Page 12 - Mini-Module 9

A breach of contract occurs when one party fails or refuses to perform

what is due for him under the contract without lawful excuse. There is
also a breach if the performance is defective. If there is a breach of
contract, the general rule is to award damages in favour of the party
suffering loss. Generally the damages are calculated so that the party

suffering the loss is put back into the position he would have been had
there not been a breach of the agreement, and the damages are not
based on the gain of the defendant

Situation:

On 1 May A Company agreed to sell a projector to B School for $1000,
and the parties agreed to complete the sale on 31 May. On 31 May A
Company failed to deliver the projector. B School sued A Company for
breach of contract and was awarded judgment. What damages would
A Company have to pay?

In this scenario, the loss to B School is the loss of the projector.
Therefore, the damages awarded should put B School in the position as
if there had not been a breach of contract. Therefore, the court would
examine what the market price of the projector would be on 31 May. If
the market price is $1300, the court would have awarded B School
$300 in damages, this being the difference it would have had to pay for
a replacement of the watch as purchased in the open market, less the
amount it would have had to pay to A Company in any event.

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