Topic
Law of Commerce
Instructions
QUESTION 1 (600 WORDS)
Susan had been a manager at a number of successful bars over the last five years and had decided to finally open her own bar. She contracted with Prestige Designs, a well-known Melbourne company doing interior design and finishing work to design and build the interior of her bar. Susan believed that having the right internal design was essential for having a successful bar, and communicated this to Prestige Designs in the course of negotiations. The contract called for all work on the interior of the bar to be completed by December 28th, so that Susan could hold a special opening party for the bar on December 31st. In anticipation of this event, Susan paid the airfare for four of her closest friends from university from Brisbane to attend the opening evening. Given feedback from social media, Susan expected a large crowed at the opening event and expected to turn a significant profit. The total amount that Susan agreed to pay Prestige Designs was $40,000.
Unfortunately, many of the employees working for Prestige Designs turned out to not have proper permission to work in Australia. The managers of Prestige Designs claimed not to know this, but when approached by Australian Immigration and Border Protection Officials, it became clear that a significant percentage of the workers did not have proper employment authorization, and were therefore prohibited from working. Because of heightened scrutiny, Prestige Designs was unable to hire sufficient new employees in time, and had to inform Susan on December 22nd that it would not be able to finish the job on time.
Fearing that she would not be able to open the bar on time, Susan told her friends from Brisbane to not come and canceled their tickets. In order to do this, she had to pay a $200.00 cancelation fee for each of the four tickets.
Susan was, after significant effort, able to find another company to finish the job. However, she had to pay the new company twice as much money as she had expected to pay Prestige Designs to finish the work on the short time frame – approximately $10,000 rather than the $5,000 the remaining work would have been valued by Prestige Designs.
The Opening was also significantly less successful than Susan had hoped, earning only a small profit. Susan suspected that the uncertainty around the completion of the bar contributed to the less than expected turnout.
The manager of Prestige Designs contacted Susan shortly after the opening, asking to be paid under the contract, claiming that it was not his fault that the work wasn’t done, but rather the fault of the government for preventing his workers from working. He claimed that Susan had breached the contract by finding another company to do the work, as Prestige Designs would have finished the work when it had a chance to hire new employees, after the start of the new year. In response, Susan told the Prestige Designs that they would never get a since penny from her, and in fact they should expect to hear from her lawyer. She then called you.
Advise Susan to whether Prestige Designs has any valid claim for payment under the contract, and if so, on what grounds. (200 words)
Advise Susan as to whether she can sue Prestige Designs for the money spent on cancellation fees for the flights for her friends. (100 words)
Assuming that Prestige Designs would be found to be in breach of contract, advise Susan as to what damages she would likely be able to collect, and briefly explain any difficulties she would have in collecting other damages. (300 words)
Please use case law and statutory provisions to support your answer.
QUESTION 2 (600 WORDS)
ALDO, a major supermarket, is selling ALDO Green Action Flushable Bathroom Cleaning Wipes (50pk) in its current catalogue.
Steve, the managing director of FOOLWORTHS (one of ALDO’s biggest competitors), is worried that these new (and cheaper) flushable cleaning wipes will reduce sales of his competing product, FOOLWORTHS Ultimate Flushable Cleaning Wipes (50pk).
He decides to purchase a packet of ALDO’s brand of wipes that night to test them and see if they really compare. Steve found the wipes to be of great quality. However, as he found himself standing in a pool of water on his bathroom floor, he realised that wipes were, in fact, not flushable.
Advise Steve.
Please use case law and statutory provisions to support your answer.
Answer preview
A contract is an accord between two or more individuals that is enforceable by the law as a legal binding agreement. Breach of any condition in a contract can lead to the aggrieved party to rescinding the contract. The rationale behind this is that a condition goes to the root of the contract, and in the instance where the same is breached then the aggrieved party has to return to the position they were before they entered into the contract. This was established in the case of Bettini v. Gye (1876) 183 at 188, where it was established that breach entitles and innocent party to rescind the contract or claim damages.
Word count: 1341