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. Students may make whatever additional factual and/or legal assumptions are necessary or convenient. And students must write about 1500 words (+/- 10%), or about 750 (+/- 10%) words per 15 mark allocation.
Question 1 15 Marks Frank, wishing to sell his car, put a sign in its window and parked it on the street outside his house. The sign said:
Car for Sale — $2,000; Enquire at 3 Wood Street, Padstowing 0412 000 000
1. Bill walks by at 8:30 am and immediately calls Frank and offers him $1,600 for the car. Frank tells Bill he will think about it and let him know soon.
2. Mark drove by around 9:00 am and took a picture of the car and sign so he could show it to his daughter. That afternoon he posted a cheque for $1,950 with a note saying he would pick up the car on Friday at 6:00 pm.
3. John was walking his dog at around 10:00 am and saw the car and the sign. Using his mobile phone, he searches for Frank’s contact details and then emails him: “I accept your offer of $2,000. I’ll bring cash Thursday evening and pick up the car”. John’s email was sent at 10:23 am.
4. Meanwhile at work, Tom, a work colleague, offers Frank $1,700 for the car. Frank promises him he’ll accept it if he doesn’t get any better offers by the weekend.
On Thursday whilst Frank was working from home, he received the letter and cheque from Mark and went to the bank and deposited the cheque. He then emailed Tom to say that he got a better offer. While sending the email, Frank noticed John’s email and read it. He wants to sell the car to John as he was the only person who met his price.
With whom, if any, does Frank have an agreement? Explain your answer in relation to each party involved.
Question 2 15 Marks
Graphic Advertising Pty Ltd, a small advertising business, employed Renee, a single mother of two, on a three year contract as a photo retoucher at a salary of $900 per week. Renee’s work has improved the quality of the advertising materials sold to their clients, thus improving Graphic Advertising’s market share as well as improving their profits. Her contract will expire at the end of 2017.
In February 2017, Cool Adverts Ltd approached Renee offering her $1,100 per week to do their retouching work. Renee was very tempted to accept the offer because she had been struggling to cover her rent and childcare expenses on her current salary. However, she was concerned about leaving Graphic Advertising as she knew February to March was a very busy time. Being a loyal employee, Renee approached Julius, the CEO of Graphic Advertising and advised him of Cool’s offer. She was grateful to Julius for employing her.
Julius said: “I am disappointed but how can you take Cool Advert’s offer when you are under contract with us?”
Renee replied that she really needed the extra money they were promising.
Julius was concerned that if Renee left, they would be in a difficult position because for the next 3 weeks there were photo shoots scheduled to meet their client’s needs. After a few moments he said to her:
“You are a valued employee and we need your expertise for the next few months. If you stay with us, we will give you a salary increase of $150 per week so that your total salary will be $1,050 per week. We will also backdate this increase to 1 December and give this back pay to you in a lump sum.”
Whilst this did not match Cool Advert’s offer Renee was happy to stay and was delighted by the promise of the lump sum. Renee declined Cool Advert’s offer.
When Renee received her next pay, the promised increase and back pay were not included. Assuming there was an administrative delay in implementing her new salary package, Renee did not worry. However, when her next pay remained unchanged, she sought an explanation from Julius. He informed her that his comments had been “somewhat foolish and ill conceived in the heat of the moment” and they were under no obligation to pay either the increased amount or the back pay and did not intend to do so.
This refusal to honour its promise has meant that Renee continues to struggle on an inadequate salary. Unfortunately, Cool Adverts has declined to enter into further negotiations with her.
Advise Renee whether Graphic Advertising Pty Ltd is liable to pay her the promised increase in salary, and the back pay.
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