Burns v MAN Automotive (Aust)

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Citation: Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653

This information can be found in the Casebook: Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), p. 680-686 [27.130-27.140] or here

Contents

Background facts

  • The Plaintiff [Burns] bought a prime mover off the Defendant [MAN Automotive].
  • The Defendant warranted that the prime mover has been reconditioned, but it was in fact in bad shape.
  • A year later (July 1978) the Plaintiff realised that the prime mover is defective,and was defective from the moment he bought it.
  • The Plaintiff attempted to pursue the Defendant to fix the engine, but the Defendant would not do so.
  • The Plaintiff was pretty poor, and didn't have the money to pay for the reconditioning himself.
  • Rather, he used the defective prime mover on state roads rather than interstate (since it was not capable of operating interstate)
  • This resulted in the business actually operating at a loss, until finally the engine broke down completely and the vehicle was repossessed.
  • The Plaintiff sued the Defendant to recover his losses.

Argument

  • Plaintiff: breach of the warranty. Seeks to recover loss of earnings for the period that he had the prime mover.
  • Defendant: the Plaintiff failed to mitigate his loss. He should have fixed the engine or not operated at all rather than operate at a loss.

Legal issues

Judgment

Gibbs CJ:

  • "[T]he appellant was bound to take all reasonable steps to mitigate the loss, and one course open to him to mitigate the damage, if he could have afforded to take it, was to have the engine reconditioned or to buy another to replace it."[1]
  • "However his impecuniosity prevented him from taking that course. The question arises whether it should be held that the appellant is debarred from claiming such part of the damages as is attributable to his failure to take the necessary steps in mitigation, when he was unable to take those steps because of his lack of means."[2]
  • "[A] plaintiff's duty to mitigate his damage does not require him to do what is unreasonable and it would seem unjust to prevent a plaintiff from recovering in full damages caused by a breach of contract simply because he lacked the means to avert the consequences of the breach."[3]
  • However, in this case, "It was not reasonable for him to carry on his business with the defective prime mover, once he knew that he was operating at a loss and should have known that he had no prospect of making a profit. As Connolly J. pointed out, this was not a case of a purchaser locked into a business; the appellant was under no compulsion to go on losing money."[4].
  • Plaintiff fails, only wins certain damages and not for the losses he incurred by operating in a loss since the discovery.

References

  1. (1986) 161 CLR 653, 658
  2. (1986) 161 CLR 653, 658
  3. (1986) 161 CLR 653, 658
  4. (1986) 161 CLR 653, 658
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