0405 term1 no.3 (with comments)

0405 term1 no.3 (with comments) - Part 1(a In this section...

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Part 1 (a) In this section, Liew Lian is interested in claiming damages against Banana Bank for their breach in contract. We shall first examine the formation of the contract between Liew Lian and Banana Bank. We can see that for such a commercial contract, there is obviously a valid offer and acceptance, sufficient consideration; whereby Liew Lian pays for the deposit service that Banana Bank is providing her, privity; both Liew Lian and Banana Bank are parties to the contract and an intention to create legal relations. However, we are certainly more concerned about the terms of the contract and in particular for this situation, the term that states “Banana Bank shall take reasonable care in ensuring that the safe deposit boxes are kept safe”. This term may be an express term stated within the contract. If it should instead need to be implied, we can see from the officious bystander test that if an outsider of the contract should ask both parties the above statement in a question at the time when the contract was being formed, both parties would not hesitate to say “yes, of course”. We have constructed this implied term even-handedly and not favouring either side. From the facts of the case, we can see that Banana Bank has breached the term when they had accidentally destroyed the safe deposit box because of their own negligence and carelessness. As a result, losses have been sustained by Liew Lian; namely, the loss of the $30,000 black diamond necklace, the loss of the future inheritance of the $2 million asset left by her parents and the damages from distress caused to her by the destruction of valuable mementos. We shall examine each loss to see if they are claimable. For the loss of the $30,000 black diamond necklace, we shall see if this head of loss can be claimed under contract law. The three criteria to establish whether a head of loss is claimable are whether the loss was caused by the defendant, whether the loss is not too remote and whether the plaintiff had mitigated her losses. We can see clearly that because of Banana Bank’s negligence and carelessness, the contents of the safe deposit box were destroyed. Causation can be established in this situation. It is also not too remote that the plaintiff would suffer the loss of the value in the items destroyed. The black diamond necklace had been valued at $30,000 and that would be the quantifiable loss suffered by Liew Lian from the destruction of it. In this case, there is also no duty to mitigate as mitigation of losses is impossible since the black diamond necklace is one of a kind and has sentimental value.
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For the loss of the $2 million from the expected inheritance, we would also follow the criteria listed above. For Liew Lian to stake a claim on the assets, she would have to keep the tile until her oldest child reaches the age of 24. We can see that with the destruction of the tile, she would no longer be able to stake a claim on the inheritance. The destruction of the tile was caused by the bank’s breach of the above term. However, on the issue of whether the loss was too remote, the
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