Termination right to perform
Step 1: Identify the legal issue
Step 2: Identify the principle of law The right to terminate performance on grounds of breach of contract is a remedy that originated in the common law courts. It consists of rejecting a defaulting party’s flawed performance and/or putting a stop to further performance of the contract. Termination right to perform consists of: -Termination of performance is only available as a remedy for relatively serious breaches of contract or another word is breach of condition. Associated Newspaper Ltd Bancks (1951). It also available for a breach of nominated (intermediate) term, if the breach substantially deprives the plaintiff of an intended benefit of the contract. Koompahtoo Local Aboriginal Land Concil v Sanpine [2007]. - Non-performance or Partial performance of one or more conditions in the contract, or if partial performance give rise to a sufficiently serious breach of innominate term, the non-defaulting party may reject that performance and put a stop to any further performance. Varley v Whipp [1900]. -Hidden defect in goods or services supplied to amount or serious breach of an innomiate term, the non-defaulting party will be entitled to reject what was supplied and put a stop to further performance. Finch Motors Ltd v Quin (No 2) [1980]. -An anticipatory breach of an entire contract, or of a condition in a contract or a repudiation of an innominate term, which would amount to a serious breach, the non-defaulting party, has the right to terminate performance immediately, even before the performance is actually due. Hochster v De La Tour (1853). -A party wish to terminate must decide to do so within a reasonable period of time. A decision to terminate must be communicated clearly to the other party by words or conduct. Holland v Wiltshine (1954). -A decision not to terminate performance despite a serious breach of contract is binding on a non-defaulting party if the decision is made with knowledge of the facts that gave rise to the right to terminate, even if the non-defaulting party had not sought legal advice and did not know their legal right to terminate. Sargent v ASL Development Ltd, Turnbull v ASL Development Ltd (1974). Breach of mere warranty is not entiled to terminate - Breach of innominated (intermediate) term, if the breach substantially deprives the plaintiff of an intended benefit of the contract Cehave NV v Bremer [1976], Reason is only a serious breach of such a term justifies rejecting performance, that is, a breach that deprives the non-defaulting party substantially of the benefit for which they entered the contract. -A beach of a mere warranty, or a breach of an innomiate term that does not have the effect of substantially depriving the plaintiff of an intended benefit of the contract, allows the non-defaulting party to claim for the damages but does not justify termination of performance. Bettini v Gye (1876). - Case of substantial performance of a condition, although this is a breach of contract, it would be unreasonable to allow performance to be terminated. Connor v Stainton (1924). Hoening v Isaacs [1952]. Reason is wher substantial performance has taken place, the failure to render completed performance, while still a breach of contract, will constructed as a breach of a warranty. - Late-performance is not always treated as sufficiently serious to justify terminating performance. Holland v Wiltshire (1954). - An anticipatory breach of an entire contract, however, the non-defaulting party may elect to continue with the contract despite a serious anticipatory breach, hopping that performance will be made when it becomes due. Mahoney v Lindsay (1980). Step 3: apply law There are two contract between Blossom (owner of Blossoming Roses shop) and Daisy (Who Flower wholesaler) the first contract was before Valentine’s event Blossom had agree with Daisy these following things. First Whole Flower Wholesaler can only guarantee the supply and delivery 1000 red rose on the day before Valentine’s Day (13 February). Secondly, any additional supply of red roses on that day will be subject to availability. Two week before Valentine’s Day, Blossom has call Daisy to supply and deliver 1500. According to Daisy, she said she is not sure she can supply with more than 1000, which mean the roses only available at 1000. As the fact flowing, firstly Daisy did not liable to the addition of 500 red rose. This is because, the condition state clearly of the roses supply on that day will be subject to availability, thus Daisy only liable of the quantity of 1000 red roses. On 13 Ferbuary, Daisy only delivers 800 red roses. Although, this is a breach of contract, but as Daisy performance can considered as substantial performance. The breach so relatively minor so that Blossom still gets the expected benefit of the contract (substantial performance) if substantial performance, Blossom is not entiled to terminate the contract, treats as breach of warranty (Hoeing v Isaacs). In addition, the breach between Blossom v Daisy could not classified ethier condition or warranty, the breach likely to be breach of innominate term cause as the non-defualting party, Blossom has the substantially of benefit of 800 roses on 1000. If a breach of Innominate term not serious, Blossom cannot terminate the contract (Cehave NV v Bremer) The second contact took place before the day after Valentine’s Day (14 February) Blossom order for 100 white rose and 200 colorful roses. Daisy agreed to deliver Blossom’s order. Nevertheless, Daisy did not deliver the order. This breach is a serious breach of term that Daisy did not deliver upon the order, this could classify as breach of condition as Daisy failure to fufill her obligation as the contract her has agreed to. If a breach of condition, Blossom can terminate the contract. (Associated Newspaper Ltd Bancks (1951)) Secondly, as performance, Daisy did not supplies and delivers to Blossom upon the order. This is more likely as non-performance, cuase Daisy completely failure to perform. If a non-performance, Blossom may terminate that performance. (Varley v Whipp [1900]).

Damages, Direct loss and consequential loss Step 1: identify the legal issue Step 2: identify the principle of law An award of damages is the ordinary remedy for breach of contract. It is available for any breach of contract that causes loss. Damages may be claimed for losses flowing form a breach of warranty, or a breach of condition, or a non-serious breach of an innumerate term. They can be claimed for a breach in the form of non-performance, partial performance, substantial performance, defective performance, late performance, or following termination of performance on grounds of anticipatory breach. ‘Damages’ mean a sum of money parid to compensate someone for a loss they have suffered. Damages for breach of contract are not awarded simply to punish a breach that causes no loss. Liquidated damages must be distinguished from penalty clause. Penalty clauses do not estimate the likely loss, but are an attempt to encourages that bear no relationship to any actual loss. The courts will disregard penalty clause and instead assess the extent of actual loss. O’Dea v Allstate Leasing System (WA) Pty Ltd (1983) An award of damages for breach of contract is calculated to put the non-defaulting party in the same financial position as if the contract had been performed. Radford v de Froberville [1978]. Taborp Holding Ltd v Bowen Investments Pty Ltd [2009] Compensation for reasonable expense incurred expectation of proper performance of the defaulting party’s obligation, to the extent that the expenses would not have been wasted had the contract been properly performed. McRae v Commonwealth Disposals Commission (1951). An award of damages may not include compensation for disappointment and distress resulting from the breach. An exception for this rule is when the contract was for the provision of enjoyment, entertainment or pleasure. Baltic Shipping Co v Dillon [1933]. When faced with a breach of contract, the non-defaulting party is required to do everything reasonably possible to mitigate the loss that flow from the breach. Burns v MAN Automotive (Aust) Pty Ltd (1986) As long as the non-defaulting party acts reasonably in the circumstances in taking mitigating action, then the even if the result is counter-productive, the non-defaulting party is entitled to recover both the actual loss suffered and any additional expenses incurred. Simonius Vischer & Co v Holt & Thompson [1979]. If action taken to mitigate loss is effective and the non-defaulting party ends up avoiding loss or obtaining a benefit, then damages cannot be claimed. British Westinghouse Electric Companny Ltd v Underground Electing Railways Company Ltd [1912]. Direct loss or immediate loss is an award of damages for breach of contract can include compensation for losses that flow naturally from the breach according to the usual or normal course of events. Koufos v C Czanikow Ltd [1969] [1967]. Reason is t Consequential loss is an award of damages for breach of contract can include the compensation for losses that are not closely enough linked to the breach of direct loss but which, even though, more remote, must have been thought about by the parties when entering the contract as a probable result of the breach. Hadley v Baxendale (1854). Step 3: apply law The letter claim for damages from Blossom list as following Firstly, Daisy not being able to deliver 500 red roses meant Blossom could not fill the extra order and suffered for the loss of profit of $4,000. This is a direct loss as Blossom already accepted the extra order from the customer therefore if Daisy not able to deliver the roses thus Blossom will suffered the loss of $4,000. However, this compensate could not be claimed. According to the condition of the contract mentioned, “Any additional supply of red roses on that day will be subject to availability” (the email sent by Daisy). Which meant the addition 500 red roses from Blossom must put into the position of consideration whether the 500 red roses possible to supplied or not possible due to the subject to availability on that day (contract enforceable). In addition, Daisy had informed Blossom that she not sure that her can supply to Blossom more than 1000 red roses causes of the running low of supplies. Ignoring that, Blossom still accepted orders excess 1000 red roses, therefore, this is not liable of Daisy, or another word Daisy action has taken to mitigate the loss therefore the damages could not be claim (British Westinghouse Electric Company Ltd v Underground Electing Railways Company Ltd [1912].). Secondly, Daisy deliver 800 red rose right at the due date instead of 1000 red roses. Blossom being 200 roses short meant that she suffered a loss of $1,800. The loss is naturally flow from the breach that instead of delivering 1000 red roses to Blossom (contract enforceable), and Daisy only delivered 800, which meant the profit of 200 red roses is liable on Daisy. (Koufos v C Czanikow Ltd [1969] [1967].) Thirdly, failure to supplied 100 white roses to fill the order of Ron Maroon, Blossom had loss of $900. This is a direct loss. This is because Daisy had failure to delivery the white roses as she promised to Blossom, thus Daisy must be liable on this loss (Koufos v C Czanikow Ltd [1969] [1967].). Fourthly, Daisy had fail to deliver 200 colourful lead to the opportunity to be on Television has failed, and loss the opportunity to increased 20% in financial year. The likely as the consequential loss, this is because the opportunity to appear on TV show thus Blossom wants to decorate her shop with 200 colourful roses to make a good interview. As if the 200 roses is not delivering so the opportunity to appear on TV cannot conduct. This is the consequences of 200 roses is not delivered. (Hadley v Baxendale (1854).) However, as the consequential loss can only claim when the two parties have been thought about when entering to the contract as the result of breach. Blossom did not inform Daisy that her opportunity to go on TV is lying on those colourful roses. She only tells Daisy that she had an unexpected order from a customer. Therefore, this unclear circumstance cannot justify as consequential loss as Daisy did not know the failure opportunity of Blossom resulting from her breach.