PR $15.$ Case Study: Is this a breach of contract? If so$,$ could damages be applied?

Solbright Pty Ltd $($Solbright$)$ is a business specialising in making solar panels for commercial buildings such as sporting venues, factories and office blocks. It is a rapidly expanding business and was hoping to secure a contract to supply panels for a large public hospital.

HotStuff Pty Ltd $($HotStuff$)$ is a business who manufactures the sheeting ovens necessary in making solar panels. The companies have dealt with each other for some time. HotStuff knew of

Solbright$$s existing business, but not about the possible hospital contract. The companies entered into a contract for HotStuff to sell and install an extra sheeting oven capable of meeting the expanding workload by a certain date.

During the installation HotStuff damaged the sheeting oven, resulting in Solbright having to wait six months beyond the originally agreed date for a new sheeting oven to be properly installed. During that time Solbright did not attempt to source a sheeting oven from any other supplier. Solbright is now claiming damages for breach of contract as follows:

$$ $$120,000$ per week loss of profits on the expected solar panel business they would have been able to undertake with the extra sheeting oven

$$ $$70,000$ per week loss of profits, being the estimated profits they would have obtained had they secured the hospital contract.

Is this a breach of contract? If so$,$ will Solbright be successful in claiming these damages? Give reasons for your answers.

In orde to answer this case study, you are required to:

$$ Collect and collate the client$$s information in order to identify the clients circumstances relevant to applicable consumer law matters,

$$ Research the current laws to identify the applicable legal principles relevant to the clients

$$ Analyse the legal issues and risks associated for these clients$$ businesses,

$$ Seek advice and guidance of a legal specialist if required

$$ Ensure you apply this knowledge and advice when explaining your answer.

Answer:

It$$s possible that Solbright will be successful in claiming damages, but it depends on the specific terms of the contract and the laws of the jurisdiction where the contract was made.

For Solbright to be successful in claiming damages they would need to prove that Hot Stuff was in breach of contract, that the breach caused the damages, and that the damages were foreseeable at the time the contract was made.

The breach of contract seems clear$-$ Hot Stuff damaged the sheeting oven and failed to install a new one within the agreed timeframe.

The causation also seems clear, because of Hot Stuff$$s actions, Solbright was unable to undertake the expected solar panels business and secure the hospital contract.

In contract law, damages are typically only recoverable if they were foreseeable at the time the contract was made.

This means that Hot Stuff would have had to know that their failure to properly install the oven would result in Solbright losing specific business opportunities. If Solbright can prove this, they may be successful in their claim.

However, Solbright$$s failure to mitigate their losses by not attempting to source a sheeting oven from another supplier could potentially reduce the number of damages they can recover. In many jurisdictions, parties who suffer a breach of contract are expected to take reasonable steps to minimise their losses.

If Solbright did not do this, Hot Stuff could argue that some of the losses should not be recoverable.

The specific terms of the contract and the laws of jurisdiction will play a big role in determining the outcome. Solbright should consult with a legal professional to get a more accurate assessment of their situation.