Joanna, the proprietor of a restaurant, decided to have the restaurant refurbished and entered into a contract with 'Tiles Without Flaws' to have a new marble floor fitted. It was agreed that the work would be completed on 1st May at a cost of 12,000. A clause in the contract provided:

'If Tiles Without Flaws fails to complete the contract within the stipulated time, we undertake

to pay, by way of penalty, a sum of 3,000 in full and final satisfaction of our liability.'

She also contracted with Kaitlin's Kitchens to install new kitchen appliances between 5th -

12th May at a cost of 20,000.

Joanna intended to re-open the restaurant on 15th May and had taken bookings for 500 people for the grand re-opening.

'Tiles Without Flaws' only completed the floor on 15th May. As a result, Joanna had to pay Kaitlin's Kitchens an extra 7,000 to allow for overtime payments to its employees in order that the kitchen appliances were installed as quickly as possible. She also had to cancel the grand re-opening with a loss of 20,000.

a) Advise Joanna as to whether she can recover all her losses, bearing in mind the effect of the liquidated damages clause in the contract with 'Tiles Without Flaws' and whether it will affect Joanna's ability to recover all her losses against that firm.

b) On what basis will damages be assessed regarding the contract with

Kaitlin's Kitchens?