ExpertThis question is part of a case study — click to read the full scenario(Case 46)
Section B - Scenario 1
SCENARIO: 'AeroKelp Ltd' is a deep-sea kelp harvesting company. They contracted with 'SubmersiTech' to repair their specialized underwater drones by 1st May. SubmersiTech failed to complete the repairs until 15th May. Because of this delay, AeroKelp could not harvest kelp during peak season, losing £20,000 in standard profits. Furthermore, AeroKelp lost a highly lucrative, secret contract with a pharmaceutical company worth £100,000, which required delivery of rare kelp by 10th May. SubmersiTech was completely unaware of this pharmaceutical contract.
QUESTION: What type of breach of contract has SubmersiTech committed?
ACCA · Question 47 · The law of obligations
Section B - Scenario 1
SCENARIO: 'AeroKelp Ltd' is a deep-sea kelp harvesting company. They contracted with 'SubmersiTech' to repair their specialized underwater drones by 1st May. SubmersiTech failed to complete the repairs until 15th May. Because of this delay, AeroKelp could not harvest kelp during peak season, losing £20,000 in standard profits. Furthermore, AeroKelp lost a highly lucrative, secret contract with a pharmaceutical company worth £100,000, which required delivery of rare kelp by 10th May. SubmersiTech was completely unaware of this pharmaceutical contract.
QUESTION: Applying the rules of remoteness of damage, which losses can AeroKelp recover from SubmersiTech?
Section B - Scenario 1
SCENARIO: 'AeroKelp Ltd' is a deep-sea kelp harvesting company. They contracted with 'SubmersiTech' to repair their specialized underwater drones by 1st May. SubmersiTech failed to complete the repairs until 15th May. Because of this delay, AeroKelp could not harvest kelp during peak season, losing £20,000 in standard profits. Furthermore, AeroKelp lost a highly lucrative, secret contract with a pharmaceutical company worth £100,000, which required delivery of rare kelp by 10th May. SubmersiTech was completely unaware of this pharmaceutical contract.
QUESTION: Applying the rules of remoteness of damage, which losses can AeroKelp recover from SubmersiTech?
Answer options:
Both the £20,000 and the £100,000.
Only the £20,000 standard profits.
Only the £100,000 pharmaceutical contract.
Neither, as AeroKelp should have had backup drones.
How to approach this question
Full Answer
Common mistakes
Practice the full ACCA LW — Corporate and Business Law Practice Exam 5
60 questions · hints · full answers · grading