Auditors was negotiating to sell an office space in the CBD to Gaga & Smith Accounts. Gaga & Smith Accounts refused to accept the terms of the contract until they were assured that there was no Asbestos in the roof insulation. E-Why gave assurance that there was no Asbestos in the office and straight afterwards the parties signed a contract for the sale of the office for a price of 2 million dollars.

Two weeks later, while a fire alarm test was being conducted, asbestos was found in the roof space above the office.

You work at Gaga & Smith Accounts and the CEO has asked you to write a brief report on the legal rights of the company against E-Why. You have read the contract for the sale of the office and as a matter of fact there is no mention or reference to the absence of Asbestos in the office.

The report must address the following 2 questions:

A. Whether Gaga & Smith Accounts can sue for breach of contract 

B. Assuming that Gaga & Smith Accounts is entitled to sue in damages, please discuss whether the company would be entitled to receive compensation for the following losses 

• $100,000 for the costs associated with the removal of asbestos from the roof.
• $50,000 for the loss of rent, as Gaga & Smith Accounts had expected to lease the office.
• $100,000 for fines applied by the City Council for not declaring the presence of Asbestos in the roof.
• $5,000 for a new fire alarm, as the one inspected was malfunctioning.

Note: In your report, be sure to address questions A and B separately and use headings to indicate which question you are addressing.

Answer rating: 100% (QA)

A Whether Gaga Smith Accounts can sue for breach of contract Yes Gaga Smith Accounts can sue for bre... View the full answer