Assistance and Financial Compensation for Breach of Contract, Negligence Misrepresentation, and Legal Risk under Australian Consumer Law

Foundation of Company and Commercial Law
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Word Count: 1,158

Question 1
Issue
What assistance/financial compensation should be offered to James for breach of the
terms of the contract?
Rule
The contractual terms bind its parties into a legal contract; there are two types of
terms which include express and implied. In case these terms are not fulfilled, then the
contract can be discharged by the parties, and the aggrieved party can demand
compensation. The terms of a contract can differentiate between condition and
warranty. The condition is referred to those terms which go to the heart of the
contract, and the contract would not have been formed without the presence of such
terms. In case of a breach of a condition, the contract can be rescinded by the parties.
On the other hand, the warranty is referred to those terms which are less significant
than compared to a condition. In case of breach of warranty, generally the contract is
not terminated, and the parties demand compensation.
The Parol Evidence Rule provides that when a contract is formed in writing, then oral
evidence which varies, contradict or add the written document can be set aside by the
parties. However, as given in Curtis v Chemical Cleaning case, this rule did not apply if
the terms are misrepresented. In case of service contracts, it is the duty of service
provider to ensure that a reasonable standard of care is maintained by the party to
ensure that the service is reasonable fit for the purpose of the contract as given in
Costa Vraca Ltd v Berrigan Weed & Pest Control Pty Ltd case. A contract can be
discharged in case one party fails to comply with the contractual terms and the effect
of breach and remedies based on the importance of terms and nature of the breach
respectively. The remedies available for breach of a contractual term include payment
of damages, specific performance, rescission, and breach of warranty of quality.
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Application
In the given case study, Lloyd Right Pty Ltd (Lloyd) has breached the terms of the
contract formed between the firm and James. All the elements of a contract were
present, thus, the parties have entered into a valid contract. One of the express terms
of the contract was that Lloyd has to obtain permits from local council. Furthermore,
the conversation between the parties regarding minimum seat capacity can be set
aside by Lloyd based on the Parol Evidence Rule. However, while purchasing the chairs
and tables, Lloyd reassured James that total 120 seats would be established in the
restaurant. Thus, Lloyd cannot rely on Parol Evidence Rule based on misrepresentation
as given in Curtis v Chemical Cleaning case. Thus, in this case, James can discharge the
contract since Lloyd failed to comply with the contractual terms by putting only 80
seats and failed to take permission from the local council. Lloyd should pay financial
compensation to James for the loss suffered by him due to removal of seats from
outside dining areas and sitting arrangement of only 80 customers. James should not
pay $15,000 to Lloyd and Lloyd should also pay for the loss of 40 customers by James.
Conclusion
In conclusion, the contract should be discharged by James and the financial
compensation includes non-payment of service charges, and James should receive
compensation for the loss of 40 customers.
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