mention that you are very particular in conducting your business in
ethical ways which includes using the products which are free from animal testing. This means,
You have entered into contract with Agro ltd by trusting the statement made by the
manger, Charley, of Agro Ltd.
Other facts related to the case are that on the date of fashion show three of the hair stylist
of Agro did not show up to the venue of fashion show and this lead to a clumsy situation as there
were not enough stylist to style hair of your models. This resulted in the situation of ill
presentation of the model for catwalk and failure of your fashion show. Furthermore, it was after
the failure of show that you came to know the fact that the products used on the models are
tested on animals and this further lead you to a situation where you lost your clients for using
this type of products of which were completely unaware2. Bowles are the evaluations the facts
related to your case along with presenting legal remedies and actions which can be taken by you
against Agro Ltd:
Defences against the formation of contract:
Misrepresentation and actions that can be taken:
Misrepresentation is a false statement over the facts or law which induce a party to enter
into a contract. When the statement is made during the course of negotiation, it is termed as
representation instead of contractual term. Tor this an action of misrepresentation can be brought
if the statement so made, turned out to be untrue. The misrepresentations are of three types
fraudulent, innocent and negligent. On finding a contract formed on misrepresented statement is
its voidable at part of innocent party and for the damage remedy is available as damage or
rescission. The provisions of misrepresentation are governed by the Misrepresentation Act, 1967.
For your case to state that statement made by Charley was a false statement, following conditions
fulfils:
2 Kramer, A., 2017. The law of contract damages. Bloomsbury Publishing.
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The statement made must be false of fact which is opposed to future events or opinion.
In your case, the statement made by Charley at time of contract formation and after breach of
contract were in opposition to each other. With the decided case of Bisset v Wilkinson3, it can be
stated that statement must not be an expression of opinion rather a statement of fact. For your
case this is a statement of fact and relying to that only you have entered into contract with Agro
ltd. Also with application of the case Smith v Land & House Property Corp.4 it can be stated that
the seller was in position to know the fact related to his property and it was a fact for contract.
Similarity the products used by Agro Ltd are whether free from animal testing or not is a fact that
the managers of firm is likely to know under the position held by him. Moreover, the
misrepresentation made by Charley is determined as fraudulent it was made without believing in
the truth as well as recklessly, carelessly knowing the its truth as it was stated in the case of
Derry V Peek 18895. Charley was under such capacity to know the truth over the product testing
and if not he must not have made such statements so carelessly towards potential clients. In such
case burden of proof is not the claimant in our case on Agro Ltd. Where there has been a
fraudulent misrepresentation, the innocent party is entitled to rescind the contract and claim
damages. The damages that are awarded are not based on contractual principles but the damages
available in the tort of deceit (fraudulent action).
For the fraudulent misrepresentation's made by Charley the manager of Agro Ltd, a
damage compensation can be claimed by you under courts by bringing initiating a litigation
process with filing a lawsuit, for loss of future earnings of your important client over discovering
the fact of using products applied on models which have been tested on animals, which was not
known to you.
Breach of contract and remedies
3 Bisset v Wilkinson [1927] AC 177 Privy Council. 2018. [Online] Available
through :<http://e-lawresources.co.uk/Bisset-v-Wilkinson.php>
4
Smith v Land and House Property Corp (1884) 28 Ch D 7
. 2018. [Online] Available through :<http://e-lawresources.co.uk/Smith-v-Land-and-
House-Property-Corp.php>.
5 Derry v Peek (1889) 5 T.L.R. 625. 2018. [Online] Available through :<http://e-
lawresources.co.uk/Derry-v-Peek.php>.
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Discharge of contract through performance:
One of the way of discharging a contract is through performance of the promise made
under the contract. A contract become fully discharged where the both the parties have fully
performed their obligations under the contractual agreement. Where one party do not fully
perform his/her duty under contract it amounts to breach of contract and other party have a right
to claim damages unless the contract has become frustrated. For the case where the breach
becomes repudiatory the other party is released from the contractual obligation. Now we have to
see that the Agro Ltd breach over the contract is repudiatory breach while considering the fact
that three of their hair stylist went on a sudden strike on the date of fashion show.
As per the provision of the contract law a repudiatory breach is where the party under the
contractual obligation refuse to perform the contractual obligation and the innocent party is not
obliged to wait for the breach to actually occur and it can bring a contract to end. The terms of
the contract themselves may also entitle a party to terminate in the event of a breach that would
not otherwise be regarded by law as a repudiatory breach. For our case Agro Ltd never showed
an intention of repudiating the contract as he was not available with sufficient number of hair
stylist to compete the job as prescribed under the contract. Have Agro have denied to perform
the job before its performance it would amounted to repudiatory breach. Rather the present facts
of your case shows that he was aware of the fact that he can fully perform the contract with
only 2 hair dresser still he performed the contractual obligation6. The contract was obliged to
cretin extent only and he failed to fully discharge contractual obligation and falls under the ambit
of breach of contract for non-permanence.
Remedies under contract law:
There are various types of remedies available under the contract law and the best suitable
legal remedy to you for the breach done by Agro Ltd is claiming compensation for the damages
suffered by you for non performance of the contractual obligation:
Damages compensation
The damages claim can be made under the contract law which is a legal remedy avail be
for breach of the contract. Damages are ward of money to compensate the innocent party. The
motive of damage under the contract law is to put injured party in position they would have been
6 Burrows, A.S., 2018. Contract, Tort and Restitution—A Satisfactory Division or Not?.
In Restitution (pp. 3-53). Routledge.
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in had the contract been performed. The damages are awarded under the contract law subject to
application of rule on causation, and remoteness and a duty to mitigate loss. The causation was
established in the case of Monarch Steamship Co Ltd v Karlshamns Oljefabriker 7 where the
defendant was held liable to foreseen the possibility of occurring an event and delaying the
action to avoid a war. In this case it can be stated the causation can bot be established as the
Agro cannot anticipate the strike of its 3 employee on the date of fashion show. The remoteness
rule under the contract law defines that damage for a contract law set out in Hadley v
Baxendale8
states that a claim may recover the losses which may reasonable by considered as arising out of
naturally from the breach or those are which a reasonable supposed to be in contemplation of the
parties at the time of making contract. For the present case the remoteness of the damage can be
set as the defendant was aware of the contractual obligation since the contract was entered into.
For the breach of the contract it can be started that two of the conditions for damage claims
satisfied that is breach of the contract which is due to complete performance of contractual
obligation and other is remoteness to damages. As Agro was aware that in case contract is not
performed what the consequence will be. But the condition of causation is not satisfying as Agro
cannot anticipate the strike of its hair stylist.
So for the damage claim for the loss on the hire of venue, loss of profits over refunding
the amount to fashion designer cannot be succeeded over the breach of contract through
performance.
With it can be summed up that you have faced two issues over the contract with Agro
Ltd, one is the breach of the contract over non performance but legally an action cannot be taken
as there is lack of causation. The second problems are related with fraudulent misrepresentation
by the manager of Agro Ltd Charley. Here you can make a successful claim for the damages and
loss of business due to action of Agro Ltd. With this it can be stated as the breach did not occur
due to action of Agro, no compensation claim can be made for the same and the losses suffered
7 Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) [1949] AC 196. 2018.
[Online] Available through :<http://www.e-lawresources.co.uk/cases/The-Monarch-1949.php>.
8 Hadley v Baxendale [1854] EWHC Exch J70 Courts of Exchequer 2018. [Online]
Available through :<http://www.e-lawresources.co.uk/cases/Hadley-v-Baxendale.php>.
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due to such breach but for the fraudulent misrepresentation a loss and damage claim can be
made, by bringing in a lawsuit against Agro Ltd under the Civil procedure and justice court
The legal actions that can be taken by you for the actions of Agro Ltd is that and you can
file a law suit against Agro Ltd for claiming the monetary compensation equal to the cost of
contract which you have lost due to a negative impact on your reputation for using products
which are tested on animals. Also you can make claims for the losses suffered for failing the
show on the basis on non performance of the contract which court might considers and grant a
remedy for the same.
From: Trainee Solicitor
City Lawyer
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REFERENCES
Books and Journals
Burrows, A. S., 2018. Contract, Tort and Restitution—A Satisfactory Division or Not?.
In Restitution (pp. 3-53). Routledge.
Golden, J. M., 2016. Reasonable Certainty in Contract and Patent Damages. Harv. JL & Tech. 30.
p.257.
Kramer, A., 2017. The law of contract damages. Bloomsbury Publishing.
Online
Smith v Land and House Property Corp (1884) 28 Ch D 7
. 2018. [Online] Available through :<http://e-lawresources.co.uk/Smith-v-Land-and-House-
Property-Corp.php>.
Derry v Peek (1889) 5 T.L.R. 625. 2018. [Online] Available through :<http://e-
lawresources.co.uk/Derry-v-Peek.php>.
Bisset v Wilkinson [1927] AC 177 Privy Council. 2018. [Online] Available through :<http://e-
lawresources.co.uk/Bisset-v-Wilkinson.php>.
Monarch Steamship Co Ltd v Karlshamns Oljefabriker (A/B) [1949] AC 196. 2018. [Online]
Available through: <http://www.e-lawresources.co.uk/cases/The-Monarch-1949.php>.
Hadley v Baxendale [1854] EWHC Exch J70 Courts of Exchequer 2018. [Online] Available
through: <http://www.e-lawresources.co.uk/cases/Hadley-v-Baxendale.php>
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