Question

Bambi is an artist who makes unique sculptures from a combination of rare gems and recycled materials. He entered into a contract with Atas Art Galleries and Restaurants (“Atas”), to sell his sculptures to Atas.

The contract does not state what Atas intends to do with the purchased sculptures. Atas wanted a simple contract so that Bambi can focus on making and delivering the sculptures. Bambi presumed that Atas could either be displaying his sculptures in its restaurants or selling them in its art galleries.

The contract is for a period of five (5) years and provides that payment of $200,000 shall be made for each sculpture. Clause 5 of the contract states that “Bambi shall supply a minimum of one (1) sculpture every month throughout the duration of the contract.”  

In the first year of the contract, Bambi supplied a total of twelve (12) sculptures. However, in some months, he supplied no sculptures and in some other months, he supplied more sculptures on a per-month basis than were stipulated in the contract.   

At the beginning of the second year of the contract, Atas wrote an email to Bambi, stating as follows:

“We refer to Clause 5 of the contract.

As you have committed a repudiatory breach of a condition of the contract, we hereby exercise our right to immediately terminate our agreement.”  

Bambi was shocked when he read the email. He had just purchased $500,000 worth of rare gems to be used for the sculptures that he was preparing to deliver for that second year.

In addition, he recently rented a large bungalow for 12 months. He felt that the contract with Atas was bringing him an excellent stream of income and he could afford to reside in more comfortable accommodations. If he terminates the lease now, he would have to forfeit his deposit of three (3) months’ rental.

Question 2

Bambi claims that his losses include the costs of purchasing the rare gems and the forfeiture of three (3) months’ rental deposit.

A) Assuming that he is successful in proving that Atas wrongfully terminated the contract, explain the four (4) aspects of damages which Bambi must consider if he wishes to claim for damages. Conclude with your view on what are the likely damages for which Bambi can claim.

Answer 1

Bambi must consider the below mentioned four aspects of damages :

• Monetary Aspect : Bambi is going to suffer monetary loss as he had already purchased $500000 worth of rare gems to be used for the sculptures that he is going to prepare for the next year.
• Mental Aspect : Bambi is going to suffer mental stress as Atas has terminated the contract all of a sudden.
• There would be further monetary loss as the three months rental deposit would be forfeited, the house which he purchased on lease under the assumption that Atas is going to purchase scultures from him for the next five years.
• Personal Image Aspect : It would create a bad image of Bambi in the market as he has already taken a house on lease and now has to cancel the deal because of financial crunch.

Bambi can claim for monetary loss in the form of gems which he had already purchased, forfeiture of three months rental deposit and the mental stress whcih he has undergone due to cancellation of the contract all of a sudden.