Reference no: EM133232972

How does a court determine the legal status of a statement in the lead up to a contract?
What is the safest way of assuring a statement is a term of the contract?
When are unsigned statements part of a contract ?
When are oral (spoken) representations binding?
What is a disclaimer and when is it valid?
When may a party sue for misrepresentation?

Question 1: Alana and Bill

Alana and Bill negotiated for the sale of Alana's accounting practice. During negotiations, Alana stated that the gross takings of the business were $3,000 per week. Soon after these negotiations, extensive road works commenced outside the business premises. Consequently access to the practice was restricted and no new clientele walked in off the street. Additionally, existing clients were frustrated by the lack of car parking and some clients took their business elsewhere. Gross takings for the business dropped to $1,500 per week. Two months later, Bill purchased the business and found the takings significantly less than Alana had represented.

Is Bill bound by the contract of sale? Refer to common law principles only in your answer.

Question 2: The Crocodile Problem

Benny is a promoter of stage productions. His latest production is Crocodile: the Musical! Benny decided to check out the multipurpose stadium, the Mega Centre in Melbourne. Benny asked Frida, the manager:

'Now be honest. This is the biggest show Melbourne will ever see. Can you handle it?'

Frida replied: 'No sweat.'

Benny signed the standard form hire contract with Mega Centre. The contract provided for 5 days hire at $100 000 per day, with an advance payment of $250 000 and $250 000 due on the final day.

On opening night the bars of the Mega Centre ran out of beer, this resulted in Benny being deluged with angry spectators. Frida assured Benny this would not happen again.

On the second night, the crane used to hoist the Crocodile failed, allowing the giant mechanical beast to come falling on to the stage with a terrifying crash. Many of the audience fled in fright. The musical through the ingenuity of the cast somehow continued to its end. The crane problem was caused by the poor management of the Mega Centre. At the end of the night, Benny rushed into Frida's office and yelled:

'This place is a nightmare! You promised you could handle it! This nightmare of a contract is over!'

Benny placed ads cancelling the show in Melbourne and arranged for the show to move to Sydney.

Required: Frida now demands that Benny pay the rest of the $250 000. The contract contains nothing about the bars or the crane. Benny does not think he should pay anything. Advise Benny.

Question 3: The Damaged Gowns

Andre wished to establish a contract for the cleaning of gowns for his newly opened bridal shop, Belle of the Ball ('BOB'). He took 3 white gowns to a dry cleaning store, iClean Pty Ltd to be cleaned, in order to test out their service. When Andre returned to the store to collect the gowns, the gowns had mould speckles all over them. They were ruined.

The cashier said:

'Read the ticket. Its not our fault'

On the back of the ticket was printed the following statement:

'The company will not be liable for any loss or damage to articles left for cleaning, whether caused by the negligence of the servants or agents of the company or otherwise'.

REQUIRED:

Advise the parties of their rights under common law. Refer to relevant cases in your answer.