Reference no: EM131601862

Facts:

Mary is a retired teacher. She is planning to open an ice cream shop for some extra cash and to keep her busy during retirement. She has saved up for this plan but in order to afford a nice shop, she decided to sell some of her personal belongings. She put an advert on the board in the staff room of her old school that stated "For sale, rare pottery collection, $800. Contact 0123456789".

On Monday, John, one of her long-time colleagues, saw the advertisement and called Mary expressing his interest in the pottery collection. Mary said that since John was a former colleague, she would sell him the items for $600. John then offered $550. Mary said that might work but she will get back to him the following day.

On Tuesday, a new teacher at the school, David, saw the advertisement and contacted Mary. David asked Mary what would be the minimum price for the pottery. Mary replied that the minimum price would be $575. David said that he accepted the price over the phone and would be in touch later that week to set up a time for picking up the goods and paying the cash.

On the weekend, Mary had lunch with a friend, Helen, who asked her if she has already sold the pottery collection. She then offered $700 for the collection but said she will have to give Mary the money next week when she is paid her salary. Mary immediately agreed to sell and accompanied her back to her place after lunch to collect the goods.

At the start of the following week, Sarah the school principal took down the advert at Mary's request. John and David were very annoyed as the pottery is rare and worth much more than $800. They are both claiming to be the new owners of the pottery collection.

Happy with the sale of the pottery collection and other items, Mary met with Charles who was selling his gelateria. Mary told Charles that because of her age she is looking for a store that needs minimal care and is well established. Charles told Mary that the shop was in tip-top condition and because of its proximity to the local amusement park, business was always great (with an average daily income of $125). Mary nodded agreeably and signed the contract for the purchase of the shop. She paid $25,000 as the first instalment of the full purchase price of $50,000.

Soon after taking over the ice cream shop, Mary was in the local Sunday market where she heard that the amusement park is bankrupt and was sold to a new owner last month. The new owner plans to turn the park into an industrial waste processing facility. Charles' son is apparently one of the engineers for the project.

Disappointed by the news, Mary arrived at work the next morning only to find out that the shop's roof had leaked and collapsed. The water had also damaged the freezer where $1000 worth of ice cream was stored. Mary consulted a builder and is told that the repair costs for the roof would be around $6000. The cost of replacing the freezer would be $1,500. Unable to run the shop, Mary is not making her average $150 daily income and has to cancel the orders she had previously accepted for birthday ice cream cakes amounting to $350 in total.

Part A

Determine whether this is a valid contract regarding the sale of the pottery collection between:

i) Mary and John.
ii) Mary and David.
iii) Mary and Helen.

In your answers, you need to examine the formation of a contract including the elements of a valid contract. Refer to relevant case law when applicable.

Part B

iv) Advise Mary regarding her contract with Charles for the purchase of the ice cream shop. She claims that Charles did not provide her with correct information. Analyse in detail Charles' statements. (Cite the relevant case law when applicable. You DO NOT need to discuss the tort of negligence or negligent misstatement in your answer).

v) Advise Mary of the options available to her under the Contractual Remedies Act (CRA) 1979 and whether her situation meets the requirements for any of the available options. If so, what are the steps she needs to follow to make a claim under the CRA. (Cite the relevant sections and sub-sections of the CRA 1979 to support your analysis).

vi) Can Mary claim damages in relation to her contract with Charles? Based on the standard common law approach adopted by courts, discuss the award and the amount of damages she might receive. (Cite the relevant sections and sub-sections of the CRA 1979 as well as the relevant case law when applicable).