Question 1
Shirley and Jessica own and operate a dancing business in Fremantle called Dance Force. The building that is being used for dancing is located in an area that experiences high levels of traffic congestion in particular the times that the dancing facilities are used. The students have to wait outside on the lawn area before their classes commence, due to the fact that the building is too small to accommodate the students to wait inside. Both Shirley and Jessica are concerned for the safety of their students as they have to wait outside and many mums are just dropping them off as the parking facility is poor. To increase safety for their students Shirley and Jessica have decided to have an extension added onto the building.
Annabelle a friend of Jessica’s knows a good construction company by the name of Compliance Builders and tells Jessica that she would arrange a meeting with them. Shirley and Jessica speak with the manager Enrico of Compliance Builders about adding on a room so the students could wait in there before entering the dance studios.
Shirley and Jessica went to an architect to get the plans for the room and when it was finished they gave it to Enrico to give a quote. Enrico comes back with a quote saying that to add on the room to the specifications on the plan it would cost $50,000 in total and says that he will need 6 weeks to complete the job and that the dance studio cannot be used whilst construction is being carried out. Shirley and Jessica agree with the price and it was verbally emphasised to Enrico that the building work must be completed by the 15 December. The completion date is very important to Shirley and Jessica as the students need to be able to go to the dance studio to practice for the upcoming championships that are going to be held in late January in London, as the students will need to practice and learn their dance routines.
Enrico assures Shirley and Jessica that Compliance Builders are the ‘best builders in the Western Australia’ and that they ‘only use the best materials’ and that they are the only company that ‘completes constructions in time’.
Enrico sends Shirley and Jessica a standard contract with the specification’s which Shirley and Jessica look and go ahead and sign the contract and there is no mention of the completion date in the contract, but Shirley and Jessica assume that Enrico is aware of the importance of the completion date due to their verbal communication.
They also both don’t bother to read the remaining contract where there is the following term:
“Compliance Builders accepts no responsibility for any damages or loss whatsoever to the existing building where the construction work is being carried out however caused.”
Shirley and Jessica then return the signed contract to Compliance Builders and Enrico signs the contract on behalf of Compliance Constructions.
Enrico on behalf of Compliance Constructions commences the construction of the room on 29th October. In the meantime Shirley and Jessica cease the dancing classes and are awaiting for the completion of the room.
On the 3rd December Shirley and Jessica ask Enrico on how the extension of the room is going and remember it has to be finished by the 15th December. Enrico replies we have had some difficulties in construction the extension as the congestion in the street has made it impossible for us to work as such it is not going to be possible to finish by the 15th December.
Shirley and Jessica are furious and they say ‘we verbally told you the importance of finishing the extension by the 15th December and how important it was due to the upcoming championships’ Enrico replies that it is not in the contract.
Question (1) 13 Marks
Assume that there is an enforceable contract. Using the four-step process, discuss what are puffs, opinions and terms in the contract and whether Shirley and Jessica can succeed in establishing their argument that the contract was partially written and partially oral. Only consider the parole evidence rule for the partially written and partially oral contract.
Question (2) 13 Marks
Chickens Galore saw an internet advertisement by Speciality Printers stating that they are the ‘best printers in the country’ and before delivery Speciality Printers ‘ensures that they would exercise reasonable care in proof- reading all materials’.
Chickens Galore phoned Speciality Printers for an appointment to negotiate a contract to print all the promotional materials for the next three years. Whilst they were negotiating Chickens Galore made it very clear that it is a term of the contract ‘that all reasonable care must be taken to ensure that all materials delivered are without errors’. Speciality Printers gave the assurance ‘that all materials would be proof-read before delivery’ in front of the lawyers involved in the contract.
Chickens Galore entered into a three-year contract with Speciality Printers to print all promotional materials of Chickens Galore. Therefore, Speciality Printers was entrusted to print the relevant scratch tickets for the promotion. The clause included in the contract is as follows:
“Speciality Printers accepts no responsibility for any loss or damage whatsoever caused by errors in printing, resulting from defective typesetting work by the printer or any of its employees.”
It was discovered that instead of only one ticket being printed with a gold car, every one in five tickets revealed a gold car. This error transpired due to the fact that an employee of Speciality Printers allowed a vacation student to experiment with the printing machine. As such was not detected because Speciality Printers had not conducted proof-reading on Chickens Galore scratch tickets due to cutbacks to increase profits.
The printing error by Speciality Printers has caused Chickens Galore being engaged in drawn-out lawsuits from numerous customers demanding a Mazda CX-9, as they have scratched a gold car. Under these circumstances Chickens Galore wants to terminate its contract with Speciality Printers and once the extent of the losses becomes apparent will sue Speciality Printers for damages.
Question (2) 13 marks
Assume there is an enforceable contract. Using the four-step process, discuss what terms are expressly agreed in relation to the contract. In your answer be sure to discuss whether Speciality Printers can rely on the exclusion clause in the contract. You will also need to determine the status of any relevant terms, including whether they are a warranty or a condition. Students are reminded that they have been instructed to confine their answers for this assignment to topic five and NOT to consider the law in relation to formation of a contract, performance, breach of contract or remedies.