Reference no: EM133137122

Assessment Problem
Before you jump to the problem and issues though, some words of advice.

Problem Question
Characters:
Alma Almason, CEO of Teen Theatre Pty Ltd (TT)
Sai Sander, CEO of North Brisbane Theatre House Pty Ltd (NBTH)
Ira lyer, CEO of Live Entertainment Pty Ltd (LE)

Alma Almason is the CEO of Teen Theatre which produces high quality theatre productions aimed at educating teenage children. Alma is the sole director and shareholder of Teen Theatre Pty Ltd (TT). TT sells tickets to theatre shows and runs the shows.

In October 2021 Alma was hopeful that COVID-19 was almost over and that TT's productions would become even more successful after the Iockdowns with people desperate to get out and see live theatre shows

Alma, on behalf of TT, signed an agreement to use a theatre in North Brisbane owned by North Brisbane Theatre House Pty Ltd (NBTH). Just before the first show Alma received a call from Sat Sainder, the CEO of NBTH who told her that the theatre had burnt down and would need to be completely reconstructed and that reconstruction was not likely to go ahead for some time. Alma was upset and immediately started looking for an alternative venue. Alma found a bigger theatre which was recently constructed and owned by Live Entertainment Pty Ltd (LE) in Brisbane's Southbank in the heart of the cultural precinct and immediately commenced discussions with LE for the use of the theatre. LE's theatre had 1000 seats. During negotiations, at which several actors were present, the sole director of LE, Ira lyer told Alma that a pedestrian bridge would be completed by the local casino before 4 January 2022 and this bridge would link the city centre directly with the theatre's entrance. Alma thought that the completion of the bridge would certainly increase ticket sales due to the ease of access to the theatre from the city. The casino displayed billboards everywhere advertising the bridge and its completion date. Alma replied to Ira saying:

"I am so excited to use the LE theatre. Our shows are the best and we will fill every seat in the theatre for every show. Just imagine the profit from 1000 ticket sales per show! The bridge will be ready just before the first show and patrons con get here quickly and easily from the city.

Ira smiled and Alma, on behalf of TT, entered into a contract with LE for the use of the theatre for its 52 shows each year for 3 years from 5 January 2022. Alma started to advertise upcoming shows and found out that the council license issued to LE upon construction of the theatre only allowed for 500 patrons. The maximum capacity of 500 was based on safety issues and not related to Covid-19 restrictions.

This meant TT was unable to sell 1000 tickets per show and could only sell 500 tickets to legally seat 500 patrons. TT's FaceBook page was inundated with requests for more tickets and more shows from the public which TT could not offer since the actors for the shows were booked out with other companies. The first month of shows sold out within hours.

Alma, who lacked business skills and experience, went back and checked the written contract and there was no mention of the reduced capacity of the theatre. Unfortunately, Alma did not consult a reputable legal team who would likely have checked the licence and highlighted the theatre capacity restrictions. Alma did not check with the council and entered into the contract without knowing the information that the theatre capacity was greatly reduced and only half the available seats could be AYN456 Business and Corporations Law

Assessment 2, Sem 1, 2022. Not for distribution used If Alma had known the capacity was only 500 she would not have entered into the contract and would have found an alternative venue.

Alma tells Ira she will no longer use LE's theatre for TT's remaining shows because:

1. The pedestrian bridge which Ira said would be completed by 4 January 2022 is now delayed until April 2023 due to a delay in vital construction materials.

2. Despite having 1000 seats, the theatre can only hold SOO patrons due to the restrictions on the licence issued by the council.

On 1 March 2022 Alma made a payment to LE and refused to make any further payments. Alma's accountant has calculated it has cost $1000 in reduced ticket sales per show for the 8 shows held since TT entered into the contract. Alma has moved TT's shows back to an alternative venue in West.

Brisbane at a cost of $2,000 which covered the removalists for the theatre props and $1000 to cover the new social media campaign to let patrons know about the return to the prior venue for the remaining shows. The new theatre in West Brisbane has a capacity of 1500 and the tickets to all of TT's shows for 2022 are sold out in the new venue.

LE is demanding payment for the outstanding money owed. Alma comes to you to ask if she can escape the contract with LE and seek compensation for the profit from ticket sales TT lost due to the reduced theatre capacity. Alma tells you that in addition to compensation for loss of profit she wants LE to be to be fined by the Australian Competition and Consumer Commission and wants LE to pay extra damages as a punishment for keeping silent about the information regarding the council licence.

Alma also recently received a phone call from the CEO, Sal Sainder, at NBTH who informed her that TT was required to pay the agreed amount in the contract for the use of the NBTH theatre as TT had signed the contract and the fire was an accident. Alma and Sai agree that neither she nor Sai could ever have expected the theatre to burn down and that neither party to the contract assumed the risk for such an event.

Unfortunately, the law firm partners are unwell so as a Business Law student you need to advise Alma on the following:

- Is it likely Alma and TT Pty Ltd can prove misleading and deceptive conduct and can TT escape the contract? Why/why not. Are there any risks for Alma and TT Pty Ltd in your advice.

- If misleading and deceptive conduct is proven what are the likely remedies for TT and punishments (if any) for Live Entertainment Pty Ltd ? You should refer to statutory remedies only.

Can NBTH and TT both walk away from the contract? Explain to Alma the likely common law principle which Alma and TT may be able to rely on and apply it to the facts.