Assignment task:
The Problem is from Commercial Law:
Dave is the Sales Manager of "IT 4 U" (IT) a leading provider of IT equipment and after sales IT Support. The owner of IT Karen calls Dave her "most trusted" employee, always referring to the fact that he has being with the company since it started 10 years ago. Dave's employment letter clearly stipulates that he is in charge of negotiating and entering into contracts for the supply of IT equipment. However, the after sales IT Support aspect of the business is handled by Kate who is a young IT whiz who since her employment at IT which started only 2 years ago, is constantly beating and exceeding the sales targets set by IT.
On 1 July 2021 Dave arrives in Perth, WA to negotiate a deal with a leading chain of Supermarkets, "Spuds". Spuds sales have grown exponentially in the last year and they can no longer manage without a robust IT infrastructure. Spuds IT Manager Lydia tells Dave that they need an IT system that can be up and ready immediately, however it needs to come with a comprehensive after sales IT Support system as most of the staff are not trained to handle the kind of system that IT will implement. Dave quotes a price of $1 million which is broken down to $700,000 for the IT equipment and $300,000 for the after sales IT support for the first year. He is prepared to negotiate with Spuds over the next few weeks as he knows that this is an extremely high amount to quote. To his surprise Lydia says, "Agreed. Let's sign today, we want the systems coming in tomorrow and ready to run by Monday". It being a Friday and needing to urgently arrange shipments, Dave tries calling Karen at IT's Office in Melbourne. But it is already past 5 pm in Melbourne and the call goes into voice mail. Dave leaves a voice message telling Karen the fantastic news of the new deal. At 4 pm Perth time Dave signs the contract on behalf of IT for the amount of $1 Million. At 6.30 pm in Melbourne time Dave calls Kate to tell her the good news and that he is going to celebrate.
Kate is surprised to hear that Dave has agreed to provide an entire year's worth of after sales service for only $300,000. She feels she could have easily negotiated for at least $500,000. She writes an email to Karen stating this and sends the email at 7 pm just as she finishes work for the day.
On Monday morning Karen's office room is being cleaned and the cleaner accidently deletes Dave's voice message as she is cleaning the desk and the telephone. Karen is at the weekly Monday Morning Sales Meeting the entire morning and is really happy to hear that $700,000 worth of IT equipment has been dispatched to Perth over the weekend and praises Dave's efforts at the meeting. Karen returns to her desk in the afternoon and is checking her email when she reads Kate's email. She is quite furious to read that they could have got at least $200,000 more.
In the meantime Lydia has received an offer from a locally based IT after sales support service company to undertake the entire after sales service for only $100,000 a year. She posts a letter to IT 4 U on Monday 4 July 2021 stating that she wishes to withdraw the offer to pay $300,000 for after sales service to IT but wishes to keep the IT equipment only. Due to Covid the letter is delayed and only reaches IT two weeks later. By this time, Karen has done her research and has discovered that the entire contract for $1 million was extremely favourable for IT and has promoted Dave to Sales Director.
Required:
1. Analyse whether Lydia's withdrawal posted on 4 July 2021 is valid.
2. Evaluate the validity of the contracts entered into with 'Spuds' by Dave on behalf of 'IT 4 U'.