Q 1

Lester wanted to sign a lease for 12 months on a large showroom in Pyrmont to conduct a series of book sales. However, he was afraid that he would not be able to afford all the monthly repayments if business was slow. He told the landlord Gabor that he would only sign the lease if Gabor promised Lester could terminate the agreement early because of financial pressures. The lease had no express term addressing the possibility of early termination. Gabor agreed just before the lease was signed. After six months, Lester’s business was struggling to achieve enough sales but Gabor refused to allow early termination.

Advise Lester how he could enforce Gabor’s promise under contract law. {Refer to general law principles only)


Mary and her husband Joseph sign a contract to sell their beautiful suburban cottage to Larry for $750,000. Larry pays $75,000 to their agent by way of deposit. One ofthe terms ofthe contract is that settlement will take place after 12 weeks in order to give Larry time to organise his finance. This is because Larry has told them he has complicated financial holdings through overseas managed funds and he needs a longer period of time to settle. Two days before the settlement date, Larry rings Mary and says he needs extra time because one of the trustees of an overseas company in which he has shares has been ill and failed to organise part of the settlement funds on time. Mary and Joseph reluctantly agree to give Larry extra time. Their solicitor serves Larry with a notice to complete. The notice sets a new time for settlement in 28 days with ‘time of the essence’. On the day before the new settlement date, Larry again rings Mary and asks for more time because an amount ofmoney he was expecting to come from one ofhis investments in the Cayman Islands did not come through on time. Mary speaks with her solicitor who advises her not to agree. The solicitor attends the scheduled settlement time but no one attends on behalf of Larry. The solicitor waits for 10 minutes and then leaves. Mary and Joseph terminate the contract and claim the deposit. Larry threatens to take them to court.

Advise Mary and Joseph about their prospects for claiming the deposit.


Heidi is a young employed solicitor in the law firm Fox & Sly, which has a Sydney city office and branches in two NSW country towns. When she got the job, she signed an employment agreement with the partners. It included a clause in which she promised that, if she left the firm, she would not work as an employed solicitor, or set up her own legal practice: 2

a) for a period of six years from her departure

b) in any premises within twenty kilometres of any of the offices of Fox & Sly. Heidi now wishes to quit the firm and get a better job with a legal practice that has an office in a small country town 15 kilometres from one of Fox & Sly’s branches.

Discuss whether and to what extent Heidi could be bound by the clause in the employment agreement with Fox & Sly.


Adam signed a contract to build a timber and fibreglass roof over the back porch of Chloe’s inner city terrace house for a total contract price of $ 10,000. When Adam finished the job, Chloe complained that rainwater entered the roof and caused the down lights to short circuit. Chloe engaged another tradesman, Beau, to replace the roof seals and fix the problem with the help of an electrician. She had to pay $2,700 for all the remedial work. Chloe is furious with Adam and tells him he deserves to be paid nothing for all the trouble he caused her. However, she offers him $4,000 on a without prejudice basis to settle his account, adding that she will sue him for damages If he refuses to take the money.

Advise Ashton whether, and on what legal basis, he could recover more than $4,000 from Demi. {Refer to general law principles only)


Zhang and his wife run a fruit and vegetable supermarket at the Western Supacenta. They lease the premises from Mega-Mall Ltd. They have a very poor grasp of English and little business experience. However, they have registered a small private company, of which they are the sole director shareholders, through which they run their business. Although Zhang is up to date with rent, he has been late with the payments on a couple ofoccasions. When it was time to renew the lease, the Supacenta manager Fred came to see Zhang in the company of a security guard. Fred said: “I’ve got your new lease. The rent and outgoings have gone up by 25%. Don’t complain because Mega-Mall have a new property manager and he is upset you have been late with payments. Sign the new lease by tomorrow lunch time.” Zhang replied: “No, this no good. I must have time to see solicitor. I don’t understand this paper.” Fred replied: “Just sign it by tomorrow or you will have to get out – and Mega-Mall will sue you for making late payments. That’s it.” Zhang again protests but at that point the security guard grabbed him by the collar and slammed the envelope containing the lease on the shop counter. Zhang stops talking and takes the envelope. The guard lets go of Zhang’s shirt collar and leaves the shop with Fred. Zhang and his wife are upset but they sign the lease because they are afraid oflosing their shop. After a few months Zhang can no longer afford the high rent and seeks legal advice

. On what basis could Zhang seek to set aside the lease? {Refer to statutory provisions and general law principles)


In Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107, Brennan J said: “It is submitted that the doctrine of privity sometimes produces unjust results and that this Court should reexamine it in the light ofthe criticisms the doctrine has attracted.” How would you explain the doctrine of privity and what are the unjust results referred to by Brennan J? Describe one way in which the unjust result was circumvented in the Trident case.


Edward contracted to hire Victoria’s luxurious yacht for use on 19 October. In his letter to Victoria, Edward wrote the following: My whole family loves boats and on 19 October, the world’s largest and most luxurious passenger liner, Titanic IV, arrives in Sydney for the first time. Not only will we have a wonderful day enjoying Sydney’s glorious harbour, but we shall also be witnessing a truly historic event at close range. On 10 October, for reasons unknown, Titanic IV sank as it was making its way across the Pacific Ocean towards Australia. Edward seeks your advice as to what impact, if any, the sinking of Titanic IV has on his contract with Victoria. (Refer to general law principles only)