New Zealand Contract Law Coursework

ANSWER ONE

The courts must measure the loss of the plaintiff, which is done by the cost of cure vs. loss of value vs. loss of amenity.

In Warren and Mahoney v Dynes the court said the plaintiff could receive reinstatement through loss of value but would usually give it through cost of cure, but in this case didn’t have the value. In this scenario (express more clearly), Donald knew the value of what his house would have been had there been no breach and GB say there is no difference in value, but in fact an increase in market value. In Ruxley Electronics v Forsyth Lord Jauncey said that damages are designed to compensate for an established loss and not to provide a gratuitous benefit to the aggrieved party that the reasonableness of an award of damages is to be linked directly to the loss sustained. A failure to reach the precise contractual objective does not necessarily result in the loss which is occasioned by a total failure.

I would advise Donald that due to there being no variation in the market value, he would not be able to claim on damages.

-Always apply statements of law to the facts

ANSWER TWO

There are three possible measurements of damage to compensate for the loss associated with the fixing of the mistake: cost of cure, loss of value and loss of amenity. Cost of cure is the cost associated with restoring the situation to what was promised. Loss of value is the difference in value between what was promised and what was supplied and loss of amenity is like loss of the use value. Need a case reference here, ideally NZ Loss of value and loss of amenity are likely to not be appropriate in this scenario because as the valuer found the house did not decrease in value as a result of the mistake, and it can be assumed there was no loss of use of the house as a result of the mistake, so loss of amenity would not apply. You cannot assume that no loss makes the type of damage not appropriate. You must say that $0 doesn’t make sense because there has been a clear loss which should be compensated. Further there could be amenity here, use value is broader.  In this scenario the cost of cure would be $350,000 as per the quote from the other builder Donald consulted. Factual similarities can be seen to the case of Warren and Mahoney v Dynes where it was held that they would normally go for the cost of cure in this type of case (they did not because there was no value determined). Therefore, Donald can be advised it is likely that he has a claim for the cost of cure of the mistake. (likely that he can cover for the cost of the cure - better)