Case Study 1 10 Marks
A Regional University in Western Australia has recently acquired an old hotel which it intends to use as
student accommodation. Having called for tenders for necessary building operations to fit out the hotel as
a hostel, the contract is made with Marina Construction Limited (MCU). The price for the work is
$2,000,000 ($2 million). The contract provides that the work must be completed by 1st March 2016 so that
it can be used for students enrolled for the first term of the semester.
By the end of a month of construction on the site, MCU is in trouble. The structure of the hotel is in much
worse condition than MCU had estimated and extensive replacement of rotted beams, studs and other
timber has been necessary. Although this is all within the terms of the contract, MCU is concerned that
they will face a major loss on the contract.
One of the board members of MCU see an article in the newspaper in which the Vice Chancellor of the
University announced a major initiative; the University has enrolled 150 overseas students who will be
housed in the new student hostel accommodation.
The directors ask to meet with the University. They state that with all the problems that they have
discovered with the structure of the building it is impossible for them to complete the work by 1 March
2016 when the first 150 overseas students are due to move in. The representatives of the University are
horrified at this and ask whether anything can be done. The directors of MCU reply that if the contract
price were to be increased to $2,500,000($2.5 million) additional labour could be hired so that the work
could go on 24 hours a day for 7 days a week and the building could then be completed on time.
The University reluctantly agrees to pay the additional $500,000. The extra labour is hired and work
proceeds with the result that it is completed by 1st March 2016.
The University council is very unhappy at the extra cost of the project and want to know whether the
University is legally obliged to pay the additional amount.
Required:
Referring to relevant legal cases, common and equity law.
Advise the University as to their legal position in this arrangement. The students are expected to discuss
all the relevant laws breached in this contract and any remedies available to the University.
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Case Study 2 10 Marks
Hoping to expand rapidly, a newly Sydney based firm of Chartered Accountants, Tom, Jane & Co (“TJC”),
offered a special deal for potential clients. TJC would audit their business for no fee in the first year of a
four-year contract. A newly listed public company, Sunflower Bank Ltd (“Sunflower”), took up its offer in
May 2016. Thereafter, however, TJC’s cut-prices expansion strategy proved fatally flawed. Owing to a
cost minimization approach, it failed to properly audit Sunflower Bank’s accounting system for the financial
year ended 30 June 2016. Consequently, it failed to detect a $65 million fraud perpetrated by its Chief
Financial Officer (“CFO”) Ms. Ann and her assistant, Mr. Claudio. As a result, Sunflower’s audited
accounts as submitted to the Australian Stock Exchange in August 2016 were not true and correct as
mandated. Shortly thereafter, its ordinary shares fell by $50 million when the fraud was uncovered.
Required:
Referring to relevant cases and general Australian Tort Law rules in relation to negligence
(ignoring the technicalities of corporate law), the principles articulated in Perre v Apand Pty Ltd
[1999] HCA 36 in particular and the Civil Liability Act 2002 (NSW) where relevant.
Advise Tom, Jane & Co of its potential liability to the Sunflower Bank Ltd and its ordinary
shareholders.
Case Study 3 10 Marks
In March 2015, under a three-year written agency agreement, Will was appointed the sole agent for the
dairy products exporting firm, Farm Fresh based in Victoria. His agreed remuneration was 5% of gross
sales. Then in October 2015, without specific reference to Farm Fresh and beyond his express authority,
Will obtained as Farm Fresh’s agent, a highly profitable three-year contract at $10 million per year (subject
to Export Legislations) to supply a Malaysian importer, “Dairy To Go” effective from November 2015. But
in May 2016 and when the contract was otherwise being properly performed, Dairy To Go learned of Will’s
lack of authority and that it could buy similar dairy products at just two-thirds the contract price from
another Tasmania based firm. As a result, Dairy To Go advised Farm Fresh that their purported contract
was terminated forthwith due to Will’s lack of authority.
Required:
Referring to relevant legal cases and legislation:
Advise Farm Fresh as to whether:
(i) there is a valid, enforceable contract with Dairy to go,
(ii) Will is eligible for his 5% commission and,
(iii) in the circumstances, Farm Fresh has any grounds for terminating Will’s agency contract.
Case Study 4 10 Marks
Write a reflective journal on your experience of completing this assessment.
Students, please click on the webpage to understand how to write a reflective journal.
Five steps to reflective writing