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Acme Retail Ltd (‘the Retailer’) entered into a contract with Box Supply Co. (‘the Supplier’) to purchase 30,000 flat-pack boxes at a price of £60,000. The Retailer paid a deposit of £20,000. When delivered, the boxes were defective, and the Supplier was unable to supply replacement boxes. The Retailer rejected the boxes and did not pay the balance of the purchase price. To avoid incurring further losses, the Retailer obtained replacement boxes from another supplier for £70,000. The Retailer has followed all appropriate pre-action procedures, and the Retailer’s solicitor is now ready to draft and issue a claim form.
Ignoring interest, what sum can the Retailer properly claim against the Supplier?
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The Retailer can claim damages for breach of contract to put them in the position they would have been in if the contract had been properly performed. The Retailer initially paid a deposit of £20,000 and incurred an additional £70,000 to obtain replacement boxes, totalling £90,000. Since the original contract price was £60,000, the Retailer can claim the difference between the cost of the replacement boxes and the original contract price, which is £10,000. Additionally, the Retailer can reclaim the £20,000 deposit paid. Therefore, the total claimable amount is £30,000 (£10,000 additional cost + £20,000 deposit).
Key Point: This question examines the principles of damages for breach of contract, specifically the measure of damages aimed at putting the claimant in the position they would have been in had the contract been performed as agreed. Understanding how to calculate these damages is crucial for effective contract law practice.
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