1) A contract can be a simple contract or a formal contract. What makes up a simple contract as distinct from a formal agreement? Explain what is required to have each of these.

2) It is said that we all make a variety of contracts every day. How can this be? How is it that we make agreements without actually necessarily saying anything to another party, or even determining the terms of these agreements?

3) A group of friends meet for a regular drink at a hotel every Friday night. Each contributes $2 towards a group lottery ticket, which is drawn over the weekend by Lotto company. One of the group is given the role of actually buying the syndicate ticket. When in fact a winning ticket is drawn for the group the purchaser of the ticket claims the arrangement is purely social and there is no arrangement whereby he needs to share the prize. Analyse this issue in terms of contract law.

4) What is meant by a letter of comfort? How are such communications distinguished from exchanges of offer and acceptance?

5) Why is it important under law to distinguish between a party who is an agent for a principal, from that of an independent contractor? In your answer explain the legal implications of each relationship.

Problem question in textbook:

Swimmingpool Co Pty Ltd employs Martin as the manager of their Tasmanian Sales division. Martin is to quote to potential customers the cost of installing the various pools that the company offers, to draw up any new contracts on behalf of the company and further to ensure that a deposit is paid by potential customers, monies which are then deposited in the companys bank account. Martin is on a fixed salary but his contract of employment allows for the payment of a bonus if he exceeds his annual target of signing new customers. The company is very impressed with Martin in the first month of his employment, he has signed at least 20 new customers and work has begun on at least half of the new projects signed.

After the lapse of another month the company receives a number of complaints from customers who claim that the construction of their swimming pool is substantially different to what they had contracted for. A number of customers were given wrong advice on the suitability of the placement of their new swimming pool, which means some newly constructed pools are sinking into the ground, the repair of which will cost the company considerably. It appears also that some of the deposits have not been paid into the companys bank, and an audit shows that in some instances not all the money collected as a deposit has been banked, Martin appears to have kept part of the money collected. The company also discovers that Martin is in the process of setting up his own business which will compete with Swimmingpool Co.

In considering the facts above make some legal observations on the following:

Is Swimmingpool Co liable for Martins actions? See 2.29 - 34

On what basis in law would this be the case?

Can the company claim they are not liable for Martin because he has not followed instructions? Explain.

Is Martin liable to his employer for any of his actions? On what basis in law would he be liable?

Has Martin breached any law if he is planning to set up his business? Explain.