How to Determine Causation in Contract Breaches in Australia

Question from Emily, How to Determine Causation in Contract Breaches in Australia

Answer from AI:

When a defendant breaches a contract by failing to use reasonable care and skill, determining the appropriate legal framework to establish causation is crucial. In Australia, the approach to causation can vary depending on the nature of the case and the jurisdiction. This explanation will explore the common law approach, specifically referencing the case of March v Stramare (E & MH) Pty Ltd (1991), and the statutory approach under the Civil Liability Act 2002 (NSW), focusing on section 5D.

Understanding Causation in Legal Terms

Causation in legal terms refers to the necessity to establish a link between the breach of duty (in this case, the failure to use reasonable care and skill) and the harm or loss suffered. This concept is pivotal in both tort and contract law, as it helps determine liability and the extent of any damages awarded.

Common Law Approach: March v Stramare Explained

The common law approach to causation, as exemplified in the case of March v Stramare, involves applying the “but for” test. This test asks whether the harm would have occurred ‘but for’ the defendant’s breach. However, the case also acknowledges that this test may not be sufficient in all circumstances, allowing for a more flexible approach when needed. The decision in March v Stramare emphasizes the importance of common sense in determining causation, suggesting that courts should consider whether the breach was a significant contributing factor to the harm.

Statutory Approach: Civil Liability Act 2002 (NSW)

The Civil Liability Act 2002 (NSW), specifically section 5D, offers a statutory framework for determining causation in negligence cases. This section outlines a two-step process:

1. The plaintiff must establish that the negligence was a necessary condition of the occurrence of the harm (factual causation).
2. It must be determined that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (scope of liability).

This approach is designed to provide clarity and predictability in negligence cases, including those involving breaches of contract where a duty of care is implicated.

Which Approach to Apply?

Determining whether to apply the common law approach or the statutory framework under the Civil Liability Act 2002 (NSW) depends on several factors:

• Nature of the Case: The statutory approach is specifically tailored for negligence cases, which may include certain breaches of contract where a duty of care is involved. The common law approach is more general and can apply to a broader range of breach of contract cases.
• Jurisdiction: The Civil Liability Act 2002 applies in New South Wales. Other jurisdictions in Australia may have similar statutes, but the principles and specifics can vary. It’s important to consider the relevant laws in the jurisdiction where the case is being heard.
• Legal Advice: Given the complexities involved in determining causation and the nuances of applying these legal frameworks, consulting with a legal professional is highly recommended. They can provide advice tailored to the specific circumstances of the case.

Conclusion

In cases where a defendant breaches a contract by failing to use reasonable care and skill, both the common law approach and the statutory framework under the Civil Liability Act 2002 (NSW) provide valuable guidance on establishing causation. The choice between these approaches depends on the case’s specifics, including the nature of the breach, the jurisdiction, and the legal advice received. For more detailed information on the Civil Liability Act 2002 (NSW), you can visit the New South Wales Legislation website.

Note: This information is intended as a general guide and not as legal advice. For advice specific to your situation, please consult a legal professional.