LAW20019 Law of Commerce :Advise Alice Case Study

Case study

Alice is an avid player of board games and is the founder and managing director of the League of Serious Gamers Pty Ltd (LSG). Every year Alice travels to London to attend the International Convention of Board Game Players where she mixes with fellow enthusiasts, sees the many displays and experiences different board games. She usually returns with new or collector board games that she has purchased and which she, then, on-sells at a profit to her customers as part of LSG’s inventory. LSG also publishes a free newsletter highlighting news items on board games and products. This newsletter goes to members who are part of LSG’s customer loyalty program. 

This year Alice bought an ornate chess set which, she was told by the seller, was once owned by Emperor Franz Joseph of the Austro-Hungarian Empire. Alice placed the following entry in the latest edition of the newsletter: 

Gamers, a special and rare find this time! Emperor Franz Joseph’s chess board and pieces. $25,000 for this piece of history. 

Preston Posh is a wealthy collector of rare historical pieces. He was in the bedroom of his son, Peter, a member of LSG’s customer loyalty program, giving some advice to him about doing an MBA. After speaking to Peter, he noticed the LSG newsletter on his desk, which had been opened on the advertisement section, and saw the entry about the chess set. Preston knew that the Franz Joseph chess set was a much sought-after historical piece. However, he thought that the chess set was in the collection of an American buyer, and in any event, would be worth more than $25,000. Nevertheless, he knew that it would make his business rival and fellow antique collector, Rooney Rabid, green with envy when Preston showed the set off as part of his collection. Preston quickly wrote down the phone number from the advertisement, arranged to meet Alice, inspected the chess set and paid her the money. 

Preston decided to host a grand evening party to which he invited other well-known collectors of historical pieces. His crowning moment was when he led Rooney Rabid over to show him the Franz Joseph chess set. However, his moment of triumph was destroyed when Rooney loudly proclaimed to Preston and the assembled audience: 

“Oh, my dear Preston! Have you checked this out properly? That’s not the Franz Joseph chess set. I am currently the owner of the Franz Joseph chess set and have the authentication documents to prove it! Where did you get this… some backstreet bazaar?” 

The evening party ended in a humiliating farce for Preston. Sitting alone after everybody had left, he suddenly felt a fit of anger rise and picked up the chess set and flung it against the wall. As a result, the chess board was cracked, and several chess pieces were badly chipped beyond repair. 

Preston reached for his phone and rang Alice. He blamed her for his humiliation and demanded his money back.

Advise Alice on her legal position with regards to the contract made with Preston and whether he (Preston) could demand his money back (you may also assume that Rooney did own the true Franz Joseph chess set).