Reference no: EM133293084

Question

Sharon owns a car parts store in the east of Sydney. There are a few such stores scattered in the area. Sharon's store imports motor vehicle parts from various Asian countries.

Sharon recently completed a very successful end of year sale and now hopes to replace old stock with new stock from overseas. She already placed an order for the stock some months ago and she needs the new stocks urgently. The sale went very well and 70% of her stock was sold. She is aware that if she does not get the new stock in on time from overseas, she will lose a lot of money in sales. Her cash flow will be adversely affected, and she will not be able to pay her rent, telephone and electricity costs. She will also struggle to meet employee salaries and the substantial payments on her overdraft with her bank. In fact, if her order from overseas is not delivered on time to her business, Sharon is likely to face bankruptcy.

She contacts the delivery company, Shipping-Solutions Pty Ltd, with which she has been dealing for a number of years. David is the director and owner of this company. He is now aware of Sharon's financial problems and instead of charging his company's normal delivery fee of $8,000 per delivery, which the parties have already agreed upon, David now advises Sharon that his company cannot deliver the goods for the agreed price and that if she wants them, she will need to pay $12,000 per delivery. Sharon is very unhappy with this news but reluctantly agrees because of her desperate financial position.

It takes three delivery trips for the goods to be received at Sharon's business and she pays the higher price for each delivery. The total payment is $36,000.

Sharon is distressed and seeks your advice.