Principles of Commercial Law Assignment

This assignment explores key concepts in commercial law, focusing on contract formation, termination, and the legal implications of breaches. It analyzes a case study involving an employment contract between Tran and TrueCom, examining whether TrueCom's dismissal of Tran constituted a breach of contract. The assignment also discusses the concept of contract frustration in relation to a factory fire incident impacting other employees. Finally, it outlines potential legal remedies available to Tran before proceeding to court.

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Contents
Assignment 2...................................................................................................................................3
Part 1............................................................................................................................................3
Part 2............................................................................................................................................4
Part 3............................................................................................................................................5
Bibliography....................................................................................................................................6
A. Articles/ Books/ Reports...................................................................................................6
B. Cases.................................................................................................................................6
C. Legislations.......................................................................................................................6

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Assignment 2
Part 1
The key issue in this case is whether or not Tran should accept the offer which has been
made by TrueCom.
A contract once formed, can be terminated upon performance or upon termination,
amongst the other methods of discharging the contract. When the terms of the contract are
fulfilled and the promise made under the contract is carried out properly, the contract is
discharged through performance1. When a term of the contract is breached by one of the parties
of the contract, in the sense that one side of the contracting party, fails to fulfil the promise which
has been made under the contract, the contract is breached2.
And in such cases, the aggrieved party can apply for damages which can be in form of
monetary damages, whereby the aggrieved party is provided with monetary compensation; and
the other option is to apply for equitable damages, where by the breaching party can be asked to
do a certain task, through specific performance; or can be stopped from doing something through
an injunction order; or ending the contract by getting the contract rescinded3. An employment
contract is also a contract and hence, the terms under the contract have to be followed4. Baltic
Shipping v Dillon5 saw the High Court of Australia awarding damages for the distress that the
plaintiff had to bear for the loss.
1 Ewan McKendrick, Contract Law (Pearson Education Limited, 11th ed, 2015)
2 Catherine Elliott and Frances Quinn, Contract Law (Pearson Education Limited, 9th ed, 2013)
3 Linda Mulcahy, Contract Law in Perspective (Routledge, 5th, 2008)
4 Neil Andrews, Contract Law (Cambridge University Press, 2nd ed, 2015)
5 (1993) 176 CLR 344

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In the given case study, an employment contract was formed between Tran and TrueCom
and one of the terms of this contract was for a three months’ notice period to be provided in case
Tran had to be given a three month’s period notice before she was removed from her job. The
period of this contract was for two years but the same was violated halfway through the second
year. TrueCom dismissed Tran without any notice period, which was a requisite as per the
employment contract. Hence, the contract was breached on part of TrueCom which gives Tran
the right to sue the company for a breach of contract. The offer which has been made to reinstate
Tran would give her only the three months’ pay, but not the bonus which she could have earned.
Also, as there was a breach of contract, Tran can apply for mental distress caused based on Baltic
Shipping v Dillon. Hence, instead of accepting the offer, Tran should sue TrueCom for a breach
of contract and claim damages for the loss of bonus, along with the three months’ pay.
To conclude, owing to the breach of contract on part of TrueCom, the better option
available to Tran is to sue the company for this breach, instead of accepting their offer.
Part 2
The key issue in this case is whether or not the contract was frustrated in this case.
Apart from performance and breach of contract, the contract can also be terminated
owing to the frustration of the contract. A contract is frustrated when the performance of it
becomes impossible as the commercial purpose of the contract is deprived. And when such
happens, none of the contracting parties can sue the other for breach of contract6. In Taylor v
Caldwell7, the hall was hired for a concert and the preparations were started for the concert. But
one week before the concert was to take place, a fire destroyed the hall as a result of accidental
6 John W. Carter, Carter's Breach of Contract (Hart Publishing, 2012)
7 (1863) 3 B & S 826

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fire. When a breach of contract was claimed by the claimant, the court denied the claim on the
basis of the contract being frustrated as a result of the impossibility of performing it8.
In the given case study, the factory burnt down as a result of an arson attack by an ex-
employee of TrueCom. As a result of this, the staff members were terminated and only a week’s
pay was given to them. However, unlike Taylor v Caldwell, the contract would not be deemed as
frustrated for Tran as she was dismissed before the fire resulting in breach of contract instead of
frustration of contract. For the other staff members, the contract would be deemed as frustrated
on the basis of Taylor v Caldwell and they cannot sue the company for a breach of contract.
Thus, for the staff members, the contract was frustrated and they would have to accept
the pay; though, Tran can make a claim against the company for breach of contract.
Part 3
The key issue in this case is regarding the steps Tran can take before her case gets to the
court.
When a case for breach of contract is made, the aggrieved party can apply for an interim
injunction, to stop the other party from doing something9. And based on this, Tran will get the
option of stopping the company from hiring anyone in her place till the case is resolved. Also, in
the court case, she can ask for specific performance as a remedy, in addition to the damages
sought out as per part 1 of this discussion.
Hence, Tran can seek an interim injunction till the time the court case starts.
8 Richard Stone and James Devenney, Text, Cases and Materials on Contract Law (Routledge, 3rd ed, 2014)
9 Andy Gibson and Douglas Fraser, Business Law (Pearson Higher Education AU, 2013)

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Bibliography
A. Articles/ Books/ Reports
Andrews N, Contract Law (Cambridge University Press, 2nd ed, 2015)
Carter JW, Carter's Breach of Contract (Hart Publishing, 2012)
Elliott C, and Quinn F, Contract Law (Pearson Education Limited, 9th ed, 2013)
Gibson A, and Fraser D, Business Law (Pearson Higher Education AU, 2013)
McKendrick E, Contract Law (Pearson Education Limited, 11th ed, 2015)
Mulcahy L, Contract Law in Perspective (Routledge, 5th, 2008)
Stone R, and Devenney J, Text, Cases and Materials on Contract Law (Routledge, 3rd ed, 2014)
B. Cases
Baltic Shipping v Dillon (1993) 176 CLR 344
Taylor v Caldwell (1863) 3 B & S 826
C. Legislations
Corporations Act, 2001 (Cth)