Business Law 4: Legal Opinion on Contract Breach and Damages Claim

This document presents a legal opinion on a breach of contract case involving two scenarios: a breach by John, who failed to deliver the agreed-upon number of rocking horses, and a breach by Ruth, who delivered the rocking horses late. The analysis focuses on advising Sam regarding her options for claiming damages. It examines different types of damages, including restitution, reliance, and expectation interests, referencing relevant case law such as Farley v Skinner, Anglia Television v Reed, Chaplin v Hicks, and Hadley v Baxendale. The opinion determines which types of damages Sam is entitled to recover from John and Ruth, considering their knowledge of Sam's intentions and the remoteness of the damages. The conclusion specifies the recoverable damages for each breach, differentiating between the restitution, reliance, and expectation interests based on the specifics of each contractual agreement and the parties' knowledge of potential profit losses.

Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author Note

1BUSINESS LAW
Issue
 To advise Sam on her options to claim damages on account of the breach of contract
by John.
 To advise Sam in relation to her contract with Ruth
Rule
Breach of Contract refers to the situation when a party to the contract does not fulfill
his promise to do or not to something. In most cases, the aggrieved party who has suffered a
certain amount of loss due to such breach of contract is liable to receive damages or
compensation. As held in the case of Farley v Skinner, Restitution Interest is a type of
damage that is awarded to aggrieved party in order to restore their position in which they
would have been if the contract had been performed as per the agreement clauses1.
Reliance Interest is the types of compensation that an aggrieved party is entitled to
for the expenses that he might have experienced due to his reliance upon the existence of the
contract, as held in the case of Anglia Television v Reed2. The purpose of this interest is to put
the party back in the position if the contract was not made at all.
Expectation Interest refers to the type of damages that an aggrieved party is entitled
to in case the breaching party had the knowledge that the aggrieved party had an intention to
made profit out of such transaction3. As held in the case of Chaplin v Hicks, the aggrieved
party had lost the chance of making a profit from an agreement which the other party had
knowledge about4. Remoteness of damage is calculated – a) based on the usual course of
things, and b) whether the knowledge of the special situation known to both the parties as
held in Hadley v Baxendale5.
1 Farley v Skinner [2001] UKHL 49.
2 Anglia Television v Reed [1971] 3 All ER 690.
3 Burrows, Andrew S. "Contract, Tort and Restitution—A Satisfactory Division or Not?." , 2018 Restitution.
Routledge. 3-53.
4 Chaplin v Hicks [1911] 2 KB 786.
5 Hadley v Baxendale [1854] EWHC Exch J70.

2BUSINESS LAW
Application
Sam and John
In the given case, John breached the contract with Sam as he only sent 1 rocking
horse instead of 12, even though Sam had already made the payment of all 12 horses. In this
regard she should be entitled to get back the $100 payment that she had already made.
Sam hired Ruth for $25 in advance, rented a stall at the local market for $60 and made
a sign board for $30 for the stall with the notion that her contract with Sam was existing.
Therefore, Sam shall be entitled to recover the expenses that she made on reliance from John.
Sam shall not be entitled to receive an expectation interest from john as John was not
expecting that she had an intention to make profit by selling the rocking horses. Therefore, it
could be held that John had not aware of the remoteness of damage and the consequences that
Sam would face due to the breach of contract. Thus, it is less likely that Sam would be able to
recover expectation interest from John.
Sam and Ruth
In terms of Sam’s transaction with Ruth, they had an agreement that required Ruth to
deliver the rocking horses to the local market by 7 am on Sunday morning, for which Ruth
was paid $25 in advance. However, Ruth failed to carry out the direction and brought the
delivery at around 10.30 which was quite late for Sam to sell. This makes Sam entitled to
recover the payment as a restitution interest that she had made to Ruth in advance for the
work that he was meant to do.
In addition, Sam shall be entitled to recover expectation interest from Ruth as he had
the knowledge that Sam intended to make profit from selling the rocking horses that he was
supposed to deliver to the local market by 7 am. His failure to do so has attracted loss to Sam
as she was not being able to sell them and make a profit. This makes Sam entitled to
Expectation Interest from Ruth.

3BUSINESS LAW
Conclusion
Therefore, Sam shall be entitled to recover Restitution interest and Reliance Interest
from John and not the expectation interest as he had no knowledge of her selling the horses
for making a profit. While, Sam will be entitled to recover Restitution Interest and
Expectation Interest from Ruth, and not the Reliance interest as she did not make any
expenses based on reliance on her agreement with Ruth.

4BUSINESS LAW
Bibliography
Books/Journal
Burrows, Andrew S. "Contract, Tort and Restitution—A Satisfactory Division or Not?." ,
2018 Restitution. Routledge. 3-53
Case laws
Anglia Television v Reed [1971] 3 All ER 690
Chaplin v Hicks [1911] 2 KB 786
Farley v Skinner [2001] UKHL 49
Hadley v Baxendale [1854] EWHC Exch J70