Business Law ( case Study


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Case study
Nicholas is the managing director of a large construction company, Constructs Pty Ltd. He regularly has to tender for contracts for new jobs. Constructs Pty Ltd is busy at the moment but Nicholas is concerned about not having enough work to keep all his staff employed over the next 12 months.
Nicholas has been in negotiations with the Western Australian Department of Education about tendering for a contract to build a new high school in Perth, Western Australia. Nicholas has begun liaising directly with the Minister for Education, Joanne Lim. The Minister is able to enter into contracts on behalf of the State of Western Australia.
The Minister is concerned that Constructs Pty Ltd is not the best company for the job as they do not specialise in landscaping. The Minister is determined to construct a high school that will have modern facilities inside the class room and out. Nicholas assures the Minister that the company will employ three renowned landscapers if Constructs Pty Ltd is the successful tenderer.
After her conversation with Nicholas, the Minister asks a member of staff to express post the following letter:
1 February 2013
Nicholas Rogers
Constructs Pty Ltd
111 Kent Street
Bentley WA 6152
Dear Mr Rogers,
Following our discussions, I, as the Minister for Education, would like to offer you the contract to build the new high school in Perth, Western Australia.
The State is willing to pay $20 million for the construction of the high school, provided that work commences within this month and is completed by, and no later than, 2 January 2014. The high school must be completed and be safe for occupancy on 3 January 2014 as Department of Education teaching staff will commence work on 3 January 2014 and will require access to the premises.
It would be in the interest of the State, that where possible, you use local materials and produce.
Please confirm your acceptance of this offer by facsimile (fax) to the Minister’s Office or mail by 5pm today.
Hon. Joanne Lim MLA
Minister for Education
Western Australia
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Nicholas immediately faxes the following response:
1 February 2013
ATT: Hon. Joanne Lim MLA
Minister for Education, Western Australia
Dear Minister,
I refer to your letter dated 1 February 2013, outlining the offer to build the new high school in Perth, Western Australia.
On behalf of Constructs Pty Ltd, I accept the amount specified for payment and the conditions outlined therein.
Nicholas Rogers
Managing Director
Constructs Pty Ltd
To be on the safe side, Nicholas also puts a copy of the facsimile in the post before 5pm.
The facsimile machine at the Minister’s Office has run out of paper. The fax is not received by the Minister’s Office until 9.30am the next morning. Meanwhile, the Minister has received a more competitive tender from another construction company, which specialises in construction and landscaping, and the Minister does not want to use Constructs Pty Ltd any more. A staff member of the Minister’s Office contacts Nicholas and tells him that as the Office did not receive his acceptance by 5pm, the offer has lapsed.
Nicholas really needs this contract to keep the company going. He does not think the Minister’s behaviour is fair because he did send the facsimile on time, by fax and by post. Nicholas believes that it was the Minister’s Office’s fault they did not receive the fax, not his.
Question 1:
Using the four step process, discuss the element of agreement required for the formation of a contract. Consider whether an agreement has been formed between Constructs Pty Ltd and the Minister for Education. Can Nicholas legally enforce the contract?
Question 2:
Assume there is a legally enforceable contract between Constructs Pty Ltd and the Minister for Education. Using the four step process determine the express contents of the contract, based on the correspondence that has taken place thus far. In your answer you will need to indicate whether the terms are conditions or warranties.


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