Business Law Assignment: Analysis of Contract Termination and Damages

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Business Law
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Table of Contents
Introduction......................................................................................................................................3
Problem 1.........................................................................................................................................4
Problem 2.........................................................................................................................................6
Conclusion.......................................................................................................................................8
References........................................................................................................................................9
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Introduction
This assignment consists the solution of the legal problems by explaining the applicable
legislation, rules, and regulations. It is divided into parts i.e. problem 1 and 2 depict the legal
opinion that assists the clients to resolve their problems.
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Problem 1
Issue
KIA wants to know if they can terminate Professor Berlin’s contract.
Rule
As per the Contract laws of Australia, the contractual parties have the right to terminate the
contract as per the under mentioned provisions are mentioned below:
Express right to terminate the contract
The contractual parties have the express right to terminate the contract by three ways which
include at will, by notice or breach of contractual terms and conditions.
Implied right to terminate the contract
Contractual parties have the implied right to terminate the contract by reasonable notice of
termination.
Terminate by Subsequent agreement
The subsequent agreement is the agreements where parties agree to release the contractual
parties from rights and liabilities mentioned under the original contract (Poddar, 2016).
Termination of breach of the agreement
This termination gives the right to the party who is innocent to conclude the contract and give
rise to the contractual parties as per the classification mentioned under:
 Condition- Contractual parties terminate the contract on the breach of certain conditions
that are mentioned in the contract.
 Warranty- Contractual parties terminate the contract on the breach of warranty that is
prescribed under the contract.
 Intermediate Terms- On infringement of terms and conditions of the contract and
contractual parties can terminate the contract.
Termination in case of Failure of a contingent condition
Sometimes parties enter into the contract on which the performance on the contractual conditions
is based on the happening of the specified events and if none happening of the specified events
then both the parties have the right to end the contract (Fried, 2015).
Termination in case repudiation
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Contractual parties can terminate the contract in case of parties are incapable to perform the
contractual obligations and in such condition, the other party has the right to terminate the
contract. The parties can expressly or impliedly terminate the contract.
In this, the unwillingness of the party for the performance depends upon the whole contract and
the contractual conditions.
Termination by Frustration
In this provision, where the contractual liabilities are not performed by the parties and there is no
fault of either of by contractual parties. The frustration consists elements are as follows:
 The event of the contract becomes impossible to perform
 The frustration of unexpected event that is not foreseen while the formation of the
contract
Termination due to delay
Delay in the performance of the contract gives the right to the contractual parties to terminate the
contract. In this, the time is the essence where the one party gets fails to perform the contractual
performance within the specified period of time (Haigh, 2018).
Applicability
Kent Institute Australia employs a new-chancellor and Chief Executive and offers the
employment to Professor Chris Berlin and signs the contract for duration of three years on 1
August 2018 at $200,000 and joined on 1 January 2019. But on 12 September 2018 Professor
Berlin had an accident in a roller blade and as per the advice the possibility of rejoining from 25
April 2019.
Conclusion
With the abovementioned discussions, Kent Institute Australia has the right to terminate the
contract as per the provisions of terminate by repudiation where one of the contractual party is
unable to perform the contract unwillingly (Stamatoudi, 2018). The similar decision passed by
the court in case of Thornton v Shoelane Parking 2 QB 163, 1 All ER 686 where the court
held that the contractual parties are not bound to accept the contractual terms and conditions
which were later incorporated.
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Problem 2
Issue
Disregarding the ACL and applying common law only, is Repairer Pty Ltd liable for the
financial loss of KIA? If so, what are the damages, if any, payable to KIA?
Rule
As per the contractual law, the rule of remoteness is the set of rules includes both the tort and
contract which assist the compensatory damages for the wrongdoings. In case of negligence, the
causation concern with the remoteness, foreseeability, and causation in case of negligence of tort
(Goh and Yip, 2016). In case of negligence, it was held that the loss or damage claim by the
claimant was not too remote and formulated the policy by ensuring that there is unreasonable
harm or loss caused or in case loss incurred than the aggrieved party has the right to claim
damage under the provisions of duty of care and ensure that the damages are fairly paid to the
defendant.
Rule of Remoteness of Damage
This mechanism limits the plaintiff ability to claim damages which are reasonably foreseeable
against the consequences of the act of negligence (Nair, 2016). But on the other hand, the
defendant is not liable to pay damages in case the liability is under the scope of the defendant
even if damages cause due to the negligence action.
Damages are too remote if the damages are not foreseeable by the defendant in case of:
 Damages are not foreseeable seen when it was physically impossible and completely
disregard it
 Only the damages of general type need to be foreseen (Levine and Stolker, 2016).
 Damages can claim primary injuries and not of the subsequent injuries that is not
foreseeable
If the damages satisfy all the above-mentioned requirements that it is not considered as remote
and will be claimed as compensation by the plaintiff (Singh, 2016).
The Tort Law depicts right to get compensation in case of harm to the people rights, property,
and life. In tort of law, it contains the provisions regarding the directness and foreseeability.
Directness provides the right to the defendant to claim compensation in case breach of the duty
of care or if the damage is unusual or unpredictable. The second one is the foresee ability, this
provision provides the right to the claimant to cause damage that is reasonably foreseen.
The above-mentioned provision learned with the undermentioned cases:
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Victoria Laundry (Windsor) Ltd v Newman Industries Ltd 1949
In this case, Court of Appeal held that if the loss that needs to compensate only relates to the
ordinary losses, not the extraordinary losses as it means several loss cannot be recovered if the
defendant does not has sufficient knowledge about them. The damages are only recoverable if
the defendant has sufficient knowledge about those damages. Damages are only recoverable if
the defendant has enough knowledge about it and accept the liability of losses.
Hadley v Baxendale (1854) 9 Exch 341
This is the leading case in the English Law, it determines the damages for contractual damages in
case of breach of contract, apart breaches the contract the parties are responsible to claim losses
if the losses are foreseen by the contractual parties (Edelman and Bourke, 2016). But the
breaching party is not liable for losses if the damages are not foreseen.
Applicability
As per the given scenario, where two parties enter into the contract which is broken by any one
of the contractual parties then the other party is liable to claim damages against the breach of
contract but it must be fair and reasonable. But in special circumstances, where both parties have
known about the damages that are suffering in case of breach of contract that amounts to injury
(Askeland, et. al., 2015). On the other hand, if in case of special circumstances such damages
that are not known by the parties then the parties are liable to pay injury that must be required to
pay by the contractual parties for the breach of contract. In the case of Koufos v C Czarniknow
Ltd, the court held that in case of damage is caused due to the remoteness of damage and this
liability is limited. The House of Lords held that in case of tort if any damage is reasonably
foreseen that it can be claimed. According to the given case, the KIA is accountable to
recompense the amount of the third oven which was damaged during transit and become unfit to
use. Furthermore, the delivery will not be possible on time because of a strike of workers at the
shop of repairer. Due to this, only two third part of the contract is possible to implement and
other contracts are canceled amounting $500,000.
Conclusion
With the above-mentioned provision, it conclude that the damages that are payable tom KIA was
only of ordinary damages that foreseen but not liable for the damages that are not foreseen which
mean the damages that are where the repair work is delay due to strike that is not reasonably
foreseen by the Repairer Pty Ltd but liable to recover the charges of first two oven that are
delivered (Ashworth and Perera, 2018).
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Conclusion
The above discussion in assignment assists the client to to have the opportunity to access the
justice and provide right direction to resolve the issues. It also acknowledges the rights and
liabilities of the contractual partiers.
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References
 Ashworth, A. and Perera, S., 2018. Contractual procedures in the construction industry.
Routledge.
 Askeland, B., Yamamoto, K., Oliphant, K., Moréteau, O., Menyhárd, A., Ludwichowska-
Redo, K., Koziol, H., Green, M.D. and Cardi, W.J., 2015. Basic questions of Tort Law
from a comparative perspective (p. 914). Jan Sramek Verlag.
 Edelman, J. and Bourke, L., 2016. Hadley v Baxendale. University of Cambridge,
Obligations VIII, Revolutions in Private Law, pp.19-22.
 Fried, C., 2015. Contract as promise: A theory of contractual obligation. Oxford
University Press, USA.
 Goh, Y. and Yip, M., 2016. Unpacking the compensatory principle: Causation,
mitigation, certainty of loss and remoteness: The MTM Hong Kong.(2016). Lloyd's
Maritime and Commercial Law Quarterly, 1, pp.33-41.
 Haigh, R., 2018. Legal English. Routledge.
 Levine, D.I. and Stolker, C.J.J.M., 2016. Compensating for psychiatric damage after
disasters: A plea for a multifactor approach.
 Nair, J.S., 2016. 31_Law of Tort (2006).
 Poddar, K.N., 2016. Theories and techniques of assessment of damages.
 Singh, S.P., 2016. 42_Law of Torts.
 Stamatoudi, I., 2018. General Principles of Civil Law, Dr.
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