The Law Handbook 2024

718 Section 7: Consumers, contracts, the internet and copyright the contract price and the market price of the goods when they should have been delivered. For example, if a buyer agrees to purchase a television for $500, but the seller fails to deliver it, normally the buyer will be forced to go and buy a television elsewhere. If, in the meantime, the price of televisions has gone up by $100, the buyer may sue the seller for that amount under section 57 of the Goods Act 1958 (Vic) (‘ Goods Act ’). If there is no available market, then the measure of damages is in accordance with the normal rule (i.e. loss directly and naturally resulting in the ordinary course of events from the seller’s breach of contract (s 57(2)). This is also related to market factors. Second, where there has been a breach of warranty, or where there has been a breach of condition that the buyer elects (or is forced) to treat as a breach of warranty, the buyer may: 1 refuse to pay the whole or part of the price (depending on the gravity of the breach); 2 sue the seller for damages; or 3 where the damage is substantial, do (1) and (2). The measure of damages is the loss directly and naturally owing from the breach of warranty. Where there is a breach of the quality warranty, the measure of damages is the difference between the value of the goods at the time of delivery and the value of the goods if they had satisfied the warranty (the latter is usually the contract price of the goods) (s 59). Normally, in consumer transactions, damages will cover the cost of repairs and matters associated (e.g. transport of the goods to the place of repair). In most cases, damages will also be recoverable when defective goods have caused personal injury or damage to other property. Damages available to the seller The seller may sue for damages where the buyer is in breach of contract, as follows: • where property (i.e. ownership) in the goods has passed to the buyer and the buyer wrongfully refuses or neglects to pay for them, the seller may sue for the price of the goods, or damages (s 55); • where the buyer wrongfully refuses to accept and pay for the goods, the seller may sue for damages (s 56(1)). Where there is an available market (see definition under ‘Damages available to the buyer’, above) for the goods, the amount of damages is the difference between the contract price and the market price at the time the goods ought to have been accepted; the amount of damages depends on market factors. If there is no available market, the measure of damages is in accordance with the normal rule (i.e. loss directly and naturally resulting in the ordinary course of events from the buyer’s breach of contract). This amount is also calculated according to market factors. If it is established that the seller can resell the goods for the same or a higher price, then no loss has been suffered and only a small amount of damages can be claimed for. The seller, however, may argue that two sales would have been made (i.e. in addition to selling the goods to you, they could have also sold the goods for the same or a higher price to a second person). While this argument may be valid in the case of mass-produced goods – each of which is exactly the same – it does not apply where the goods are all different. Thus, it may be true in the case of new cars that the seller has made only one sale, where two would have been made. But with second-hand cars, which are all different, the test is ‘what could reasonably be expected’ to be in the contemplation of the parties as a natural consequence of the breach. The buyer in this case could not have contemplated that the dealer would sell one car less. At most they would contemplate that, if the dealer resold this very car at a lower price, they should recover the difference (see Lazenby Garages v Wright [1976] All ER 770). Specific performance Sometimes a party may want to insist that the other party complies strictly with the contract that has been made. This is called requiring specific performance. If one party refuses to comply with the contract, it may be possible for the other party to apply to a court for an order for specific performance. This will not be granted if: • the party has been guilty of some ‘sharp’ practice, even though within the strict letter of the law; • the remedy requires the court to supervise and see that the services were properly performed; or • another adequate remedy (which is usually damages) is available. This is of particular relevance to contracts for the sale of goods. Where goods which are freely available on the market are concerned, the court will order payment of