Dato Darius is a successful silk and textile trader.

He owns various outlets called "Darius

House of Textile* specializing in festival attires especially Hari Raya style garments. On 5
January 2020, Dato' Darius contracted with Mordikai Sdn Bhd (Mordikai) for the supply of
various textiles specifically for the purpose of the upcoming Hari Raya celebration which falls
on 28 April 2020.

It is stipulated in the contract that the textiles must be delivered to the warehouse of Darius
House of Textile by 28 February 2020, so that his workers can start work on the textiles to be
made into Baju Melayu for men and Baju Kurung for women. Earlier, Dato' Darius had
informed Mordikai that he cannot miss the 28 February 2020 dateline of the delivery of the
textiles and that his annual Hari Raya sales of the Baju Melayu and Baju Kurung had always
been in the range of RM 12 million. The expected date for nationwide delivery of the Baju
Melayu and Baju Kurung to all Darius House of Textile outlets is on 28 March 2020 and
Mordikai is made aware of this.

Dato' Darius also had a contract to supply Baju Melayu and Baju Kurung to Jaya Target
Emporium for which the contract price was RM 3 million but this arrangement was not
communicated to Mordikai. The expected date of delivery to Jaya Target Emporium is also
on 28 March 2020.

On 28 February 2020, the textiles had yet to be delivered to Darius' House of Textile
warehouse and this failure continued for several weeks and disrupted the business plans of
Dato' Darius for the Hari Raya sales. Dato' Darius had failed to deliver the finished Baju
Melayu and Baju Kurung to all Darius House of Textiles outlets and Jaya Target Emporium
on 28 March 2020 as planned. Regular customers of Darius House of Textiles opted to buy
their Hari Raya garments elsewhere. The half year record of sales had reported a decline in
Darius House of Textiles revenue.

With reference to section 74 of the Contracts Act 1950 and relevant authorities, discuss the
losses suffered by Darius House of Textiles and the likelihood of success should they wish to
claim for damages against Mordikai.

ISSUE

Whether Dato Darius can claim for damages due to loss suffered by the failure of Mordikai in
supply of various textiles on the specific dates given?

LAW

Damage can be defined as monetary compensation in which the objective is to compensate

the aggrieved party by placing the aggrieved party as far as money can do it in the same
position as if the contract has been performed or if the contract had not been breached

If the parties breach the contract. If breach is proved then the damages will be awarded by
the court to the aggrieved party.
There are two types of damage which are pecuniary and non pecuniary. On this question I
will focus on the pecuniary which is loss in terms of financial.

There are two elements that need to be satisfied in order to show the losses were caused by
the defendant's conduct which is causation. The plaintiff must prove that the loss was due to
the act of the defendant and there is no break in the chain of causation that can shift the fault
to someone else. Secondly the plaintiff must show the losses are not too remote.

Section 74 (1) of the contract Acts stated that …

Section 74 (2) of the CA stated that….which means when calculating the loss or damage
from a breach of contract, it's important to consider the available remedies for the
inconvenience produced by non-performance. For example, A entered a contract with B for
repairing the machine. And need to be delivered ASAP. In the meantime A also entered into
a contract with the government. However the delivery was delayed and A duffer loss of profit
and also with the government as A needed to have the repair crankshaft first in order to
succeed the second contract. A is entitled to recover the loss profit that caused by B
however not able to recover from the second contract.

In the case of Hadley v Baxandale it laid down the test of remoteness which is explained
in 2 limb. two parties made a contract but one of them breach it, the other party entitled to
get the damage for the breach. The first limb is the breach of contract may arise naturally
which in the usual course for it to be fair and reasonable. The second limb is it must within
the contemplation of both parties

In this case hadley entered into a contract with baxendale. Hadley was the owner of a mill
factory. The crankshaft of hadley broke down. Baxandale must return the repair crankshaft
ASAP. However, B was delayed for 5 days. P argues that without the repair crankshaft
hadley cannot operate the mill. P suffered loss of profit. Court held that could not be liable for
the loss of profit for 5 days. B also argues that it is ordinary practice for industries to have
extra crankshaft. Court agrees with B that they should have extra. Court argued that you
should have told the defendant.

1st limb. The loss suffered by the plaintiff is not ordinary. The plaintiff did not comply with
the norm by having another crankshaft.

2nd limb, This is where a remote test is applicable, the plaintiff must inform the defendant
about not having the extra crankshaft. When the plaintiff did not inform the defendant, it is
not within the contemplation of the defendant. The defendant could not foresee the damage
if he failed to deliver in stated time.

However in this case, the court never explain how do we know the defendant has the
knowledge or not

In the case of Victoria Laundry (windsor) ltd v newman industries ltd, p entered the
contract with D to manufacture and deliver boiling equipment for laundry equipment. P
wishes to open a laundry business. Victoria also bid one particular tender with the
government. So P has 2 contracts. However D failed to deliver the boiler on stipulated time
which had cost P to operate her business on time. P suffered loss of profit. The 2nd contract
suffered loss as she needed the boiler in order to secure the contract. It laid down 2 kinds of
knowledge which is imputed and actual knowledge. Imputed knowledge means an ordinary
person is taken to know the ordinary course of things and can be liable in this knowledge.
Actual knowledge means an extraordinary course of things.

Imputed knowledge on the first limb. Actual knowledge on the second limb.

APPLICATION

Back to the Dato Darius situation. He has suffered losses amounting to 12 million due to the
breach by Mordikai in failure to deliver the textiles in stipulated time by 28 February 2023. By
applying the case of Hadley v Baxendale and Victoria Laundry (windsor) ltd v newman
industries ltd, The test of remoteness for the 1st limb (imputed knowledge) which is the 12
million is foreseeable when Dato Darius clearly say to Mordecai that he cannot miss the 28
February 2020 dateline of the delivery of the textiles and that his annual Hari Raya sales of
the Baju Melayu and Baju Kurung had always been in the range of RM 12 million. Mordikai is
already aware of this. So it is within the knowledge Mordikai that he know if he deliver the
textile late, Dato darius will suffer loss. under 2nd limb (actual knowledge) the losses 3
million was not within the contemplation of mordikai as he did not communicate it to
Mordikai. Dato darius needs to give information to Mordikai. So under the 1st limb the claim
of 2 million was successful however for the second limb is not satisfied, dato darius cannot
recover as the losses is too remote.

CONCLUSION

In conclusion, Dato Darius can claim for damages due to loss suffered by the failure of
Mordikai in supply of various textiles on the specific dates given