1. Qantas Airlines Ltd signs a contract with Airbus Corporation Ltd for Airbus to build a new aeroplane. On average, Qantas would make $ 800,000 profit per day from using such an aircraft.
The contract has 545 terms. Term 56 says that the plane must be able to travel 10 000 km at 800 km per hour. Term 455 says that the aircraft must have an in-flight video system capable of showing 36 channels of entertainment to passengers.
After the contract is signed, Airbus sends to Qantas a package containing a large number of documents, including the contract itself and examples of the colour scheme that will be used. In the middle of these documents there is also a new document headed ‘Limitation of Liability’, the key part of which states as follows:
The liability of Airbus Corporation Ltd for breach of contract is capped at $ 300 000.
When the plane is delivered, its engines are as required, but, due to confusion at the factory, the wrong software has been loaded into the entertainment system, which has only 34 channels. It would take a week to re-configure the software. Advise Qantas Airlines fully as to what its legal position is, citing relevant case law.
2. Frank runs a shop that sells appliances such as ovens, fridges and freezers. He is a sole trader – his business is not incorporated. Gemma is employed by Frank as a salesperson. Among the second-hand appliances in the shop is a dishwasher, priced at $ 350. One day Tom, is browsing in the store, sees the dishwasher, and says to Gemma “That’s a great price – I will just go home to see if I have space for it”.
Gemma’s niece, Frances, is getting married next month. Gemma knows that Frances needs a dishwasher. Gemma quickly phones Frances and says “Get to the store quickly – I think I can get my boss to agree to take $ 300 for a fantastic dishwasher”. Gemma tells Frank that she doesn’t think that the dishwasher will ever sell for $ 350, but that a customer might pay $ 300. Frank authorises Gemma to sell the dishwasher for $ 300. Frances comes in and Gemma sells it to her at that price. Later, while Gemma is on her lunch break, Tom comes in to the store. When he inquires about the dishwasher, Frank tells him that it was sold that morning for $ 300. Tom tells Frank that he would gladly have paid $ 350 for it.
Another salesperson, Bob, has the job of selling large quantities of washing machines to commercial laundries. He has frequently negotiated with Angela, who owns a chain of laundries, to sell her washing machines. Bob frequently comes to work late and is sometimes drunk. One Friday afternoon, Frank says to Bob “You are fired with immediate effect – clear out your desk and leave”. Frank then rushes off to a meeting across town without making sure that Bob actually leaves the premises.
Bob sends an email to Angela, saying that he has just received ten new industrial washing machines which he can sell to her for $ 1 000 each. Angela agrees, and makes an electronic transfer of $ 10 000 in payment, saying that she will collect the machines on Monday. Bob withdraws the $ 10 000 from the Home Appliance Specialists bank account and disappears overseas with it. When Angela comes to collect the machines on Monday, Frank refuses to give them to her, saying that Bob had no authority to sell them as he had been fired. Angela has sued Frank for delivery of the machines.
Give Frank legal advice in relation to the above situations.