LST5CCL Company Law: Remedies for Breach of Contract - James Case

This case study examines a contractual dispute between James and Lloyd Right Pty Ltd, focusing on issues of breach of contract, misrepresentation, and the application of Australian Consumer Law (ACL). It addresses whether James is entitled to financial compensation for Lloyd's failure to obtain council permission, misrepresentation regarding Italian-based furniture, and misleading conduct under the ACL. The analysis covers express and implied contract terms, the parol evidence rule, and remedies for breach of contract, including repudiation and damages. The study concludes that James is entitled to compensation, including reimbursement for lost customers and non-payment for services, and that Lloyd faces legal risks under the ACL due to misleading statements. This document is available on Desklib, a platform offering study tools and solved assignments for students.

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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.

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Answer 2
Issue
The issue which will be discussed is related to what assistance/financial compensation
should be given to James for negligence misrepresentation?
Rule
The contract which is formed based on the false statement of a party is considered as
voidable based on misrepresentation. The party who makes the untrue statement can be
held liable by the aggrieved party who suffered a loss for the misrepresentation. The
contract can be terminated, and compensation can be demanded by the aggrieved party. In
case of negligent misrepresentation, the court evaluates elements such as whether a duty of
care was owed and whether such duty was violated due to negligence. The foreseeability of
risks is also necessary along with the close relationship between parties. In Shaddock v
Parramatta City Council case, the council gave a certificate to the claimant under which
information regarding a future road widening project was not given.
The court provided that duty is present which was violated due to negligent. The loss
suffered by the claimant is direct result of such breach, and the risks were foreseeable. The
parties were not a close relationship as well, thus, damages can be demanded by the
aggrieved party. Moreover, Australian Consumer Law (ACL) provides similar provisions to
protect the rights of customers in Australia. A right to terminate the contract is given to
parties under section 268 if a party of the contract did not comply with a major term of the
contract. The violation of this section gives the parties right to claim compensation and
terminate the contract.
Application
A negligent misrepresentation was made by Lloyd while giving information to James
regarding Italian-based tables and chairs. The elements given in Shaddock v Parramatta City
Council case are present in this case. Lloyd had a duty which was violated due to negligence.
Parties were in a close relationship, and the risks were foreseeable. The contract formed
between the parties has become voidable due to the presence of negligent
misrepresentation. Thus, James has the right to terminate the contract formed between the

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parties and discharge himself from the contractual obligations. Due to misrepresentation
and failure of getting the permission of the local council, a major term of the contract was
violated under this it can be rescinded under section 268 of ACL. James can demand
financial compensation from Lloyd for the loss suffered by him which includes
reimbursement for the loss of 40 customers of $30 for each customer every day along with
non-payment of $15,000.
Conclusion
The financial compensation which should be given to James includes denial of payment of
$15,000 for the services and reimbursement for the loss of 40 customers.

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Answer 3
Issue
The issue which will be discussed is related to whether Lloyd faces any other legal risks
under the Australian Consumer Law (ACL)?
Rule
The parties operating in Australia are prohibited under section 18 of ACL from making any
statements regarding their products or services which are misleading or deceptive or which
are likely to mislead or deceive people. The aggrieved party can demand compensation for
the loss suffered due to the violation of section 18 under section 236 of ACL.
Application
The information given by Lloyd regarding the Italian-based tables and chairs was misleading
and deceptive which resulted in causing financial loss to James. Thus, section 18 of ACL is
violated under which compensation can be demanded by James under section 236 which
include reimbursement of the loss of 40 customers along with the denial of the payment of
$15,000 for the services given by Lloyd.
Conclusion
Lloyd faces other legal issues under ACL due to the violation of section 18. A claim for
compensation can be made by James under section 236 in which he can deny the payment
of $15,000 for the services of Lloyd and reimburse the loss suffered for 40 customers who
are not able to sit in the restaurant.