Tegan takes over the family company ‘Quality Leather Goods Pty Ltd’, which manufactures shoes, handbags, belts and wallets.
At a family wedding Tegan was discussing with her husband that she needs to purchase new machinery to make the company more efficient. Her cousin, Sebastian overhears the conversation between Tegan and her husband. He is a director of ‘Nu Machinery Pty Ltd’ which supplies plant and manufacturing equipment to factories.
Early Monday morning Sebastian approaches his cousin offering to sell Quality 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, Tegan on behalf of Quality Leather Goods Pty Ltd sends Sebastian an email accepting to purchase the machinery for $150,000.
Sebastian delivers the machinery to Quality Leather Goods Pty Ltd for installation and hands Tegan the invoice for payment.
Tegan says: ‘Thanks Sebastian 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.”
Sebastian demands the full amount of $150,000. Tegan says that as they are family they don’t have to strictly follow the agreement.
Question (1) 13 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 Sebastian can enforce the contract against Quality Leather Goods Pty Ltd.
Wagyu Burgers Delight is a chain of burger restaurants in Australia. In order to boost the sales of the chain, it advertised on radio, TV and in newspapers that it was running a promotion whereby a token would be stuck to the inside bottom of the burger deluxe box and if 25 coupons were collected they could be redeemed for a scratch ticket. Further details explained as:
“Scratch a ticket with a gold car, present it to the Wagyu Burgers Delight head office and win the grand prize of a Subaru Forester. Hurry, as it is only available for a limited time.”
Maxwell Smart was very excited and was waiting for the doors of his favourite Wagyu Burgers Delight Restaurant to open the next day. He ordered 25 burger deluxe boxes and after a marathon eating session redeemed the coupons for a scratch ticket. He then collapsed and had to be taken to hospital to have his stomach pumped.
Obviously, not every customer had an interest in returning to Wagyu Burgers Delight and buying a burger deluxe just for the chance to win a prize and as a consequence many boxes were thrown away with the token inside. Adele James scavenged through the bins of her local Wagyu Burgers Delight restaurant and pulled the tokens out of the discarded boxes. Within a short time she amassed 50 coupons. She then went inside the restaurant to redeem the coupons for two scratch tickets and was astounded to scratch two gold cars. Adele then drove straight to Wagyu Burgers Delight head office, where she showed the receptionist the winning tickets. While she was waiting in the front room as directed by the receptionist, another Wagyu Burgers Delight worker appeared and posted the following notice on the front door of the office, which Adele strolled over and read:
“Due to a printers’ error, faulty scratch tickets were included in the burger deluxe promotion. Wagyu Burgers Delight regrets to advise that these tickets are null and void and as a consequence it will not be honouring any prizes claimed. Wagyu Burgers Delight apologies for any inconvenience and expects to announce an exciting new prize competition soon.”
While Maxwell was in hospital Wagyu Burgers Delight announced on radio, TV and in newspapers that it had discovered that there had been a printer’s error in its scratch tickets and that instead of only one winning scratch ticket in the promotion for a Subaru Forester, every one in five scratch tickets were winning tickets for Subaru Forester’s. Wagyu Burgers Delight was therefore immediately declaring their promotion to be null and void and would not be honouring any prize claims. While Maxwell did not see or hear these reports, several nurses at the hospital did. He overheard them casually talking about Wagyu Burgers Delight difficulties and the cancellation of the promotion while they were doing their work.
Maxwell scrambled for the ticket in his pants pocket, scratched it and found a gold car. Figuring that he had heard nothing official from Wagyu Burgers Delight, he discharged himself and headed for the Wagyu Burgers Delight head office with hopes of redeeming it for a Subaru Forester. When he arrived there was a crowd of angry people standing around the notice on the front door, obscuring it. He therefore did not read it, and instead strode up to the receptionist and presented his ticket.
It transpires that even Adele was preceded by another customer, whose claim Wagyu Burgers Delight had decided to honour since it had already bought the single Subaru Forester that it had intended to give away as the grand prize.
Question (2) 13 Marks
Assume that the elements of intention and consideration required for the formation of a contract exist. Using the four-step process, discuss whether the element of agreement required for the formation of a contract can be established. Is Wagyu Burgers Delight obliged to provide Adele and Maxwell each with a Subaru Forester?