LAWS1200 Contracts Assignment

Question 1 [Total 35 marks]

Nikita is the manager of Steaks Alive', a restaurant that specializes in steaks. She places a large poster on the front window which states Free Steak! Just register in our Steak Eating Challenge'. If you can eat 10 steaks in one hour, they are FREE!. Kat is a steak lover and is very excited when she reads the sign. Steaks in Steaks Alive normally cost $20 each. Kat is a poor student who can never normally afford to eat steak. She enters the restaurant and asks for the challenge. Nikita sits her down at a table and begins the clock at 6pm. Sure enough, Kat manages to eat 10 steaks in 59 minutes. Nikita is shocked. She did not expect that anyone could actually meet the challenge. She promptly hands Kat an invoice for $150. Kat begins to feel ill, not just from overeating, but also the shock of being charged for all that food. When Kat complains:

• Nikita laughs and says We can't afford to give away steak! Just be grateful that you got a discount of $50 for being a good sport!.

Advise Kat. [12 marks]

• After Nikita's good sport' comment, Kat tries to point to the poster, but realizes it is Nikita says Yes, we withdrew that offer just after you walked in. Sorry!

Advise Kat. [23 marks]

Question 2 [30 marks]

Lil' Z is a rapper booked for a giant stadium concert on 7 September. His manager Mike contracts with Gators Pty Ltd to set up and staff gate entries for the concerts. Gators are hired to install equipment to check tickets and bag searches for prohibited items at each stadium entry point, and to hire and pay staff for each entry for 3 hours to ensure all entrants comply with entry requirements. This is crucial as a requirement under local legislation for all major events. If queues at entry gates are too long, or if a weapon is allowed to enter the stadium, Lil' Z will suffer reputational harm. The agreed price is $100,000, and the contract is signed on 7 June.

However, since June, numerous problems have increased costs for Gators. The price of petrol has skyrocketed which has made gate equipment transport and custom fitting of the equipment in place much more expensive. Labour shortages have meant that Gators had to offer double the usual rates to hire staff. By 21 July, Gators is having financial difficulties. Gus, the manager of Gators, contacts Mike on 21 July to explain that Gators will not perform the contract because it will make a loss at the agreed price of $100,000.

Mike is devastated. He soon discovers there are only two companies that do this type of work, and the other company is fully booked. Mike quickly rings Gus back and said I'll pay you an extra $50,000 if you finish the job. Gus agrees, and Gators performs its remaining obligations.

The concert goes off without a problem. Mike is delighted and pays Gators $100,000. Gus emails Mike immediately asking for the additional $50,000 as agreed.

Advise Gators whether it can recover the additional $50,000. [30 marks]

Question 3 [35 marks]

Julian phones his friend Liza to ask if she would look after his house for the next 2 years, since he is taking up a position at a New York firm. He explains that he will take all his furniture and household goods with him. Liza tells Julian that she likes the prospect of living in Julian's house with its leafy garden and coincidentally, the timing would work because her apartment lease is about to end soon unless she chooses to renew the lease. However she hates the idea of moving all her furniture, so she politely declines. Julian then throws in something to sweeten the deal, telling her that he could leave Betsy' the barbeque behind for her to use while she lives in the house. Betsy' is a huge barbeque with many special features. In the past Liza has enjoyed spectacular barbeque parties at Julian's house with their mutual friends, and Julian knows how fond Liza is of Betsy'. Liza and Julian sign a written contract which specifies that she can live in the house for 2 years in exchange for her paying the costs of electricity and gas, and for keeping Julian's house in perfect order.

In anticipation of moving in, Liza decides to give away her old barbeque, so that she has one less item to move. Julian flies out of Australia on the day Liza is due to move

1. When Liza arrives at the house she opens the back door, but the promised barbeque is nowhere to be seen. She texts Julian to ask where it is, but Julian responds so sorry and tells Liza that he had a change of heart after they signed the contract. He explained that he started packing up his furniture, then suddenly realized he really needed Betsy in New York. However, Julian hears the disappointment in Liza's voice and says look, I will ship you a box of Mexican tequila instead. [Note: You should assume the statement regarding the barbeque does not form an express or implied term of the contract, nor a collateral contract]

Can Liza enforce Julian's promise regarding the barbeque by way of equitable estoppel? [35 marks]

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