Bill and Ben are best mates and love to sail together. They want to turn their sporting interest into a business. They decide to start their own company called Sensational Sails Pty Ltd (Sensational Sails). Bill and Ben design and manufacture sails for all size yachts and supply wholesale to retail outlets. Their company becomes very successful and soon they need more sophisticated machinery to ensure that their business is profitable. Ben’s cousin Marc is also in the manufacturing business, supplying plant and manufacturing equipment to factories. Marc is the sole director and marketing manager for the company EquipU Pty Ltd (EquipU). On Monday, Marc approaches his cousin and offers to sell Sensational Sails new sail making machinery that has just been developed in Italy. Marc claims that the equipment will improve output and efficiency in the sail making factory by 20%. He says he is prepared to sell the equipment to them for only $50,000. Marc says the offer will end on Friday at 5pm, and acceptance could be via email, fax or post. Bill and Ben think that Marc’s offer is very good and one which would enable Sensational Sails to increase production and profit. Bill and Ben are keen to accept Marc’s offer, but feel that they really should try to negotiate better terms. On Tuesday, Bill sends Marc an email on behalf of Sensational Sails which states: Sensational sails is very interested in your offer, however we believe that the new equipment will only deliver a 15% Return on Capital, so we are only prepared to pay you the amount of $30,000 for the machinery.” Marc is at a three day conference on Tuesday, Wednesday and Thursday, so has not read his email. Meanwhile Bill and Ben have reconsidered their position and are feeling nervous that they may have missed the deal because they haven’t heard back from Marc. They decide to accept EquipU’s original offer and on behalf of Sensational Sails post Marc a letter on Friday morning agreeing to purchase the Italian machinery for $50,000. Just to be sure, at the same time they email Marc. Due to problems with Sensational Sails’ internet service provider, the email is not received into EquipU’s system until 6pm Friday. Over the weekend Marc meets with his old friend Pauli who just happens to be in the market for the same Italian sail making machinery. Marc owes Pauli a favour so wants to give the machinery to Pauli instead of selling it to Sensational Sails. On Monday morning Marc reads his emails and opens the post. He calls Bill and Ben and says the deal is off. Bill and Ben are very upset and want to force Marc to sell them the Italian machinery. Question (a) 15 marks Using the four-step process, discuss the element of agreement required for the formation of an enforceable contract. Have Sensational Sails and EquipU reached ‘agreement’ in relation to the sale of the Italian machinery?
FACT PATTERN: DISCOUNT FARM MACHINERY LTD. (Manager – Mechanics Division Farm Machinery) Discount Farm Machinery Ltd. is in the business of selling used and new heavy-duty machinery including farm machinery to dealerships and individual farms. The company has its corporate headquarters in Langley, British Columbia. In British Columbia, Discount Farm Machinery Ltd have offices in Langley, Kelowna, Prince George and Fort St. John. It has sales throughout Canada. The sales for Ontario, Quebec and the Maritime provinces are handled out of Toronto. The sales for the Prairie Provinces are handled through Regina, Saskatchewan. The job of a Manager – Mechanics Division Farm Machinery involves a supervisory role of the mechanics division of the company in British Columbia. There are 10 mechanics located in Langley, 5 mechanics located in Kelowna, 5 mechanics located Prince George and 8 mechanics located in Fort St. John. The mechanics inspect, repair and ensure the used machinery has been properly serviced before they are sold. As well they repair machinery that has been sold to customers. From time to time a mechanic will be asked to attend to a customer’s machinery in the field. The job requires the successful candidate to have good communication skills. It involves the supervision of mechanics to ensure the repairs are properly carried out in a safe environment. Occasionally the successful candidate you will be asked to meet face to face with customers. The successful candidate will manage the department to ensure all company procedures on health and safety, inventory, billings and quality control are being followed. While the successful candidate will spend most of his time in the Langley office he will be required to visit other offices about once a month to ensure they are following company policies. Most of the clients from the farming community are older males and your boss has stated that he feels the preferred candidate should be male as the clients would feel more comfortable dealing with them. He should also be reasonably fit as the work involves walking over rough terrain on farms. Most of the farmers are of Christian faith and it would be preferred with he shared their religion. There are 15 other companies in British Columbia selling farm machinery. The job of Manager – Mechanics Division Farm Machinery involves having access to previous technological advances in the new equipment that is coming up for sale and how to repair them. He also has access to the processing of large sums of money when equipment is repaired and subsequently sold. Your employer has asked you to draft an advertisement for the position of Manager – Mechanics Division Farm Machinery for British Columbia. The ideal candidate should have at least a bachelors’ degree in business, engineering and/or agriculture. He must have at least 5 years’ experience in heavy duty mechanics and be certified and 5 years’ experience in management. Most of the clients are male and your employer has advised you that the successful candidate must be male and be between 40 and 50. He does not want him to be younger as he would be less experience and might have family commitments that would keep him away from completing his road duties. The candidate must have computer skills and be technologically savvy. He must be able to act independently and be a problem solver. He would be reporting to the General Manager for British Columbia. The territory is all of British Columbia. Approximately half of the sales are in the Peace River country. After an interview your employer has decided make an offer to David Smith. David presently lives in Calgary, Alberta. He told you that he meets all of the criteria and is ready to start immediately. He is 43 years old, married and with two children (aged 18 and 20). He lost his job 1 months ago as a result of the restructuring of his previous employer. His wife is not working at the present time. You employer has asked you to prepare a memo as to what terms should be included in an employment agreement. He told you the parties discussed the following at the interview: • Discount Farm Machinery would Mr. Smith that he would help him with his moving expenses. • He would be paid a base salary of $100,000 plus a commission of 2% of net sales from the mechanics division. • He Smith would be given all of he usually benefits including extended medical • He would be located in Langley, B.C. • He would be given a company car All senior salespeople for Discount Farm Machinery Ltd. are required to complete a two-week training course on Company procedures which costs the employer $10,000. Your employer would like to recover this sum from the employee if he leaves the within 5 years of starting his job.