Paula sent a letter to Tess stating that she needed 1200 climwits very urgently. She instructed Tess to
buy from Woddo Co for a total price not to exceed $12,000. Tess contacted Woddo Co but they told
her that they had no stock available at present but they should have a delivery of stock very shortly.
Disappointed with that information Tess contacted Sepal Co. They have a large stock of climwits but
they will sell only in lots of 1400.Because they never had any business dealings with Paula they were
prepared to supply Tess only. They agreed to give Tess a discount of 10%.
Tess then placed an order in her own name for 1400 climwits at a contract price of $16,000 less the
Tess informed Paula that she had obtained 1400 climwits from Sepal Co for a total price of $16,000.
Paula, being desperate to obtain the climwits, immediately contacted Sepal Co and demanded that
they supply her with her original requirement of 1200 climwits for a price of $12,000. Sepal Co
refused to comply with her demand. They stated that their agreement was with Tess for 1400
climwits at an agreed price of $16,000 less 10% discount.
You are required to:
Advise each of the parties of any legal rights or liabilities that they may have.
You are required to support your answer by reference to relevant legal authority.
Merco recently entered into a written agreement with Eddo Publishing Co to subscribe for a monthly
magazine called English for Migrants- Beginners to advanced stage.
The background to the negotiations and the entering into the contract are as follows:
Merco arrived in Australia about 7 months ago. He could not read or write in the English language. He
could speak and understand spoken English only haltingly. He was employed as a clerical assistant by
a large corporation. His job was to assist in operating the various photocopying machines used by the
company. He had earlier enrolled in English language classes with an adult education centre
conducted by the NSW government.
One day while Merco was having dinner in a café near where he worked he met Ted Upton, a sales
representative for Eddo Publishing Co. They started chatting and Merco told Ted about his difficulty
with English. He said that this prevented him from getting any promotion in the company. Ted said
that his employer published a monthly magazine called English for Migrants- Beginners to advanced
stage. . He told Merco that the magazine would be of great advantage to a person in Merco’s
position. He explained that the magazine was very well thought of and was used by English teachers
in their classes. Ted said this although he knew of only one teacher who used the magazine
occasionally. He also told Merco that many employers have been recommending to their migrant
employees that they obtain a subscription to the magazine. This statement is untrue. Ted informed
Merco that if he wanted to take out a subscription he should do so immediately as there were a very
limited number still available and only to persons selected by Ted. This statement is untrue. ‘Act now
or you will lose this opportunity to improve your English and this will prevent you getting promotion.
Subscribe today Merco for a better future at work and in your social life’
Ted then produced a written contract of ten pages in length containing 90 clauses including a
provision by which the subscriber agreed for an additional fee to purchase binders for each year’s
copies of the magazine from the publisher at the end of the year of the subscription. This clause was
not brought to Merco’s attention.
There was also a provision in the contract by which the publisher had the discretion to review the
subscription price at six-monthly intervals during the currency of the subscription and to increase the
price if in the opinion the production costs of the magazine had increased. This clause was not drawn
to the attention of Merco.
Merco was not sure of most of the clauses in the contract and told Ted that he would like to
telephone a solicitor friend to come to Merco’s house that night to read through the contract
document and explain the clauses to him. Ted told him there was nothing to be concerned about and
that by waiting another day Merco might be too late to get the subscription. Ted said:’ Sign the
contract now and be sure of getting the magazine. You have time to go to your bank and get the
money to begin your subscription. Merco withdrew the money from his bank and then signed the
contract. He handed the money to Ted for the subscription price.
A few days later Merco had doubts about whether he should continue with the subscription even
though all his workmates agreed that the content of the magazine was of a genuinely high standard
and would be of benefit to him for the development of his English skills and for his future job