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Unformatted text preview: d, but not executed, a contract with Pagini Resources, which would enable a
capital reconstruction which was needed for expansion and exploration purposes. Adelaide were persuaded through the representations of Sellars, an executive of Poseidon
Limited, to contract on better terms with Poseidon instead of Pagini. After the contract
with Poseidon was executed, the Board of Directors of Poseidon repudiated the contract, 74 (1992) 174 C.L.R. 64.
McRae v Commonwealth Disposal Commission (1951) 84 C.L.R. 377 at 414, cited with approval by
Brennan J in Commonwealth v Amann Aviation (1992) 174 C.L.R. 64.
75 221 alleging that Sellars had acted in excess of authority, offering instead a contract of m u c h lesser advantage to Adelaide. Adelaide accepted a repudiation, and sought to reinstat
negotiations with Pagini. Pagini offered Adelaide another contract, but on less
advantageous terms than previously. Adelaide contracted with Pagini and sued Sellars
and Poseidon for the losses incurred for the lost opportunity to execute a more advantageous contract with Pagini, the result of the misrepresentations of Sellars un
52 of the Trade Practices Act 1974 (Cth), asking damages under s. 82 Trade Practices Act 1974 (Cth), the section controlling the damages awarded under s. 52. The High Cou
had to decide the question:
Is it necessary for the applicant to prove on the balance of probabilities that a benefit would have
been derived from the opportunity had it not been lost, and if so, the extent of that benefit? Or is it
sufficient for the applicant to show, not on the balance of probabilities, but by reference to the
degree of possibilities and probabilities, that there were some prospects of deriving a benefit from
the opportunity had it not been lost and, if so, then to ascertain the value of the opportunity or
77 benefit by reference to such possibilities and probabilities? The court ruled that the plaintiffs could recover, and unequivocally recognized the l
chance doctrine. In this case it was the lost chance of a profitable commercial
opportunity. Applying Malec, the court ruled that the logic in Malec should not be
confined to its facts:
Neither in logic nor in the nature of things is there any reason for confining the approach taken in
Malec concerning the proof of future possibilities and past hypothetical situations to the assessment of damages for personal injuries. T he reasons which commended the adoption of that
approach in assessments of that kind apply with equal force to the assessment of damages for loss
of a commercial opportunity, as the judgments in Amann acknowledge.78 76 (1994)179C.L.R.332
Sellars v Adelaide Petroleum NL. (1994) 179 C.L.R. 3 32 at 339 per Mason CJ, Dawson, Toohey, and
(1994) 179 C.L.R. 3 32 at 350.
77 222 J udgments such as Malec, Adelaide Petroleum, a nd Chappell indicate that courts d o not
wish to fetter their decision-making powers, and assess the cases coming before them
with intuition as much as legal reasoning. The concept of 'justice' may be more integrally tied to the way the facts of each case are characterised than with a prec principle which can be more generally applied. Litigants may feel that subjectivity h
been introduced, which breeds uncertainty in the application of the law.79 Remoteness and Proximity The concept of remoteness concerns itself with what kinds of damage the court will ho the defendant liable in an action. Damage of the most catastrophic and unusual nature may ensue from breach, but on practical grounds the law takes the view that a line mu
be drawn somewhere and that certain kinds or types of loss, though admittedly caused
a direct result of the defendant's conduct, shall not qualify for compensation.80 The issue of remoteness arises where the defendant denies liability for damage, even
though it may have resulted undeniably from his/her actions. Knowledge, actual and imputed, the likelihood of the event occurring, and the circumstances around the even
are all considered. In addition, in contract, the parties are free to make provision
respect of a contemplated loss which the court will also consider. The terms of the
contract, therefore, become central in such a dispute. 79 Chappel v Hart  H C A 55; 156 A.L.R. 517.
Furmiston, M . P. 1991, Cheshire, Fifoot, and Furmiston's Law of Contract, 12th edition, Butterworths
596. 80 223 T he m odern law, in contract, starts with the j udgment of Baron Alderson in the 1 854 case of Hadley v Baxendale%x Alderson B. gave the 'rule', divided into two 'limbs' or par (sometimes called two rules), upon which damages must be claimed, excluding any oth damages as too remote. This is a reflection of the underlying social policy that it
unwise to put an unlimited burden of loss upon a defendant in circumstances where
on losses cannot be reasonably foreseen. Foreseeability, therefore, and its inescapable counterpart, knowledge, are used as benchmarks in determining whether the court wil award damages for certain types of losses which it regards as too remote as to crea injustice to award a pecuniary burden for losses incurred by the plaintiff or third p but nevertheless which can be theoretically traced to the actions or omissions of t
defendant. Baron Alderson stated in the famous ratio of the court in Hadley v
N o w w e think the proper rule in such a ca...
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