LAWS20058 - Australian Commercial Law - Sally Case Study Assessment

Background Facts

Sally needed money urgently and her business was doing poorly. In June 2017 she sold her North Melbourne suburban convenience store to her cousin Ethan, the first buyer she could find, for $155,000, which included $25,000 for the goodwill in the business. Ethan had no experience in business matters. Before the sale Sally showed the buyer trading figures for the previous three years. They showed strong profits and growth. The trading figures were not true and accurate. In the contract of sale that was written by the lawyers for the buyer, Ethan, there was a clause that stated, The seller shall not commence or purchase a convenience store within a 100 kilometre radius of the existing convenience store sold for ten years. Almost one year later in May 2018 Sally decided to start another convenience store in South Melbourne within 20 kilometres of the old one sold in 2017.

Before Sally completed the purchase of the new store she visited the new store and business site on July 4 owned and operated by David and while she was inspecting the new store premises she slipped on the wet and slippery polished floor and injured her back causing her to spend two weeks in hospital.

After she left the hospital Sally visited a medical company, Good Health Help Pty.Ltd., whose staff member provided written advice on August 21 that Sally should have special back surgery but the advice was based on incorrect information and x-rays. The operation made Sallys injuries much worse.

Provide the following answers to these questions using the IRAC structure and support your analysis with case and statute references where appropriate.

PART A (20 marks- 1000 words)

Sally started her new store. A dispute arose when Ethan found out that Sally had done this. Within six months Ethan realised that his business had few customers and trading was very weak.

1. ( maximum 250 words, 5 marks) How would a court determine whether there was an intention to create legal relations in the agreement between Sally and Ethan? You should support your analysis with case references.

2. (maximum 500 words, 10 marks) If this sale of business contract dispute between Sally and Ethan goes to court how would a court assess the representations made by Sally before the parties reached agreement about the sale? What remedies could be awarded to Ethan should he be successful? You should support your analysis with case references. Only discuss the common law in the answer. Do not discuss statute.

3. (maximum 250 words, 5 marks) Would a court view as reasonable in the circumstances the restraint of trade term in the agreement between Sally and Ethan? What possible remedies could be granted if Ethan was successful in legal action against Sallys starting the new store? You should support your analysis with case references. Only discuss the common law in the answer. Do not discuss statute.

PART B (10 marks- 600 words)

What action could Sally take against Good Health Help Pty. Ltd under the Australian Consumer Law legislation? Include the issues of remedies and consumer guarantees in the analysis.

PART C (10 marks- 600 words)

Explain whether Sally could take legal action in negligence against David for the accident on July 4 based on common law and state legislation legal principles.