Question One - Business Structure
Billy and Sasha decide to go into business together following the completion of their studies at university. After extensive market research they write up a business plan for an online florist to be named Fusion Flowers.
Sasha has recently inherited $50,000.00 which she contributes as start-up capital. Billy doesn't have any savings but contributes his van tools and other equipment. They agree to lease a small warehouse space from which to operate the business.
The pair agree that Sasha will pick up flowers each day from the Flemington Markets while Billy will manage all customer enquiries and both will undertake deliveries. Profits will be split 50:50.
After the first two weeks of operations, they are struggling to keep up with the orders and decide to hire Jacob to take care of deliveries.
Over the next month the following events unfold:
- Without asking Billy, Sasha orders some very rare (and expensive) orchids from Ooh Orchids believing that she would be able to sell them, however, Billy says he never would have agreed to this if he had been asked. Ooh Orchids has demanded payment of the outstanding invoice of $1,500 from Billy.
- While delivering some flowers the delivery driver gets caught in heavy traffic. Under pressure from Billy to get the flowers delivered on time to "a very important customer", Jacob is speeding and crashes into a car stopped at a roundabout. Nobody is injured and the flower van is protected by a bar at the front, however, there is $5,000 of damage caused to the other driver's car.
- Without consulting Sasha, Billy started a separate business selling flowers specifically for weddings. So far Fusion Flowers haven't been supplying flowers to events as it would increase their insurance costs, however, Billy and Sasha have previously discussed the lucrative nature of supplying the wedding industry.
Discuss Billy's potential liability. Support your response with relevant case authorities.
Question Two - Contract Law
Bianca has recently purchased a house in Mallacoota. Originally her plan was to move down there from Sydney at the end of 2017, however she has decided to wait a while as her father recently fell down some stairs and is now in need of full-time care.
Bianca can't afford to leave the house empty as she is not currently working so she advertises it as a holiday rental in the local newspaper and online. Wassim sees the newspaper listing, not realising it is his cousin Bianca's house, and calls the number listed to make an enquiry. There is no answer so he sends the following text message: Hi, I would like to rent your house in Mallacoota for one month from 1 January 2018 for $2000.00. Please confirm how l should deposit the money and where I can pick up the key.
On 10 December 2017, Bianca replies that the house is already booked out between 1-7 January 2018 but is available for a month from 8 January 2018 and confirms it would cost $2000.00.
The following day Wassim phones Bianca to obtain her bank account details and realises he has been speaking to his cousin. Upon realising this Bianca says she will 'do him a deal' but acknowledges that 'i can't let you have it too cheap as I still have a big mortgage to pay off and I'm not currently working'. Bianca says I will rent you the house for a month from 8 January for $1200.00, being $300/week, inclusive of power, internet and cleaning.' Wassim says 'that sounds perfect' and agrees to transfer full payment by 20 December 2017.
Advise Wassim whether the 'three elements for formation of contract are established. Ensure your response is supported by relevant case authorities.
Question Three - Contract Law
Find a written contract that is available online. It must be an Australian contract and you should include a URL link to the contract above your answer.
(i) Describe and classify four terms from the contract as either a condition, warranty or intermediate term, explaining why you believe each term would be classified this way. Your responses MUST be supported with relevant case authorities.
(ii) What impact does the classification of a term as a condition, warranty or intermediate term have on the remedies available?