Objectives

Answer the following questions with reference to the relevant common law and equity principles operating in Australia concerning contracts plus related and other transactions. Do not consider the effects of legislation potentially applicable other than that specifically identified. As a guide, students should write about 2000 words (+/- 10%), or about 500 words (+/- 10%) per 10 mark allocation.

Assessment Task

Question 1

Mojo Beverage placed the following advertisement in a local newspaper on 25 January:

‘Come one, come all! Fishermen and women of Lake Tranquil. We are offering to pay $100,000 to any person who catches Lord Harry, a trout which we have tagged and released into the lake.'

The following day was the Australia Day holiday. Lake Tranquil was crowded with people fishing both from the bank and from boats. At about lunch time, a rumour spread among the people on the bank that there had been an error in the advertisement: that the true amount should have been $1,000 and that Mojo Beverage had announced that the prize would be the lower amount. The rumour was in fact true. Ben heard this rumour from the stranger fishing beside him, minutes before catching Lord Harry. A Mojo Beverage representative was on hand to certify the catch before Lord Harry was released back into the lake, but did not say anything about the amount of the prize.

Ben is claiming that Mojo Beverage owes him $100,000.

Advise Mojo Beverage, explaining applicable legal principles and citing relevant authorities.

Question 2

(a) Dorper Sheep Sellers Pty Ltd was negotiating the sale of a number of dorper sheep to a firm called Livestock Brokers, which intended to on-sell the sheep. On 1 June Dorper Sheep Sellers sent a letter to Livestock Brokers, setting out the number of sheep for sale and the price per head. It asked Livestock Brokers to reply within 14 days.

Livestock Brokers sent a letter by reply dated 6 June, inquiring whether the sale could be financed on the ‘usual terms'. Dorper Sheep Sellers did not reply.

On 14 June, at the opening of business, Livestock Brokers sent a fax stating: ‘We accept your offer of 1 June for the sale of sheep'. The same day Dorper Sheep Sellers faxed back, saying: ‘You're too late. We're just in the process of selling the stock to another purchaser. Formalities will be completed by tomorrow'.

Advise Livestock Brokers as to the rights and liabilities of the parties in the light of the commercial interactions taken place between them.

(b) Presume in (a) above Livestock Brokers sent the fax on 14 June but because of a transmission error Dorper Sheep Sellers did not receive it. Advise Livestock Brokers under these circumstances.

Question 3

Stuart had a 5-year written lease of a shop in the Prince Mall. He entered the lease at $1000 per week at the end of 2010 and ran a successful music business for about two-and-a-half years. In 2013 the business was affected by decreased sales in CDs as a result of the increased ability of people to access music through the internet.

In December 2013 Stuart asked the lessor, Westphalia Marts Pty Ltd, for a reduced rental of $700 per week until the business improved. He told the lessor about his business problems and plans to diversify and indicated that he might have to terminate the lease early. Westphalia Marts agreed to allow Stuart to pay the reduced rent and in January 2014 Stuart began to pay the new agreed rent of $700.

In December 2014 Westphalia Marts decided to sell the Mall, including all the shops. They wanted the income from the Mall to look healthy, and asked Stuart to pay the full amount of $1000 per week rental beginning in January 2015 and also demanded the shortfall of $300 per week for each week of the year 2014.

Advise Stuart, with reference to the relevant principles.

Question 1

Issues to be discussed
Ben v Mojo Beverage
- Is there a valid contract?
 Agreement, including effect of attempted revocations
 Intention to create legal relations
 Consideration

Question 2
Issues to be discussed
(a) Rights and liabilities of Livestock Brokers and Dorper Sheep Sellers Pty Ltd
(i) Was there an intention to enter a contract?
(ii) Is the letter of 1 June an offer?
(iii) Is the letter of 6 June a counter-offer?
(iv) Is the fax of 14 June a valid acceptance?
(v) Is the mode of acceptance valid?
(vi) Attempted revocation by Dorper Sheep Sellers Pty Ltd
(vii) Breach of contract
(viii) Remedies
(b) Was Livestock Brokers' acceptance effective?
- Instantaneous communication rule

Question 3
- In the context of the binding nature of the written lease between Stuart and Westphalia Marts Pty Ltd, was the promise to reduce the rent supported by consideration?
- The issue of equitable estoppel
- Unconscionable conduct
- Two periods of detriment