Cases: Fran runs a laundry business. She contracted with Industrial Machines Co to supply her with a new washing machine, which would increase her laundry capacity by 50%. In breach of contract, Industrial Machines Co failed to deliver the machine on time. As a result, Fran lost increased ordinary profits (which would have come from its increased production) and also the profits from an unusually profitable contract with a clothes hire company, which Fran could have made had she had the new machine on time. Fran could have hired a machine from Best Co, to cover the period of delayed delivery, but she was concerned that the machine being old would not have washed the clothes effectively. Advise Fran as to whether she can recover damages for
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Issue: Whether Fran is under a duty to migrate the loss.
Rule: According explanation to Section 74 of the Contract Act 1950, Mitigation of loss is the party seeking damages is under a duty to mitigate the loss. The law imposes a duty to the injured party to take all reasonable procedure to minimize their loss instead doing nothing.
Application: Based on the case of Kabatasan Timber Extraction Co v Chong Fah Shing, the breach of this case occurred when the defendant had failed to deliver the timber. The respondent to have gone to the expense and trouble of buying logs from elsewhere. However, it was said the logs were lying at a distance of approximately 500 feet from sawmill. The Federal Court held that was a failure of the respondent part to mitigate his losses because the appropriate damages to be awarded in this case should be the approximate cost of hauling the lodge to the sawmill not the cost of buying lodge from elsewhere.
Conclusion: Although Fran was the party who suffer from the losses, she still under responsible to the duty to mitigate her losses after the breach of contract
Issue: Whether Fran is under a duty to migrate the loss.
Rule: According explanation to Section 74 of the Contract Act 1950, Mitigation of loss is the party seeking damages is under a duty to mitigate the loss. The law imposes a duty to the injured party to take all reasonable procedure to minimize their loss instead doing nothing.
Application: Based on the case of Kabatasan Timber Extraction Co v Chong Fah Shing, the breach of this case occurred when the defendant had failed to deliver the timber. The respondent to have gone to the expense and trouble of buying logs from elsewhere. However, it was said the logs were lying at a distance of approximately 500 feet from sawmill. The Federal Court held that was a failure of the respondent part to mitigate his losses because the appropriate damages to be awarded in this case should be the approximate cost of hauling the lodge to the sawmill not the cost of buying lodge from elsewhere.
Conclusion: Although Fran was the party who suffer from the losses, she still under responsible to the duty to mitigate her losses after the breach of contract