Memorandum of Advice

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Ref No: 1414

Question Presented

1. Ballarat Transport Inc. has received a letter from Granny Smith Co. to initiate dispute resolution procedures. I am asked to advice Ballarat Transport Inc. on their potential legal liabilities to Granny Smith Co. and provide them with a future course of action resulting from a failure to provide 4 refrigerated trucks to Granny Smith Co.Memorandum  at the time specified in the contract. This resulted in Granny Smith Co. having to bear a loss on the sale of their apples and losing expected future business with their wholesale customers.

Brief Answer

2. The damages that Ballarat Transport Inc. is liable to are only nominal damages for the breach of contract because they failed to perform their part of the contract at the specified time. Although Granny Smith Co. had to bear a loss because of Ballarat Transport Inc.,Memorandum  Granny Smith Co. failed to perform its duty to mitigate its losses, and no such clause in the contract stated that a failure to perform would result in losses and would be paid by Ballarat Transport Inc. Ballarat Transport Inc. provided an alternative to Granny Smith Co. which comes under substantial performance under the law, if accepted, would have prevented the loss, but Granny Smith Co. chose to wait for the trucks, rather than fulfil its duty to mitigate the losses. Since liquidated damages are not the part of the contract; Ballarat Transport Inc. has a liability to pay only the nominal damages as the loss bore by Granny Smith Co. could have been avoided.

Facts

3. Granny Smith Co. is a certified producer and a supplier of apples. This means they are not just responsible for producing apples, but also supplying them to their wholesale customers across the country. As their apples have very low shelf-life, it is imperative to deliver the apples at the right time. They got into a contract with Ballarat Transport Inc. to give them 4 refrigerated trucks on 1^st February for 3 weeks because that is when Granny Smith Co. plans to deliver the apples to their wholesale customers. Although Granny Smith Co.’s apples weren’t ready to be picked on February 1^st, they came to collect the trucks in accordance with the contract. But Ballarat Transport Inc. failed to give them the trucks as they were undergoing mechanical repairs and were told that the trucks would be ready till February 14th. This was Ballarat Transport Inc.’s failure to perform its duty and was breach of contract. But Ballarat Transport Inc. Memorandum gave an alternative to Granny Smith Co. to give them 8 refrigerated trucks so that Granny Smith Co. does not have to bear the losses. Granny Smith Co. refused the offer and chose to wait instead for the trucks to get ready. The trucks weren’t ready until February 21^st, while the apples were ready to be transported on February 8^th. Granny Smith Co. stored the apples on site, waiting for the trucks to get ready, because of this the apples lost their value and Granny Smith Co. only got one-third of the agreed price. Granny Smith Co. also did not receive the expected future orders from their customers had the apples been delivered on time. There was no clause of liquidated damages in the contract.

Discussion

4. In this case, the validity of Granny Smith Co.’s claim for damages depends upon whether (I)the contract makes Ballarat Transport Inc. liable for the losses, (II) Ballarat Transport Inc.’s offer for 8 refrigerated vans was a substantial performance and (III) was it a viable option for Granny Smith Co. who was under a duty to mitigate its losses. The relevant law, in this case, is contract law, breach of contract, duty to mitigate the losses and substantial performance.

Likely Claims by Granny Smith Co. for the Breach of Contract:

5. As per contract law, the defendant had to pay nominal damages to the plaintiff because he had trespassed their property. The nominal damages were $1, although a very small amount, it serves as a legal recognition that the plaintiff’s rights were violated. Although punitive damages were also awarded in this case, they are irrelevant here. It must be stated that Ballarat Transport Inc. is the party which committed the breach of contract by its failure to perform the duty at the specified time. This constitutes a breach of contract by law. The contract stated that Ballarat Transport Inc. was supposed to provide 4 refrigerated trucks on 1^st February to Granny Smith Co. Firstly, Granny Smith Co. is supposed to receive nominal damages as is required by the law because it is the aggrieved party. This will serve as a legal recognition that Granny Smith Co.’s rights were violated…