Building Law Assignment 1

Building Law Assignment 1

Question 1:

John and Angela entered a legally binding contract with Paul Stratford as they accepted the quote, satisfying the legal aspects of the offer and acceptance. The dispute arises when Paul refuses to install doors in his extension of the home, to which the chatbot responds by saying that obligations may arise under implication. This implication/implied term is enforceable by law or implied by facts if all the necessary conditions are satisfied:

It must be reasonable and equitable

It must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it

It must be so obvious that it goes without saying

It must be capable of clear expression

It must not contradict any express term of the contract

This test for an implication of terms was summarised and utilised in the BP Refinery (Westernport) P/L v Shire of Hastings [1997]VicSC 183 (3 May 1976). The Government of Victoria and BP refinery negotiated an agreement in 1963, agreeing upon establishing the Westernport Refinery in the Westernport of Victoria. This agreement set out the required rates payable for the following 40 years. Issues began to arise when BP was restructured and overtaken by BP Australia. The shire of Hastings agreed to assess the BP refinery at a lower rate of taxation due to a preferential agreement. Due to the restructuring, the shire sought new rates that exceeded $150,000 when the agreed rates were $50,000. The question is whether the shire could imply that the preferential agreement ended due to BP no longer owning the refinery versus BP implying that though ownership has changed, can BP continue their preferential agreement as they have a 30% share in the new company? In the law of Contract, the 5 requirements of an implied term were utilised to solve the dispute. BP was able to satisfy all five requirements whereas Shire could only satisfy two. Their alleged term failed as it was deemed inequitable, unnecessary for the contract to fulfil the efficacy of the business, and it was overcomplicated and far from obvious. This led to the BP term being applied and them still being entitled to their initial taxation rating. This test was also applied to Codelfa Construction v SRA (1982). The State Rail Authority of NSW (SRA) accepted a tender by Codelfa to excavate tunnels with an expected completion time of 130 weeks. Codelfa operations were reduced moderately affecting their overall output. This severely debilitated Codelfa's output and delayed their expected completion time. During contracting, both parties assumed that the project would not be subjected to injunctions. Codelfa requested additional sums from the commissioner. The issue of Codelfa implies that unforeseen circumstances allow for deviation from the original price. The court denied the implementation of the term as it was not necessary to contract, instead, they were granted a time extension under the contract.

Applying these two case studies to the couples situation, Chatbot's response is incorrect. The couple can imply terms for Paul Stratford to install doors as long as they satisfy the requirements

It is reasonable and equitable that a building has doors to allow for entry, utility and privacy

Having doors for an extension for a house is necessary to give the room function and serve its purpose

It was obvious that you installed doors to an extension of a house.

It is straightforward as expressing the need of doors for a room is easily articulated.

If there were contradicting terms specifically stating, no doors then this dispute would have not arisen.

Question 2:

Chatbots reference to the case Lichaa v Lichaa [2010] NSWSC 1510 to the Steve and Allan dispute as both cases explore the intention to create binding legal obligations with family members is correct. However, the chatbots advice is false and incorrect, the court found that were was no plausible and legally binding agreement reached between the defendants and the plaintiff, therefore dismissing the plaintiffs claim with cost. Chatbots inaccurate facts and principles cannot be applied to Steve and Allan

The plaintiff Kaissar Youssef and his Company Ces Lichaa Pty Ltd claimed that the defendants, his son, nephew and nephews wife are liable for the loss of $562,163 to his company. These losses come from the period of 2004- 2005 Daceyville property, which involved the renovation of an old police station into a home alongside the construction of 8 units. Kaissar claimed that his family members engaged in a legally binding contract orally as they discussed plans of holding shares and being directors of the two companies. Furthermore, shortly after June 2003, Kaissar engages with his son and nephew in discussing the Darceyville property proposal. The son and nephew accepted that Kaissar and his company would be responsible for two-thirds of the losses, and JJ and his wife would be responsible for the remaining third. This dispute raised numerous questions as to whether the family members of Kaissar made any intentions or agreements with the plaintiff regarding the Daceyville losses. The underlying question of whether the plaintiff is entitled to any monetary compensation for the indemnity or damages caused by the defendants. In the law of contract, for a contract to be legally binding, there are elements of a contract that must be satisfied. Though a clear offer was made and accepted by the defendants, there are no written documents or records of the agreement, no certain terms constituting the agreement, and lastly, alcohol was consumed during the negotiation potentially affecting capacity. The discussion was performed in a relaxed and informal setting of an informal barbeque, this contradicted the serious tone of the losses regarding Daceyville, weakening the claim of the plaintiff. Furthermore, the wife of the nephew was not present during the agreement and therefore was unable to consent or be legally capable of the agreement as she was aware of her husband consenting on her behalf. With the lack of formality, evidence and legal requirements of a contract, the judge found that there was no legally binding agreement was reached and therefore Kaissar's claims were dismissed.

Certain elements of the case can be applied to Steve and Allans situation but ultimately Chatbots claim that Steve can recover the other half of the money owed to the bank is wrong. An offer was made and accepted by two parties but was never made official or recorded. Just like Lichaa v Lichaa, all parties had no mutual intention to make the agreement legally enforceable as it only consisted of oral agreement and casual discussions. Therefore, the chatbot's connection between the two situations is correct but the advice that Steve can legally claim his other half of the money owed to the bank is false.

Question 3:

The comparison of Masters v Cameron [1954] HCA 72 to S.H.A.C.N Pty Ltd and George Jacksons by Chatbot is correct as they share similarities, but the advice is incorrect. Both cases explore the idea of agreeing upon terms of the bargain but not executing it in a legally binding manner. Both parties signed the written memorandum Norman and Mavis Masters (defendant/buyers) and Violet Cameron (company manager) for the sale of a farming property within Western Australia. The master couple paid for the deposit of 1750 pounds for the property after agreeing with Cameron. Subsequently, the master couple decided to retract their acquisition of the property. The dispute of whether the master couple was entitled to keep their deposit. The court was tasked with solving the issues of whether the agreement formed a legally binding contract, and were the parties legally bound by the agreement. Specifically, did the written memorandum constitute a legally binding contract? Though an offer was made and accepted, the intention to create legal relations was not pursued. A memorandum does not constitute as a legally binding contract as it acted as a precursor to the legally binding contract that would execute the sale of the property. The couple expressed their intention to purchase the property via the deposit but have not executed a formal contract. The high court found that

All the terms of the bargain may have been finalised and intended to be bound immediately but will eventually restate the terms in a precise manner such as a formal contract.

All the terms of the bargain may have been agreed upon by all parties but have made conditional terms before the execution of the formal contract.

A formal contract is yet to be executed; therefore, the parties may have never intended to make a binding agreement.

With these conclusions, the High Court of Australia held in favour of the Master Couple, concluding that the memorandum was not a legally binding contract that bound them to purchase the farm. Applying this case to George Jacksons scenario, Chatbot's claim that George has a valid and enforceable contract is wrong. S.H.A.C.N Pty Ltd proposed the quote of $2,692,000 to George on a site at Glending, to which George accepted. Though an offer was accepted in a professional setting, there was no intention to make the agreement legally enforceable. Though an agreement was met, the process of creating the legally binding contract was ultimately stopped due to S.H.A.C.N Pty Ltd's position. Similarly, with Master v Cameron [1954], no contract was legally executed and the leadup to it was ultimately halted and a change of mind occurred.

Reference List

Legal Authorities

BP Refinery (Westernport) P/L v Shire of Hastings [1976] VisSC 183

Codelfa Construction Pty Ltd v State Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 (11 May 1982)

Lichaa v Lihcaa [2010] NSWSC 1510 (23 December 2010)

Master v Cameron [1954] HCA 72; (1954) 91 CLR 353 (30 November 1954)