Contract Law: Consequences and Monetary Remedies

Compensatory Damages is also known as Expectation Damages. Expectation damages are those damages which cover the expectation of party. In other words it covers what parties are expected to receive from the contract.

Compensatory damages include special damages and general damages. Special damages cover those damages which plaintiff has suffered before the trial date, and general damages are those damages which cover all the injuries suffered by plaintiff and cannot be calculated in precise manner. In this case, Ms. Virginia Dixon gets compensation for actual damage.

Compensation for actual damages can be awarded to plaintiff in case when there is any physical injury, psychiatric injury, property damage, and any other type of economic loss. For getting compensatory damages plaintiff needs to prove that damages are fall under the remoteness of damage[3].

It must be noted that in case of compensatory damages calculations are usually straightforward, and amount of damages are based on the contract itself or on market value. In case of direct loss, usually the amount incurred in replacement of goods is considered as amount of loss[4]. 

In this case, clause 15 states that all the glasses used in the church will be 3.2mm thick but Patrick change the thickness, and put 3mm glass on the windows of the church. Patrick does not inform this change to Ms. Dixon. Later on Ms. Dixon found that thickness of windows are not up to the contract, and also found that Patrick used Victorian Ash instead of Tasmanian Oak to fix the windows. Now, Ms. Dixon cost up to $ 150,000 to remove all the windows and then fixed them using original material. Therefore, in this case amount of damage is $150,000 which can be claimed by Ms. Dixon as amount of damages claimed.

Now, Type of Damages Ms. Dixon can Claim for the Breach of Clause 14 of the Contract:

According to the clause 14, all the work must be completed by 30^th June 2016. Ms. Dixon wants to open the café on 4^th July 2016 because Pan Oceanic Games were being held in Rockhampton, and thousand of athletes, officials and spectators are there for 10 days.

Patrick completed the work after the 9 days of deadline that is on 9^th July 2016 because of which Virginia start her café on 9^th July 2016. Due the late opening of business is the starting 5 days of games. Breach of clause 14 is actual breach, and Ms. Dixon can claim for compensatory damages for direct loss of profit. Direct losses occurred because of non compliance of the provisions of contract are easily identified and assessed[5].

On Behalf of Plaintiff (Hayden):

Issue 1: Plaintiff cannot terminate the contract in case of breach of clause 15 because only expert can identify that material used in the windows are not original, and plaintiff does not suffer any loss because of the windows.

Issue 2: in this defendant stated that he is not entitled to give any compensation because:

(a) Patrick told Ms. Dixon that she can start the business on 4^th July 2016, because all the work was completed on 30^th June 2016 except the restoration of windows. Patrick also stated that that they are only inserting the windows, and this would not cause any interruption in the eating area and the bar.

(b) Patrick held in this point that there is no provision in the contract which state that Patrick is liable to pay damages in case of breach of contract. He also stated that Ms. Dixon stated that only 11 windows need restoration, but later on after the inspection of windows it was found that all 20 windows are damaged and need restoration. This would increase the cost of restoration, and he only try to save the cost of Ms. Dixon.

Issue 3: Patrick held that contract is not spoiled by misrepresentation, and if it was then also no provision for damages or rescission are available in the contract. Therefore, Patrick is not liable to give any damages to the Ms. Dixon. Patrick further stated that Ms. Dixon stated that only 11 windows need restoration, but later on after the inspection of windows it was found that all 20 windows are damaged and need restoration[6].

Patrick knew Ms. Dixon is not able to pay more amounts for the restoration of windows, and he only tried to help Ms. Dixon. Patrick also stated that changes are so minor that only experts can identify them, and Ms. Dixon does not suffer any loss because of the architecture of windows, because no one recognized except experts that windows are not formed from original material.

Issue 4: Before discussing the Unconscionable Conduct of Ms. Dixon it is necessary that we understand the meaning of Unconscionable Conduct.

Unconscionable Conduct covers those transactions which are conducted between parties in which one is dominant and other one is weaker. It covers matters related to duress and undue influence. This conduct is prohibited in both aspects that is equity and recently by statute. Section 20(1) of the Australian contract law states prohibits the Unconscionable Conduct. Unconscionable Conduct in equity held when one party take advantage of the disability of other party. In this case, Ms. Dixon takes the undue advantage of the feelings of Patrick[7].

Ms. Dixon clearly knows that Patrick likes her from the beginning, and she took the advantage of the Patrick’s feelings. She gives her impression that she also interested in Mr. Patrick and went for dinners with him, Patrick gifted her gold bracelet that cost $3000, and they also spent few days in Sydney before starting the work of café.

It was also clear from the following points that Ms. Dixon took the advantage of Patrick’s feelings:

• First Quote received by Ms. Dixon from Patrick was of $300,000 which only covers the cost of material, and Ms. Dixon knows that because second Quote was send by the manager which was cost up to $1 million.
• Later on Patrick reduced the amount of work and sends the final quote of just $250000.

Therefore, Mr. Patrick states that Ms. Dixon use Unconscionable Conduct and Patrick is entitled to get compensation. 

References:

Mitchell, T. Contractual Breach: Consequences and Monetary Remedies, Accessed on 20^th October 2016 from: file:///C:/Users/Guest/Downloads/Travis_Mitchell_Contractual%20Breach%20-%20Consequences.pdf.

ACL, Remedies, Accessed on 20^th October 2016 from: https://www.australiancontractlaw.com/law/remedies.html. 

ALRC, Remedies and Costs, Accessed on 20^th October 2016 from: https://www.alrc.gov.au/publications/12-remedies-and-costs/damages. 

JEC, Remedies for Breach of Contract, Accessed on 20^th October 2016 from: https://jec.unm.edu/education/online-training/contract-law-tutorial/remedies-for-breach-of-contract. 

Uni Study Guides, Unliquidated Damages for Breach, Accessed on 20^th October 2016 from: https://www.unistudyguides.com/wiki/Unliquidated_Damages_for_Breach. 

ACCC, Unconscionable conduct, Accessed on 20^th October 2016 from: https://www.accc.gov.au/business/anti-competitive-behaviour/unconscionable-conduct. 

ACL, Unconscionable Conduct, Accessed on 20^th October 2016 from: https://www.australiancontractlaw.com/law/unconscionable.html.