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Why Jackson May Recover Contract Damages

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I PART A

Is Jackson able to recover by way of damages; the students’ profits made on Airbandb; and the loss for the three months rent before 1 December?

To show that Jackson may recover contract damages, the following elements must be considered:

1. Breach
2. Loss
3. Causation
4. Remoteness
5. Assessment of damages
A Breach

To claim damages, Jackson must establish breached of contract. The contract prohibits the students from sub-letting the property without Jackson’s express permission. Without his knowledge, they sub-let the house on Airbandb, thereby constituting breach.

B Loss

Jackson has lost the profit from three months rent before 1 December.
C Causation

Did students’ breach cause Jackson to lose rent profits for the …show more content…

Per Hadley v Baxendale remoteness is satisfied where the damage either:
(a) arose naturally according to the usual course of things, from the breach; or
(b) may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as a probable result of the breach.

Applying the first limb, the students were presumably aware that subletting was a ‘serious possibility’ in termination and loss of future rent payments (until a new tenant was found), thus rendering the loss ‘reasonably foreseeable’. While the students may argue that the extent of the loss as a full three months of lost rent renders the loss too remote, per H Parsons (Livestock) Ltd v Uttley Ingham, the foreseeability of the extent of the harm is irrelevant where the type of harm was foreseeable (as satisfied above). Thus, remoteness is likely satisfied.
E Assessment of damages

Can Jackson claim loss-of-bargain damages?

Loss-of-bargain damages are only recoverable where a contract can be terminated at common law: Shevill v Builders Licensing Board (‘Shevill’). At common law, the right to terminate may arise when there is a breach of a condition - a term so important the party would not have entered into the contract without assurance of its strict performance: Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd.

This clause is likely to be construed as a condition given the contract is a lease agreement.

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