Preliminary Issue

1. Was there a contract between Huang and Bill?

A contract is an agreement which the law will enforce, and to be legally binding it
has to contain six essential components, which are
1
offer, acceptance, consideration,
intention to be legally bound, capacity to contract, and legality of the promises. In
this case, Huang has primarily wanted to build a small factory and workshop at the
rear of his own property. And Huangs purpose for the garage and workshop is to
store the machinery and equipment that he needs to make and assemble
components for a company he has submitted tender to. Therefore, according to the
presumptions relevant to test for the existence of intention, the agreements made
are commercially because Huang was offering a contract to a registered builder Bill,
so it is assume that the parties are intended to create a legal relationship. In
conclusion, there is an existing contract legally binding between Huang and Bill.

2. What were the terms of contract between Huang and Bill?
The terms of the contract between Huang and Bill are that Huang needed the
constructions of his factory and workshop to be completed by Bill in the 1
st

November. The date is very important to Huang because he needed the factory and
workshop for commercial use, and that it is an opportunity for him to assemble and
make components for other company. Although Huang did mention the date of
completion of the construction is at 1
st
November, but he did not tell Bill its purposes
and the importance of the garage and workshop have to be done by the completion
date. Therefore, Bill assumed Huang is going to build for domestic and recreational
purposes, and does not know its actual purposes. So, Bill accepted the offer from
Huang and promised to complete the construction of the garage and workshop at
the date of 1
st
November. Therefore, the acceptance is clear and communicated
through Bills agreement towards Huangs offer.

3. Did Bill perform the contract?
The rule established that in order for one party to perform the contract, the party
have to accomplish exactly all the terms and requirements stated in the contract. In
this case, Bill promised to complete the construction of the garage and workshop by
1
st
November. But Bill did not finish the construction as promised at 1
st
November,
the construction was whereas completed at the following February. Due to the
delays of the construction, Huang loses the contract for the supply of the
components for the company which is worth $150,000 of the contract, and the loss
resulted on Huang was directly caused by Bill did not complete the construction on
time. Although in this case, Bill had completed the construction, but he did not finish

1
David Parker and Gerald Box, Business Law For Business Students 2011(Lawbook Co., 2011)
the construction by the completion date as he promised to finish at 1
st
November.
Therefore, Bill did not perform exactly all the terms in the contract.

4. What remedies are available for breach of contract?
A breach of contract was occurred when either party in the contract fail to meet the
requirements and terms stated in the contract. In this case, the appropriate remedy
for breach of contract was the principle of awards of damages.
2
The purpose of an
award of damages is to compensate the victim for his actual losses resulting from
the breach of contract, which in this case to compensate the losses of Huang
incurred by Bills delaying of his duty. Therefore, Bill was obliged to pay the loss
amount of $150,000 to Huang for breaching the contract.

Main Issue: Can Huang claim $150K as damages from Bill?
Rule of Law
A breach or anticipated breach of contract will by definition occur before the termination of
that contract by full performance on both sides. The contract may be wholly unperformed
or partly performed. The aggrieved party may pursue to a monetary compensation for
awarding of damages. Damages in contract law are aimed to restore the plaintiff against
losses flowing from the breach of contract, and is not aimed to put him or her in a more
superior or better position to that which would have been enjoyed had the contract been
duly performed. (Business Law 6
th
Edition)
Damages for breach of contract are viewed as a 'substitute' for performance. Consequently,
they are designed to put the plaintiff in the position they would have been in had the
contract been performed properly. Punitive damages are not available. (Australian Contract
Law website)
Parties are entitled to loss-based damages only if the loss they have suffered has been
caused by the other partys breach. Additionally, if the loss could not have been expected,
the loss may be too remote from the breach for damages to be awarded. (Australian
Government website)
Damages will be compensated to the victimized party. However, the damages incur when a
party breach the contract must be foreseeable and made know to the party. Therefore, the
main term here is foreseeability of damages of breach of contract, and in order to be
foreseeable, there are three rules applicable. The first rule it is flow naturally from the
breach, which is natural consequences from the breach). The second rule is the party has
been informed that the results will be result from the breach, which are unnatural

2
David Parker and Gerald Box, Business Law For Business Students 2011(Lawbook Co., 2011)
consequences informed prior to the time of contracting by the other party). And lastly the
third rule is its within the knowledge which the breaching contract party possesses of
special circumstances outside the ordinary course of things that breaches in contract would
be liable to cause more loss.
The measure of damages is the principles upon which the loss or damage is evaluated or
quantified in monetary terms. It is assessed to the innocent party for his losses according to
the market value of goods substituted for those under a breached contract.
The law imposes a duty upon the party claiming damages to take all reasonable steps to
mitigate the losses caused by the breach of contract. The party who fails to mitigate their
losses cannot recover any part of the loss which is attributable to their failure to do so.
(Australian Commercial Law)

Cases
Robinson v Harman

In this case, Parke B stated Where a party sustains a loss by a reason of a breach of
contract, he is, so far as money can do it, to be placed in the same position with respect to
damages as if the contract had been performed. Therefore the aggrieved party is placed
financially in the same position he or she would have occupied if there has been no breach.
Hence, the court decision was for the other party to compensate the aggrieved party in
monetary terms for what the plaintiff has losses from the breach of contract. (Business Law)


Hadley v Baxendale
According to the case of Hadley v Baxendale, there was a term between them that
Baxendale should transport the broken shaft at the following day, but Baxendale did not
transport on time that Baxendale was delayed of the manufacture of the replacement shaft.
Therefore, Hadley sued Baxendale for damaged for breach of contract, which Hadley losses
production at the mill resulting from Baxendales delay. The court decision was to reject
Hadleys claim for damages for breach of contract, declaring that Baxendale was not told
that the damages of loss of production will incur from breach of contract, and could not
foresee, that the broken shaft was the only crankshaft which Hadley owned.

Victoria Laundry (Windsor) Ltd v Newman Industries Ltd
In the case of Victoria Laundry Case, There was a contract between Victoria Laundry and
the engineers for supplying a new boiler at Victoria Laundrys premises. But the engineers
failed to complete the work on time. The engineers therefore, were liable for paying the
losses resulting for their breach of contract. However, the plaintiff claimed for more
amounts due to their intention of their new businesses. The court decision was that they did
not approve the claims because it was not informed earlier to the defendants that the
damages for breach of contract will lead to an unnatural consequence, therefore it was not
foreseeable to the defendants. Hence, the court decision was that the defendant was not
liable to pay the extra amounts.

Analysis
In the case of Robinson v Harman, the plaintiff sued the other party for damages for breach
of contract. The breach of contract has caused the plaintiff to loss in monetary terms.
Therefore the court decision was that the other party was obliged to compensate the
aggrieved party in his monetary losses due to the consequence of his act of breach of
contract.
However, in the case of Huang v Bill, Huang is the plaintiff and Bill is the defendant. Bill
agreed in the terms of the contract that he supposed to finish constructing the factory and
workshop by 1
st
November. But Bill fail to do so, he delayed on his duty for the construction.
Therefore, Bill had breaches a fundamental term of the contract of not completing his duty
by the contractual time. This action of Bills delay results a monetary losses of $150,000
suffered by Huang because the factory and workshop was supposed to house Huangs
machinery and equipment for a supplying components for a company. But, the results of
losses occurred to Huang was not a natural consequence for breach of contract; therefore it
could not be foresee by the other party. Bill did not know that the breach of contract could
directly causes loss to Huang because Bill thought the uses for the factory and workshop
was for domestic and recreational purposes. The actual purpose for the factory and
workshop was not told to Bill that it is actually used for a commercial purpose to store
Huangs equipment and machinery to supply components to a company. The situation of
loss of breach of contract was a special circumstance which was not communicated
between Huang and Bill.
Similarly to the case of Hadley v Baxendale, because Baxendale have a contract duty to
transport a broken shaft to the manufacturer, but Baxendale was delayed on his duty to
transport the broken shaft, and in results of that, Baxendale was being sued for damages for
breach of contract. But Hadley did not inform prior to Baxendale the consequences of an
unnatural result that it will causes Hadley to occur loss of production for Baxendale assumed
Hadleys broken shaft was not the only shaft he owned.
In addition, the case was also similar to Victoria Laundry (Windsor) Ltd v Newman
Industries Ltd, there is a standard form of damage is remedied called expectation damages
as the defendants failed to supply goods needed in the plaintiffs business, therefore the
plaintiff was unable to earn profits due to the act of breach of contract. Newman Industries
did not told in prior to the contract being formed; therefore Newman Industries is not liable
to pay for the losses caused by the unforeseeable and unpredictable consequences. These
two cases have supported the case of Huang v Bill, so that Bill was not liable to pay for the
unforeseeable losses incurred by an unnatural consequence of losing a contract that is
worth of $150,000.
Besides, Huang did not take any reasonable steps to reduce its loss from the contract and
did not take any actions to avoid the losses from the contract. Therefore, Huang also
cannot claim any loss that was actually avoidable by him if he took reasonable measures to
minimise the losses.



Conclusion
I will argue that Victoria Laundry (Windsor) Ltd v Newman Industries Ltd and Hadley v
Baxendale are more suitable precedent case for the court decision because it is very similar
and more exact to the situations and terms between both cases that Huang did not told Bill
in prior of the consequences due to his special circumstances for breach of contract.
I will advise Huang that he could not claim the $150K as damages from Bill. Therefore Bill
was not liable to pay the $150K to Huang as the result of losing the supply contract.





















Bibliography

A. Articles/Books/Reports
Australian Government Attorney-Generals Department, Remedies for breach of contract
Australian Government Attorney-Generals Department <www.ag.gov.au>
Clive Turner, Australian Commercial Law (LBC Information Services, 23
rd
Edition, 2001)
David Parker and Gerald Box, Business Law for Business Students 2011 (Lawbook Co., 1
st

Edition, 2011)
Julie Clarke, Remedies (2010) Australian Contract Law
<http://www.australiancontractlaw.com/law/remedies.html>
Peter Gillies, Business Law (The Federation Press, 6th Edition, 1994)

B. Cases
Hadley v Baxendale (1854) 9 Exch 341
Robinson v Harman (1848) 1 Ex 850
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd (1949) 2 KB 528

C. Legislation