Relationship to other tasks and assessments:

This assignment focuses on the first two 'themes' of the unit, namely, contract formation and contract construction. It also covers some aspects of the Australian Consumer Law, which is addressed in session 6.

However, the problem-based nature of this assignment requires a deeper understanding of relevant principles and ability to apply such principles to the facts of the hypothetical scenario.

Purpose of this assignment and ULOs assessed

The purpose of this assignment is to:

1. Test students' knowledge and understanding of the principles relating to contract formation (sessions 1-3)
2. Test students' knowledge and understanding of the principles relating to contract construction (sessions 4-6)
3. Require students to apply the IAC methodology to address a hypothetical problem
4. Consolidate students' learning on the first half of the unit generally.

The unit learning outcomes assessed are:

1. ULO1 -Analyse the legal concept of a legally binding contract.
2. ULO2 -Identify, interpret and critically analyse contractual terms.
3. ULO3 -Identify and critically analyse circumstances in which contracts can be brought to an end or nullified in a variety of situations and the different types of remedies as well as rules relating to them.

Scenario

Tim is a 17-year-old university student living in a 2-bedroom rented apartment in Yarraville. He is a diligent student, but he is also very entrepreneurial, precocious and thrifty.

Tim has Wi-Fi internet at home through an internet service provider called 'Rapid Net'. The contract that Tim signed with Rapid Net was for a 'super-fast NBN plan'. Rapid Net's advertising for this plan guarantees customers reliable connectivity and "super-fast speeds ranging between 3 megabits per second (Mbps) and 4 Mbps". However, the internet has been fickle at Tim's place and Tim has come to think that Rapid Net may have overstated the internet speeds it can deliver.

Tim experiences various forms of inconvenience and damage in the form of poor buffering in Netflix, inability to listen to lecture recordings and download class materials which are essential for his tertiary education, and missing-out on bookings for the spare bedroom on share accommodation website 'Melbourne Cribs'.

Rather than getting a housemate, Tim has put the second bedroom on 'Melbourne Cribs'. Tim's lease agreement does not permit subletting without prior authorisation from the agent. The Residential Tenancies Act 1997(Vic) also prohibits tenants from advertising rooms online without prior written approval from the landlord.

A couple of months ago, Tim received a booking request through the 'Melbourne Cribs' website' from a user named Clare, a 24-year-old sports-fanatic from Adelaide. Clare wanted to stay in the spare room for a month over the popular ANZAC Day and Easter long weekends. Tim initially accepted the booking and Clare paid a 50% deposit towards the $2,000 overall cost, with the remainder payable upon arrival in Melbourne. Clare was very excited to lock-in decent accommodation in a trendy locale and planned her whole stay in Melbourne around the accommodation.

In the meantime, Tim notices that accommodation rates have sky rocketed as hotels tend to charge a premium over long weekends. Seeing what he thinks is a shrewd business opportunity, Tim emails Clare and issues her with the following ultimatum: "The rates for my place have gone up due to high demand. Your booking is now $4,000. Payment of the $3,000 balance is required to confirm your booking. If the balance is not received within 3 days, your deposit will be booking will be cancelled and you will forfeit your deposit".

Unfortunately for Clare, she cannot afford to pay $3,000 at short notice. Tim subsequently cancels her booking, keeps the deposit and 'rents' the room to other 'tenants' at higher rates with payment up front. Determined to still have a Melbourne holiday in autumn, Clare is forced to book alternative accommodation in a less convenient and less trendy location for $2,500. Clare wants to sue Tim for not honouring their original contract.

Tim was very pleased with the extra money he was able to make, but his bad karma has caught up with him. Last week, Tim went out for a big night on the town with some friends from university. Towards the end of the night, one of Tim's classmates (Roland) starts hassling Tim by repeatedly asking him if he could buy Tim's carbon fibre bicycle. Tim eventually gives-in and says "Alright, alright, you can have it for $1,000". The bike is actually worth about $10,000 as it is a limited edition and extremely aerodynamic. Seizing the opportunity, Roland transferred the purchase price to Tim straight away using his smart phone and got him to sign a record of their agreement on a serviette he collected from the bar.

The next morning, Roland comes around to Tim's place to collect the bike. Tim is feeling extremely hung over but can vaguely remember signing something with Roland. Reluctantly, he hands over the bike and accused Roland of taking advantage of him.

When Tim eventually recovers from his hangover, he remembers that he has to go around to his uncle John's place in the evening and help him make some deliveries as part of a family catering business. Tim has been doing this every couple of weeks for the past 12 months or so. Sometimes John gives Tim $100 cash for his work, but not always. Tim thinks John is taking advantage of him and wants to claim 'back pay'.

Question 1

Does Tim have any grounds to get out of his contract with Rapid Net or get compensation?

Question 2

Were the accommodation arrangements between Tim and Clare legally binding?

Instructions

1. Read the hypothetical scenario.
2. Answer each of the 2 questions (noting the relative weight attached to each question).
3. Use relevant cases and legislation to support your answer.
4. Your answer should use citations and be formatted in accordance with the AGLC.
5. Footnotes do not count towards overall word count.

Assessment criteria

1. Demonstrated understanding of relevant legal principles.
2. Use of relevant case law and legislation to support conclusions.
3. Articulation of clear conclusions and advice as required by each question.
4. General quality and clarity of written communication.