Assistance/Financial Compensation for Violation of Contract in Company and Commercial Law

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Company and Commercial Law

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Answer 1
Issue
The issue which will be discussed is related to what assistance/financial compensation
should be given to James for the violation of the contract?
Rule
The contractual terms which bind the parties to a contract into legal obligations are divided
into two parts which include express and implied terms. The terms which the parties include
in the contract as per their mutual understanding are referred to express terms. On the
other hand, the implied terms are not included in a contract by the parties. These terms are
included by the court and the stature based on custom, facts or law. Moreover, these terms
can be further characterised into two categorised which include warranties and conditions.
The terms based on which the entire contract is formed and which are essential are referred
to conditions. In case these terms are not fulfilled, then the contract can be terminated, and
compensation can be demanded by parties. The warranties are non-essential terms, and the
contract cannot be terminated if they are not fulfilled.
During the negotiation stage of a contract, the evidence of oral conversation which had
between the parties that contradict with the terms included in the written contract can be
avoided by the parties based on the Parol evidence rule (PER). Those oral terms which did
not become the part of the contract cannot be enforced by the parties; however, an
exception of this rule is given in Curtis v Chemical Cleaning case. In case any party relies on
misrepresentation while forming the contract, then this rule did not prevail. During service
contracts, the aggrieved party has the right to receive remedies for the loss caused due to
the failure of another party to maintain a standard as given in Costa Vraca Ltd v Berrigan
Weed & Pest Control Pty Ltd case. The remedies include specific performance, damages,
injunction, rescission, and repudiation.
Application
The contract formed between James and Lloyd Right Pty Ltd (Lloyd) contained an expressed
term regarding taking the permission from the local council. This was a warranty rather than

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a condition, thus, violation of this term given the right to James to recover damages. James
cannot terminate the contract solely based on non-compliance of the warranty by Lloyd.
However, the seating arrangement was a major term of the contract since it affects the
profitability of James, therefore, it can be considered as a condition. The oral assurance
given by Lloyd to James regarding seating arrangements can be set aside by PER. However,
Lloyd misrepresented while giving the information regarding Italian-based tables and chair,
thus, the exception of PER applied in this case (Curtis v Chemical Cleaning). A standard was
not maintained by Lloyd while giving services to James, thus, the remedy can be demanded
by James (Costa Vraca Ltd v Berrigan Weed & Pest Control Pty Ltd). The contract can be
repudiated, and James can deny the payment of $15,000 to Lloyd. Damages can also be
claimed for the loss of 40 customers as per $15 per customer each day.
Conclusion
The financial compensation given to James includes reimbursement for the loss of 40
customers and non-payment of $15,000.