Veronica takes over the family company ‘Genuine Leather Goods Pty Ltd’, which manufactures handbags, belts and wallets.
At a family wedding Veronica was discussing with her husband that she needs to purchase new machinery to make the company more efficient. Her cousin, Andrew overhears the conversation between Veronica and her husband. He is a director of ‘Equipment Sales Pty Ltd’ which supplies plant and manufacturing equipment to factories.
Early Monday morning Andrew approaches his cousin offering to sell Genuine Leather Goods Pty Ltd machinery that will make the company more efficient by 30%. He says that he is prepared to sell the equipment to the company for $150,000 and that the offer will remain open until 5pm Friday. He further states that acceptance could be by post, fax or email.
On Tuesday, Veronica on behalf of Genuine Leather Goods Pty Ltd sends Andrew an email accepting to purchase the machinery for $150,000.
Andrew delivers the machinery to Genuine Leather Goods Pty Ltd for installation and hands Veronica the invoice for payment.
Veronica says: ‘Thanks Andrew I will instruct the bank to transfer $140,000 to your account straight away. I’ve decided to deduct $10,000 as a family discount.”
Andrew demands the full amount of $150,000. Veronica says that as they are family they don’t have to strictly follow the agreement.
Question (1) 10 Marks
Assume that the element of agreement required for the formation of a contract exists. Using the four-step process, discuss whether the elements of intention to be legally bound and consideration required for the formation of a contract can be established. Consider whether Andrew can enforce the contract against Genuine Leather Goods Pty Ltd.
James is a tennis champion and he is going to represent Australia in the forthcoming European Tennis Championship in Belgium. Before leaving Australia for Belgium James decides to have his tennis racquets restrung. James sees an internet advertisement by Jacob’s Restringing, stating that they are the ‘best in Queensland and no-one can restring racquets like them’ the advertisement also stated that ‘they only use first grade materials when restringing tennis racquets for champions’.
Seeing this advertisement James decides to take his racquets to Jacob’s Restringing. James enters Jacob’s shop, James does not notice a sign which is placed on the wall behind the counter which says, in small sized print:
‘Whilst all possible care is taken with stringing and restringing work entrusted to us we cannot accept responsibility for any defective work or defective products used by us, and we will not be liable for any loss or losses to customers, even if demonstrably caused by negligent workmanship by any of its employees.’
Even if James had seen the notice he would not have been able to read it as he normally wears contact lenses and he was not wearing them that day.
James asks for Jacob and he explains that he has seen his internet advertisement and he would like him to restring his racquets for tennis as he is going to the European Tennis Championship in Belgium and that there is a high chance that he could win the championship, therefore it is extremely important that he restrings his racquets with the correct tension and materials. Jacob assures him that the racquets would be restrung correctly with the highest grade of materials. James then asks ‘what is the cost for restringing 6 racquets’ and Jacob says ‘the 6 racquets would cost $180’. James agrees and leaves his tennis racquets for restringing and was Jacob gives James a docket which he placed in his wallet, assuming that it identifies his tennis racquets so that he could collect the right tennis racquets on his return. The same words which appeared on the notice behind the counter were also printed on the docket in very fine (but legible), print on the bottom of the docket.
A few days later, James collected his racquets which appeared to be correctly strung. Paid the costs of restringing, packed the tennis racquets with his other gear and left for the European Championship in Belgium.
Whilst competing in the first round of competition, the strings in James’s racquet broke. James then selected five replacement tennis racquets and in turn they also broke. He was eliminated from the first round of the European Championship and he was devastated as James was guaranteed $35,000 of endorsements if he won the first round. James’s poor performance could be directly attributed to his faulty tennis racquets, which had been strung with defective materials. Subsequent testing of the strings showed that they were suitable for squash racquets, but not for tennis racquets and they should never have been used by the person stringing the racquets for James.
It was later discovered that one of Jacob’s employees allowed his son (who is not an employee of Jacob’s Restringing) to restring the racquets and he used the wrong strings.
Question (2) 10 marks
Using the four-step process, discuss what terms are expressly agreed in relation to the restringing of James’s racquets. In your answer be sure to discuss whether Jacob’s Restringing can rely on the exclusion clause in the contract. You will also need to determine the status of any relevant terms, including whether they are a warranty or a condition.
Students are reminded that they have been instructed to confine their answers for this assignment to topics four and five and NOT to consider the law in relation to performance, breach of contract or remedies.
PART B – Short answer question (5 marks)
Discuss the doctrine used in Australia under the common lay system that allows the courts to make new decisions over original situations or change their previous decisions.
In this question the marker will be looking for more than just “yes” or “no” answers.