Reference no: EM133200100

Sarah is very keen on sailing and wants to purchase a yacht.  Looking through the for-sale advertisements on treegum, Sarah notices that Andy has a yacht for sale.  Sarah contacts Andy and arranges to inspect the yacht.  On Thursday afternoon Sarah and Andy meet at the local marina.  Andy shows Sarah the yacht and explains that he is looking to sell the watch for $12,000.  Sarah is extremely happy with the yacht and has just one question.  Sarah says that she will purchase the yacht from Andy only if it is less than 10 years old.  Andy responds that he can guarantee that the yacht is only 5 years old.  On that basis Sarah agrees to purchase the yacht.  

Sarah and Andy agree that a written contract will be drawn up and that on signing the contract Sarah will pay a deposit of $2,000 with the balance payable on the 10th of August 2022.

Andy has a contract of sale drawn up which Sarah signs and pays the deposit.  Unfortunately for Sarah she discovers that the yacht is closer to 15 years old than the 5 that Andy claimed.  Sarah approaches Andy with this information and demands her money back.  Andy has a copy of the contract and explains to Sarah that none of the terms of the contract mention the age of the yacht.  Andy explains to Sarah that they are only bound by the terms of the written contract.

Sarah has approached you seeking advice on the status of the contract.

This advice needs to consider the following:

1. Part A:
   
   1. Advise Sarah as to wether a contract exist?  That is have the four elements of contract formation been satisfied?
      - Your answer must included references to relevant case law.
2. Part B: 
   1. What does Andy mean when he states that they are bound by the terms of the written contract?
   2. How can Sarah have the verbal assurance that the yacht is only five years old included as a term of the contract?
      - Your answer must included references to relevant case law.
3. Your letter of advice should provide a reasoned conclusion on the status of the contract.