The Sales of Goods Act
Section 48:
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If Buyer to accept and pay for goods Seller can bring action for damages resulting from non-acceptance
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Damages= estimated losses directly and naturally occurring from breach
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If there is a market for the goods then (Contracted Price) - (Market Price) = Damages
Section 49:
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If Seller refuses to sell or deliver goods Buyer can bring action for damages resulting from non-delivery
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Damages = estimated losses directly and naturally occurring from breach
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If there is a market to purchase the goods then (Market Price) - (Contracted Price) = Damages
General Rule for Breach of Contract to Supply If the plaintiff has proved a breach he is entitled to be placed, as far as money can do it, in as good of a situation as if the contract had been performed
Thompson (W.L.) Ltd. v Robinson (Gunmakers) Ltd. (1955) Party refuses delivery of cars. Dealership sues for lost profit. 48(3) Discusses available market.
Issue
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Ratio
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Notes
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D bought cars from P
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D refused to accept delivery
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P returned cars and then sued for loss of profit
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An available market for goods requires that there be sufficient demand for the goods to readily absorb them
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If the application of the available market rule leads to an injustice according to the general principles (person breached has right to be put in place he/she would have been in) then it doesn't need to be applied
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Judge interpretation of “available market”: the situation in the area is such that the particular goods could freely be sold, and that there was a demand sufficient to absorb readily all the goods that were thrust on it
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Had P kept car they would have sold it anyways and P would have been entitled to storage and some interest from D
| Charter v Sullivan Loss profits is the amount lost because contract is breached. If would have sold all anyways then no loss
Issue
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Ratio
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Notes
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D refuses to accept delivery of a car
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There is evidence P could sell, and did, all models of this car
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Is there lost profit?
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Plaintiff must show that the sum representing the profit he would have made if the defendant had performed his contract has in fact been lost
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Available market doesn't mean that there is someone to purchase that particular item (car), there must be enough of a market to take all of those type of item (cars). If there isn't enough to take all of those cars the plaintiff’s lost sale will be lost profit.
| 18.Remoteness Case British Columbia Saw Mills Co. v Nettleship
Issue
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Discusses case from the early 1600s
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Man is to be married to heiress
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Horse needs a shoe on the way.
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Blacksmith worked so unskillfully the horse was lame and the man was late
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Heiress married another
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Blacksmith was found liable for the loss of the marriage
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Comment by F.E. Smith: even if the blacksmith knew about the wedding he couldn't be expected to apprehend that the bride would marry another due to lateness
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| Hadley v Baxendale(THE RULE) when a breach/inadequate performance by B causes a damage to A that is unknown to B
Issue
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Ratio
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Notes
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P contracts with D to ship broken gear shaft (required to operate business)
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Delivery by D was delayed an unreasonable time
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P sues for lost profit
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Rule for damages in cases where breach of contract causes a remote damage:
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Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as:
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First Prong - May fairly and reasonably be considered either arising naturally from such breach of contract itself; or,
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Second Prong - Such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable breach of it
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If the special circumstances were communicated then the potential damages would have been considered.
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D was not made aware that profits were dependent on a timely delivery
| Horn v The Midland Railway Company When giving notice of potential remote damages, notice must give rise to contractual obligation
Issue
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Ratio
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Notes
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P Ks to supply should to firm in London
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Ships shoes with D
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P drops of shoes with note stating P was under contract to have them delivered on the 3rd
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D delivered on the forth
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In calculating exceptional damages for a remote loss:
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In order that the notice of special circumstances may have any effect, it must be given under such circumstances, as that an actual contract arises that obliges the defendant to bear the exceptional loss
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The giving of the notice has to actually give rise to contractual obligation
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The court has never enforced exceptional damages on the grounds of having notice alone
| Note Cases
Hydraulic Engineering Co. Ltd. v McHaffie (1878)
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Plaintiff doesn't enter into a second contract to pay damages
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But, is liable for injuries that he is aware his default might cause
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Court will not imply the note as an implied condition
Rivers v George White & Sons Co. (1919)
Shippers have no discretion to decline the second contract as they have already accepted the first (Modification without consideration)
Kinghorne v The Montreal Telegraph (1859)
It makes no sense that a shipper should be liable for all potential loss that might arise from a late delivery
Koufos v C. Czarnikow Ltd. (The Heron II) Breach causing loss of profits: if its reasonably foreseeable breacher is liable
Issue
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Ratio
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Notes
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Ship captain breaches
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Gets passenger and cargo to port late
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Price for cargo has gone down, would have been more if on time
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If a loss is reasonably foreseeable to result from a breach the contract-breacher will be liable for the damages
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Look at circumstances and intentions of parties
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Is the breacher likely to know that the breach will cause a loss of profits?
| Transfield Shipping Inc. v Mercator Shipping Inc. (The Achilleas) Are damages for reasonably foreseeable losses always imposed? Limited to liabilities parties reasonably expected to assume/pay for
Issue
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Ratio
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Notes
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D charters boat from P for over a year
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D is supposed to return at set date
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P has lucrative charter with new client set up
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D is late and P must change rates, loses a lot
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P sues for lost profit
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In cases involving remote damages the court will interpret the contract to determine the liabilities which the parties may reasonably be expected to have assumed and paid for.
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Is the loss the kind of loss that risk would be considered to be assumed for when entering into the contract, if not then not liable
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It is wrong to hold a party liable for risk that people entering into a contract in that market would not consider
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1st determine type/kind of loss
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Implied contractual duty?
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Express contractual duty?
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Does this fall outside risk considerations that generally exist in market?
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Interpret contract as a whole against its commercial background to determine if the type of loss could have been assumed by one of the parties
| Cornwall Gravel co. Ltd. v Purolator Courier Ltd. What is this about
Issue
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Ratio
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Notes
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Business gives Purolator courier tender
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Courier knew what a tender was and knew what it meant
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Purolator failed to deliver tender on time and cost business the bid
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The party breaching does not need to be able to predict the exact manner of breach :
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Remote damages to non-breaching party have to be within the contemplation of the parties; OR,
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The damages must be expressly communicated
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Once expressly communicated the damages are VERY reasonably foreseen
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