• Internal Code :
  • Subject Code : LAW1029/7729
  • University : Griffith University
  • Subject Name : Contract Law

Case Study: Tina, Lee and Kyra

Ans. 2 (a):

Joe can very much recover the additional $5000 from Tina. To achieve the same, he can employ the legal principle of “quantum meruit”. However, for restitution to apply, the contract first needs to be terminated from Joe’s end, and only then can there be any claim for payment of reasonable remuneration under restitution.

To elucidate the position of law on this notion, the recent matter of Paterson Construction Pty Ltd v Mann [2016] is relied upon. In this case, to build two townhouses under a major domestic building contract under the Domestic Building Contracts Act 1995. Before the conclusion of the second townhouse’s construction, the Manns asserted that the contractor had disavowed the agreement, claimed to have consented to the said disavowal, and excluded himself from the site. The builder contended that the defendants’ manner amounted to repudiation, or disavowal since they had introduced 42 changes to the building plans and the price received by the contractor had not taken into account the costs of the said changes.

The Victorian Civil 7 Appellate Tribunal held, whilst relying on Sopov v Kane Construction Pty Ltd (No 2), that the contractor could claim remunerations based on quantum meruit owing to the introduction of 42 variations which were not foreseeable when the contract was first drawn. The said decision was affirmed by the Supreme Court, as well as the Court of Appeals.

The High Court, however, held that the legal remedy of quantum meruit was available exclusively where a contractor had completed construction work about which the right to payment had not yet accrued before termination of the contract. As an illustration, concerning unfinished steps of a construction project, in which “progress payment” is claimable upon successful completion of the said stage, consideration concerning the stages stemming from the non-fulfilment of the contractor's right to successfully conclude the performance and earn his reward, restitution through means of quantum meruit is available to be assessed based on the contract sum agreed by the parties.

Although both these matters involved the repudiation of the contract by the builder and subsequent claims for repudiation, applying the outcomes to the present case, it is found that Joe can proceed in the current scenario through two different routes: he can either repudiate the contract and seek remedial rewards for the same, or he may file a suit for breach of contract since the contract included the clause of "all necessary associated works” to be completed by Joe.

 Since there was prior intimation from Joe's end as to an additional cost of $5000 being incurred for the hiring of heavy equipment to deal with the rock during digging for the pool, Tina cannot claim to not have knowledge of the same or not have agreed to bear the same, since Joe incurred the said expense by relying on her promise to reimburse him for the said spending. A change in one's position on basis of the promise made by another person to fulfil an obligation after such change has been made also called 'restitution', should be a useful theory for securing the said relief.

Ans. 2 (b):

From the facts, it can be seen that the online advert for the apartment in question was found by Lee to be ‘suitable for his needs’. However, there is no mention as to whether the flat was furnished. Even while discussing the same with the owner of the said property, although Lee stressed on his request of the flat being furnished, the same was not confirmed by the owner. The only statement made by her in this regard was that the furnishing ‘could easily be arranged’.

Although there was verbal communication via a phone call from the owner that the flat would be furnished, the issue which would arise there would be to establish that the said events or communication did take place.

Discussing the legal authority on the issue, where a landlord causes a contract for lease to be violated, but it remains possible for the said breach to be corrected, the tenant has the option of serving a notice on the landlord. Subsequent lack of a remedy of the said breach within a said duration of no less than seven days causes the tenancy to be spontaneously terminated by force of the notice, effective post the passing of a minimum of seven more days, as per the Residential Tenancies Act 1995, S. 85.

The landlord has the option of replying to the notice via application to the Tribunal, either before the date fixed by the notice or before renunciation of possession by the tenant, to seek an order affirming the absence of any breach, or of its resolving or of reinstating the tenancy under S. 85(2) of the said Act.

An attempt at the same can be through the provision of oral evidence by the contesting party what transpired and what was agreed to. At this point, there will remain a burden to bring to light, the significant terms of the contract while simultaneously establishing the presence of the indispensable elements. However, oral evidence alone will not be sufficient and will need to be supported through other means, like emails, text messages, receipts, photographs etc. This is because documentary evidence has a higher degree of reliability as it is not subject to hearsay claims.

Lee has the option of seeking termination of the lease agreement due to a fixable breach, although the only impediment to this move can be his inability to prove the existence of a clause relating to the furnishing of the apartment because of the lack of any documentary evidence to back the same. Therefore, Lee does have the option to terminate the lease agreement, and the statements made by the agent about the apartment being furnished are indeed covered under the agreement in question.

Ans. 2 (c):

In the given set of facts, Relax Fitness is obliged on grounds of the agreement for the sale of the business of Workout Fitness to honour Kyra's membership, since there was a promise from Relax to honour all existing memberships.

There was no time frame or other qualification mentioned by Relax when they promised to Workout that they will continue honouring existing memberships, neither was there any other condition, based on the fact-set provided, which would have made the clause a qualified one. Further, upon being prompted, Kyra had submitted the form which would reflect her wish to have the membership honoured, and it should send an automatic message to Relax for the same.

Shifting focus towards authorities on the same, the Australian Consumer Law, contained in the Competition and Consumer Act, 2010 forbids entities from seeking disbursements in exchange for the supply of goods or services in the backdrop of the presence of judicious grounds to believe the services cannot be supplied. This provision remains applicable irrespective of whether the agreement allows a suspension of payments. Thus, a consumer is not bound by law to make payments as regards services, the delivery status of which stands on precarious footing.

The Department of Mines, Industry Regulation and Safety, Government of Western Australia states, concerning the route to be taken by gymnasiums to be one where regular membership fees are not charged as long as the limitations set out because of the ongoing pandemic are lifted, and they can be certain of their ability to provide the full extent of their services.

Certain fitness brands have begun charging a separate fee for their members’ to enable them to attend separate classes. This remains unlawful until the fee requested is equivalent to the usual membership fee charged by the said entity.

Significant to the given question, the Department states that “as regards members who have paid upfront for, for instance, a 12-month membership, their respective gymnasiums are required to elongate the timeframe, on a complimentary basis, to cover the duration from when restrictions were enforced up until their complete relaxation.

The Department also states that at the time of the prevalence of the regular course of events, the Australian Consumer Law, set out in the Competition and Consumer Act, 2010, disallows the acceptance of payments by businesses in the backdrop of their awareness of their impossibility to ensure the provision of a service, irrespective of the presence of a clause allowing suspension of payments, that is to say, where payments have been completed previously, individuals can be said to be within the limits of their right to request a refund of their payment from the concerned business establishment.

Nonetheless, in the instance of suspension of service because of limitations placed by the Government, such as on the functioning of gymnasiums, the consumer’s right to seek an intact refund might be affected. The terms and conditions of the consumer contract entered into by Kyra, in addition to the cancellation policy followed by the gym might help her continue her membership with the gym, and where Relax fails to honour the said agreement, entitle her to a complete refund of the same.

Certain fitness establishments are attempting to provide alternative services, like workouts through live online sessions. However, consumers are not compelled to accept the proposed alternative and can instead request a refund, or alternate means of return of their payments, however, they might find it acceptable.

Therefore, Relax Fitness is obligated to honour Kyra’s membership to its full extent.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Contract Law Assignment Help

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