ACTS John Nguyen (John) owns and runs a successful cafe, University Caf, in Bundoora. He has been

ACTS John Nguyen (John) owns and runs a successful cafe, University Café, in Bundoora. He has been having serious back pain and decides to sell University Café. John contacts Willy Wonka Commercial Real Estate Agents (Willy Wonka) to arrange the sale of the business. Willy Wonka places an advertisement in the local newspaper advertising University Café for sale. The advertisement reads: URGENT SALE University Café University Café, located in Bundoora (situated near La Trobe University), is available for sale. This rare business opportunity will not be on the market for long! All furniture, equipment, and current stock inclusive of the business sale. Sales are approximately $500,000 per annum and owner-operator profits are approximately $150,000 per annum (calculated based on the average earnings from the past five years). All reasonable offers above $400,000 will be considered. For more information or to make an offer, please contact William Wallace on 0412 345 678  Karen, a close family friend of John, notices the advertisement in the newspaper and telephones John directly. Karen, knowing how much John wants to leave the hospitality industry, offers to purchase University Café for $350,000. As Karen's offer is $50,000 below the minimum asking price, John is hesitant to accept the offer. Karen tells John to think about her offer and to get back to her at the end of the week, but no later than the coming Friday at 5 pm. Without consulting Willy Wonka about the offer, John decides to accept Karen's offer. On Wednesday morning, John emails Karen telling her that he is willing to sell University Café to her for $350,000. On Wednesday afternoon, William Wallace from Willy Wonka contacts John and informs him that an anonymous investor has provided a written offer to purchase University Café for $450,000. John tells William to accept the offer on his behalf. John immediately calls Karen and tells her to ignore the email he had sent her earlier that day. Karen is furious and believes that they have formed a legally binding contract. Use only common law and/or equitable principles to answer questions 1, 2 and 3. Do NOT use legislation.

1. Did the parties (John and Karen) possess the necessary intention to form a legally binding contract? (4 marks)

2. Have the parties (John and Karen) reach an agreement (that is, was an offer and acceptance reached)? (7 marks)

3. Has valid consideration been exchanged between the parties (John and Karen)? (4 marks)

Assuming John has managed to sell his cafe; John's doctor suggests that he should consider a career change as his body, particularly his back, will not handle the strain for much longer. John decides to take early retirement and write book about running a successful business. In preparation for this change, he clears out the guest bedroom and converts it into a study. After seeing a television advertisement in which Comfy Furniture claims to stock 'the biggest and best range of office furniture in Victoria,' John decides to visit the show room in Epping to have a look at their stock. Shalin assists John at Comfy Furniture. John explains that he has a serious back problem after years of running a café, 'I need an office chair that will support my back sufficiently to allow me to spend the entire day working in the study comfortably without developing back pain. No use trying to be a writer if you cannot spend long hours at a desk says John. Shalin works for Comfy Furniture on a commission basis. She gets 20% of every piece of furniture she sells. She has not sold many units during the last few weeks, and she is desperate to sell a chair to John. Shalin tells John that she has the perfect chair for him and suggests a high-end office chair, the ERGOTURBO 9000. Even though several customers have complained about the chair since the store started selling it, Shalin tells John that 'Nothing beats the ERGOTURBO 9000. It is the best on the market. It is an amazing office chair, specifically designed for all-day sitting. We have sold hundreds of this model to several secretarial agencies without a single complaint.' Shalin's last statement about the absence of complaints convinces John to buy the ERGOTURBO 9000. He pays for the chair and signs the contract of sale. John is excited about his purchase. He assembles it and starts using the chair on the same day it is delivered. Within the first couple of hours, John's back starts aching, forcing him to stop writing and he suffers a painful night. John tries to use the chair for a few more days, but his back pain continues to flare up and it gets worse. Use only legislation (and any relevant case law) to answer questions 4 and 5. Do NOT use common law and/or equitable principles.

 4. Would the contract of sale between Comfy Furniture and John be considered a 'consumer' contract under the Australian Consumer Law? (5 marks)

 5. Has Comfy Furniture breached any statutory consumer guarantees under the Australian Consumer Law? (10 marks)

Answer rating: 100% (QA)

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