Using the IRAC method
Milena runs a cafe. The business has been very successful and regularly makes a profit of $2,000 per week. Unfortunately, on 5th May the water pipes burst. Milena calls Plumbers’R’Us and said, “I have to close the café until the pipes are fixed so it needs to be fixed urgently. I am losing $2,000 per week.” Plumbers’R’Us said, “We can come straight away and it will be fixed within 2 days.” They enter a contract to fix the pipes for $500. Unfortunately the plumber installed the wrong pipe and this caused delays. The pipe was not fixed until 26th May. Milena says “I have lost 3 weeks profit and I have also lost a very profitable catering job for $10,000. You have to pay me $16,000 compensation for breaching our contract.” Advise Plumbers’R’Us about whether they have to pay compensation for Milena’s: • loss of profits • loss of $10,000 catering profit. Use relevant cases to support your answer.