Case Study-Karl owns a restaurant

Karl owns a restaurant and wants to expand its seating capacity. He, therefore, entered into a contract with Ricky to build an extension onto the restaurant by the end of October (time was of the essence of the contract). The contract price was fixed at $150000 after due negotiations (Ricky is charging additional money to finish the contract by October). At the time of signing the contract, it was discussed that the extension would help Karl earn an additional profit of $50000 during the Christmas season.

The work should have been completed by the end of October, but Ricky did not finish the extension until eight weeks later (three key members of senior labor force of Ricky and the site supervisor fell sick and could not work for 3 weeks that delayed the completion of the contract) and Karl is suing Ricky for breach of contract (not completing the contract in time as promised).

Karl is claiming for the loss of profit of $50000 as a result of not having the extra seating capacity in time and the amount claimed by Karl is higher than the normal (given that Karl wanted the extension ready for the busy Christmas period, which usually is the busiest period of the year and would have resulted additional profit of $50000). Karl also had to turn down a lucrative wedding booking because his restaurant lacked the seating capacity to accommodate all the members of the wedding party. Karl is also suing for the profit ($20000) he would have made as a result of this wedding party. There was no mention of the lucrative wedding booking in the contract with Ricky.

Which of the following statements is true with regard to the above situation?

Select one:

a. Ricky promised to complete the contract by the end of October and not completing the contract as promised make him liable for breach of contract.

b. A higher contract price is not a relevant factor in deciding the case.

c. The sickness of the labor force and the site supervisor is a serious event, so the contract is frustrated and no one would be liable for breach of contract.

d. Ricky could not complete the contract on time because of the illness of his team members, so he will not be liable for breach of contract

The damages for loss of profit from not having additional seating capacity for the Christmas season (whether successfully claimed or not) would be categorised as which of the following:

Select one:

a. special damages

b. contractual damages

c. unliquidated damages

d. liquidated damages

Which of the following damages would Karl be able to claim successfully?

Select one:

a. Damages from turning down the lucrative wedding booking.

b. All the damages suffered by Karl PLUS a penalty amount for his suffering

c. Damages for loss of profit resulting from not having the additional seating capacity in time for the Christmas season.

d. No claim of damages will be allowed to Karl

Assuming Karl would be successful in claiming the damages of breach of contract, How much money would Karl be able to successfully claim as damages?

Select one:

a. $20,000.

b. $50,000.

c. $70,000.

d. $1,50,000

What is the aim of the rule of award of damages under the common law?

Select one:

a. The aim is to put the innocent party in the position he/she would have occupied if the contract would have been performed as originally intended.

b. All of the given options are correct.

c. The aim is to put the innocent party in the position he/she would have occupied before the start of the contract.

d. To punish the guilty party

Complete Answer:

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