Question One (Contract law) – 15 marks
Grace runs a small shoe repair business in Bankstown. Kelly took a pair of his mens’ leather shoes to be repaired by Grace. Grace presented Kelly with a receipt which she asked Kelly to sign. Kelly signed the document without reading it.
Two days later Kelly returned to Grace’s shop and presented the receipt to collect the shoes. Grace told Kelly that the shoes had been badly damaged whilst being repaired, and that the damage had been caused by Grace’s negligence. Kelly demanded that Grace reimburse him for the damaged shoes, but Grace refused, relying on a clause that was printed on the receipt and which read as follows:
The repairer shall not be liable for any damage to shoes left for repairs as a result of the repairer’s negligence or fundamental breach of contract.
Kelly seeks your advice as to whether he can recover damages from Grace for breach of contract.
Using IRAC, advise Kelly, and in doing so, discuss fully all relevant legal issues that arise in these circumstances. Your answer must be supported with relevant case law authorities.
Question Two (Business entities) – 15 marks
Rebecca and Joel decide to go into business together following the completion of their studies at university. After extensive market research they write up a business plan for an online florist to be named Fusion Flowers.
Joel has recently inherited $50,000.00 which he contributes as start-up capital. Rebecca doesn’t have any savings but contributes her van, tools and other equipment. They agree to lease a small warehouse space from which to operate the business.
The pair agree that Joel will pick up the flowers each day from the Flemington Markets while Rebecca will manage all customer enquiries and both will undertake deliveries. Profits will be split 50:50.
After the first two weeks of operations, they are struggling to keep up with the orders and decide to hire Matthew to take care of deliveries.
Over the next month the following events unfold:
- Without asking Rebecca, Joel orders some very rare (and expensive) orchids from Ooh Orchids believing that he would be able to sell them, however, Rebecca says she never would have agreed to this if she had been asked. Ooh Orchids has demanded payment of the outstanding invoice of $1,500 from Rebecca.
- While delivering some flowers the delivery driver gets caught in heavy traffic. Under pressure from Rebecca to get the flowers delivered on time to “a very important customer”, Matthew is speeding and crashes into a car stopped at a roundabout. Nobody is injured and the flower van is protected by a bar at the front, however, there is $5,000 of damage caused to the other driver’s car.
- Without consulting Joel, Rebecca started a separate business selling flowers specifically for weddings. So far Fusion Flowers haven’t been supplying flowers to events as it would increase their insurance costs, however, Rebecca and Joel have previously discussed the lucrative nature of supplying the wedding industry.
Using IRAC, advise Rebecca on her potential liabilities, and in doing so, discuss fully all relevant legal issues that arise in these circumstances. Your answer must be supported with relevant case law authorities.
Question THREE: Contracts short answer Questions – 20 marks
Consider the scenario below, then write your answer to the four-part question that follows. You must answer all four parts of the question.
Jeremiah places the following listing on Gumtree:
I have a large tree in my front yard that needs to be removed before the block can be subdivided. It is a 30-year-old maple and should take well to being transported as the roots of this species are shallow. I am prepared to sell it for $500 if you arrange for removal before 10 March 2018. Please contact me via 0411 963 965 or firstname.lastname@example.org.
In each of the separate scenarios below, advise Jeremiah as to whether an agreement has been reached for the purpose of creating an enforceable contract. Explain your reason(s) for reaching this conclusion with reference to legal authorities where appropriate.
- Abdul sends an email stating he is prepared to pay $450 for the tree but will not be able to pick it up until 20 March 2018. Jeremiah replies stating he can have the tree for $450 but would need to remove it by 15 March 2018 at the latest. Abdul says he can remove it on 15 March 2018 but is now only prepared to pay $350. Jeremiah responds by saying: “Yes, great news about the 15th, if you can make it $375 you’ve got yourself a deal.” (5 marks)
- Bianca calls Jeremiah and states that she is interested in the tree. They arrange a time for her to inspect it. After walking around it silently for about 10 minutes, Bianca says “I’ll take it” and walks off to her car before Jeremiah has a chance to reply. (5 marks)
- Mason emails Jeremiah late one night to say he will buy the tree for $500 and pick it up on 5 March 2018. When he wakes up the next day he realises there is no room for it and immediately sends Jeremiah another email stating that he is no longer interested in buying the tree. Jeremiah doesn’t see Mason’s second email and replies to the first one, stating: “It’s a deal.” (5 marks)
- Stephanie calls Jeremiah (who doesn’t answer) and leaves a message saying she is on the way with $500 and a team of 5 tree removalists. She says she will leave the money in an envelope under the door step if he is not home. (5 marks)