Lecturer: Arthur Hoyle
Tutor: Rosa Raco- Tues 4.30-5.30pm
Subject University of Canberra – Breach of Contract and Damages matter
You have sought my advice as to you rights under the original contact between your company, Peerless Computers and the University of Canberra, which you consider that the University has breached. Your company has requested advice as to whether a term such as delay by a third party can be successfully implied into the contract. Additionally, your company has sought advice as to whether the University can recover its additional costs arising from the failure to meet the obligations of the contract, and if so how much of these costs can be recovered. Background
The University of Canberra invited tenders from computer manufacturers to re-equip its computer centre. Peerless computers made an offer to University to supply the computers. The offer was accepted by the University and a contract was signed requiring delivery no later than one week prior to the start of the next semester. Two weeks prior to the commencement of the semester as the result of a fire at Peerless’ supplier’s factory a delay of three weeks is placed on essential computer components. Upon being informed of the fire the manager of Peerless computers immediately contacted the University to advise that they would be unable to meet the terms of the contract. The manager did not offer any suggestions as to what solutions were available to the University. The University then formally cancelled the contract with Peerless and engaged into a contract with another supplier, Fujitsu. The consideration of the new contract with Fujitsu was 20 percent higher than that of the contract with Peerless. The computers were delivered by Fujitsu in the required timeframe. The University invoiced Peerless computers for the 20% additional cost incurred. Advice
Breach of Contract
The breach of a contract can be defined as the failure of a party to a contract to perform a contractual obligation. The contractual obligations that were to be carried out by your company were to supply the University of Canberra with computers one week prior to the commencement of the semester and the University was required to provide consideration for the computers. Both of these obligations could be considered as conditions of the contract as they are vital to the contract and so important that non performance may be considered by the injured party as amounting to substantial failure to honour the contract at all and could be grounds for setting the contract aside and or suing for damages. It would appear that the fire is the result of an unforseen circumstance and similarities may be drawn to the case of Taylor v. Caldwell (1863) 122 ER 309 in which the obligations were physically impossible to be carried out due to destruction of subject matter. However in the case of Taylor v. Caldwell the entire subject matter was destroyed and in this case only parts of the subject matter were destroyed not the entire objects. Although you did anticipate that you would be unable to carry out your obligations due to the fire in a timely manner, it would appear that your company failed to mitigate the loss that would occur as a result of not having the computers delivered on time. No solutions were provided to the University and it may also be noted that your company did not attempt to contact alternate suppliers to seek out the parts that were unavailable from your regular supplier. It would be reasonable to assume that if such an event was to occur resulting in the unavailability of parts that a firm would make a reasonable attempt to acquire the parts from an alternate supplier. In regards to whether or not the University of Canberra has breached the contract by the act of cancelling the contract with your company and engaging an alternate supplier depends on the circumstances that led them to...