Instructions

Read the factual accounts and answer ALL of the questions with reference to the principles law covered in:

Contract Law - Part 1

This is not an essay, therefore, you do not need to have an introduction and conclusion. You are required to answer the questions in a series of sentences and paragraphs using the numerical value for each question as a guide to how much you need to write.

Read the following factual account:

Simon is the owner and curator of Paint Spot, an art gallery that showcases the work of local artists. For each work that is sold Paint Pot receives a percentage commission on the sale price. One of the major pieces on display in the gallery is a painting entitled ‘Kangaroos at Sunrise' painted by the well-known indigenous artist Uncle Jim. The gallery also have an original painting of Sydney Harbour Bridge by the famous Australian artist, Rolf Black, which they are currently in negotiations to sell to a well know art collector, Tony Jones. Paint Spot recently held an event that was attended by a number of high profile guests, including the Minister for Arts. Elite Foods catered for the event at which Paint Spot's guests were treated to gourmet food and imported wines.

Unfortunately Paint Spot have got themselves into a few difficult situations for which they seek your legal advice.

Answer ALL of the questions:

Question 1

While browsing Paint Spot's web site, Barnaby, a fan of Uncle Jim's work, notices ‘Kangaroos at Sunrise' advertised for sale for $1,500. He immediately contacts Simon and tells him that he wants the painting, to which Simon responds that it can't be sold until the exhibition closes; however, he will make a note of Tony's ‘expression of interest' and get back to him.

At the end of the exhibition Barnaby attends Paint Spot hoping to collect the painting. The following discussion takes place between him and Simon, the owner:

‘I'm so excited to collect ‘Kangaroos at Sunrise' today. I have some friends coming over today to check out my new painting. Is it ready for me to take now'?

Simon says: ‘it's already packed. As soon as we have finalised the deal I can get one of my assistants to help you load the painting into your car. Are you paying by cheque or credit card?'

‘I have a bank cheque already prepared - here you are'. Barnaby hands over the cheque to Simon.

Looking shocked, Simon says to Barnaby: ‘The bank has made a mistake - the cheque is only for $1,500!'

‘Yes - that's right, isn't it? Replies Barnaby.

‘No - it should read $15,000. I think you need to go back to bank and have it corrected', says Simon.

‘Your web site clearly states that ‘Kangaroos at Sunrise' is priced at $1,500. Check it out for yourself if you don't believe me', says Barnaby.

Sure enough, when Simon looks at the web site for Paint Spot, he notices the price for ‘Kangaroos at Sunrise' is only $1,500.

‘This is a mistake!! We would never sell an Uncle Jim for such a low price. My assistant has obviously put the wrong price on the painting'.

Simon tells Barnaby he can still have the painting, but he needs to pay the correct price $15,000 for it.

Barnaby sternly replies:

‘We already have a deal - the mistake is yours so you still have to sell the painting to me for the advertised price of $1,500'.

When Simon refuses to hand over the painting for anything less than $15,000, Barnaby storms out of the shop exclaiming that Paint Stop will be hearing from his solicitor, not to mention the bad publicity which the gallery will get once he informs the media about their ‘shonky' sales tactics .

Advise Barnaby if he is correct in claiming that he has an agreement with Paint Stop for the sale and purchase of the painting for $15,000.

Question 2

Alan Jones, a wealthy collector of all things beautiful, had been negotiating with Paint Stop, to purchase an original painting of Sydney Harbour Bridge by the famous Australian artist, Rolf Black. Several letters had been exchanged between them containing counter offers within a certain price range, however, no agreement had yet been reached.

Simon, on behalf of Paint Stop, sent Alan a letter on September 10 offering to sell the painting for $45,000. In his letter Simon stated that this was their lowest offer and that they were not prepared to negotiate any further. The letter arrived at 10 am on September 12. Upon reading it Alan went straight to the post office where he sent a letter at midday by registered mail accepting Paint Stop's offer.

On September 13 Paint Stop was approached by Pauline Handsweat, a wealthy Queensland socialite, who offered to buy the Rolf Black painting for $50,000. Since this was the price that Paint Stop had wanted for the painting all along, they promptly accepted Pauline's offer and arranged to have the painting transported to its new owner in Queensland. That afternoon Simon tried to telephone Alan informing him

that Paint Stop had changed their mind and no longer wanted to sell the painting, however, Alan did not answer his phone so Simon just left a verbal message.

On September 14 Alan's letter accepting Paint Stop's offer arrived at the gallery. In the meantime when Alan checked his answering service and found out that Paint Stop had changed their mind about selling the painting he was outraged and immediately contacted Simon insisting that the gallery were already bound to sell him the painting.

(1) Advise Alan whether Paint Stop is bound to sell the painting to him.

(2) Would your answer be different if the negotiations for the sale and purchase of the painting had so far been conducted by email and phone?

Question 3

Simon was negotiating on behalf of Paint Stop with Elite Foods, to cater for a special exhibition they were holding at the gallery later that month, to be attended by some high profile guests, including the Minister for Arts.

Elite Foods agreed to provide all the necessary food and drinks for $3,000, which included assorted gourmet finger food and a selection of fine imported wines. Elite Foods were paid a $500 deposit and agreed to invoice for the remaining amount after the event.

On the afternoon of the exhibition Elite Foods' representative contacted Simon explaining that the catering fee would need to be increased by a further $500 because they could not obtain imported wine at wholesale prices since their supplier had temporarily run out of stock; so they would need to pay more for it from another supplier. The advertising for the exhibition clearly stated that guests would be served ‘fine imported wines' and it was too late in the day to look for a better deal, so Simon felt that he no choice but to agree to pay Elite Foods the extra amount they had requested.

When Simon received Elite Foods' invoice he decided not to pay the extra $500 they had requested. Instead, he paid them the amount still owing from their original agreement.

Elite Foods is now considering enforcing payment of the outstanding amount of $500 for their catering services against Paint Stop.

Advise Elite Foods.