Answer the following questions with reference to the relevant common law and equity principles operating

| March 29, 2017

Question
Length: Approximately 3500-4000 words

Objectives
Answer the following questions with reference to the relevant common law and equity principles operating in Australia concerning contracts plus related and other transactions. Do not consider the effects of legislation potentially applicable other than that specifically identified. Students may make whatever additional factual and/or legal assumptions are necessary or convenient. And students should write about 3500-4000 words, or about 400 words per 10 mark allocation.

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Assessment Task

Question 1 25 Marks

Read the recent NSW Court of Appeal case Prasad v Sangha[2012] NSWCA 92 (see http://www/austlii.edu.au) together with any other relevant material you may care to consider and answer the following questions.

Provide a summary account of the key material facts and court proceedings. (5 marks)

What authority (if any) did Mr Goodarzi have to act for Mrs Sangha in relation to the sale and purchase of an interest in the Bar-Chello restaurant business and how did this affect Mr Prasad’s restitution claim? (10 marks)

What (if any) separate rights under common law/equity might Mr Prasad have against Mr Goodarzi in relation to the relevant transaction(s)? Consider especially the issue of warranty of authority. (10 marks)

Question 2 50 Marks
To provide security for the new $50 million shopping mall it was constructing, SunnyBank Construction Ltd (“SunnyBank”) – a south Brisbane firm – entered into a security services contract with Moreton Security Pty Ltd (“Moreton”) a well-established Queensland firm. In pre-contractual negotiations, Moreton said that it could guarantee its employees had an average of six years security experience, were only selected after careful screening to ensure they had no police record and on recruitment, went through an extensive training program. These statements were not entirely true, accurate or honestly made. To be sure, the final written contract made no mention of these promises and in fact contained the following exclusion clause:

Under no circumstances whatsoever, shall Moreton Security Pty Ltd be liable to SunnyBank Construction Ltd under contract law, for any injurious act or omission of an employee of the company or for any property damage or financial loss suffered thereby whether directly or indirectly.

Moreton then hired Patrick Kenniff – otherwise known as “Captain Kenny” – especially for the SunnyBank security contract. Kenny was in fact a covert member of a notorious group – dubbed “the Phoenix Boys“ – that stole and “recycled” expensive commercial vehicles besides plant and equipment. He had a criminal record for vehicle theft, assault and property damage. However, Moreton had failed to undertake a more or less routine check of public records that would have readily revealed his police record. During Easter 2012, whilst undertaking a routine daytime patrol on SunnyBank’s construction premises, Kenny invited some mates over for later afternoon drinks and a barbeque (BBQ). Unfortunately, his gas-fired BBQ stove blew up as they were cooking. It then set fire to the half-completed building causing $5 million in property damage as a consequence.

Required:

Apply the parol evidence and related rules to ascertain the scope of the contract. That is, in the absence of a “whole of agreement” clause can it extend to include the statements made in pre-contractual negotiations? (15 marks)

In the event any of the statements did form part of the contract, would they comprise essential, non-essential, innominate or procedural terms? (10 marks)

Is the exclusion clause valid and able to be relied upon by Moreton in relation to Kenny’s unauthorised Easter weekend activities? (10 marks)

What (if any) common law/equity remedies does SunnyBank have in the circumstances? (15 marks)

Question 3 25 Marks

Faraway Downs Pty Ltd (“Faraway”) a Northern Territory (NT) firm, operates an efficient well-integrated live beef export business comprising several large cattle stations across the NT, its own sizeable trucking fleet plus a 500 hectare property near Darwin which collectively enable it to supply about 10,000 head of cattle per month to the Indonesian live export trade out of the Port of Darwin. It also buys about 5,000 head of cattle a month from other graziers under annual contracts to ‘finish off’ over three months, then include in its regular three shipments per month of 5,000 beef cattle; these combined arrangements minimise total shipping costs per head. Faraway has regular arrangements with Darwin Shippers Ltd to charter three livestock vessels a month, since its Indonesian cattle supply contracts require delivery to nominated Indonesian ports. Faraway’s major competitor is Carnet Beef Exports Pty Ltd (“Carnet”) the NT’s leading meat processing firm, based in Darwin, owned and operated by Bill Carnet and his sister Ann Clancy. Carnet processes about 120,000 head of cattle per year, to supply the expanding Asian market for prime Australian beef. Carnet recently enlarged its Darwin abattoir operations in anticipation of expanding into the Indonesian beef market and also bought a large grazing property near Darwin with a capacity of 20,000 head of cattle. In the short term, to meet its Indonesian market supply target of 3,000 processed beef cattle a month, Carnet would have to outbid other buyers in the very competitive weekly NT Livestock Exchange (“NTX”), or otherwise secure cattle privately. Bill, Carnet and Ann took an aggressive approach in order to secure that target, detailed as follows.

Carnet successfully lobbied the NT Government to impose a $50 per head fee on the livestock export trade, supposedly to fund additional port infrastructure. This imposed an annual levy on Faraway of about $9 million and forced Faraway to secure a $50 price reduction from its unhappy grazier suppliers.

Carnet persuaded one so affected grazier supplier, Action Beef, to break its annual supply contract of 1,500 head of cattle per month with Faraway with an inducement of (i) $100 per head extra, payable three months in advance of supply (ii) free transport and (iii) separately marketing in Indonesia its beef cattle after processing, under the Supa-Action Beefbrand.

On her own initiative and without Bill Carnet’s prior knowledge or approval, Ann Clancy discreetly joined, funded and took over the leadership of an existing small vocal but previously harmless Darwin-based anti-livestock export protest group, Beef-Biffo, which she then radicalised and mobilised to: (i) illegally blockade the Darwin livestock wharf for three days, causing cancellation of a scheduled Faraway shipment; and (ii) trespass on Faraway’s 500 ha Darwin property causing $250,000 in damage to water bores, tanks and related equipment.

Required:

Advise Faraway Downs as to what (if any) common law tort rights and remedies (e.g. property damage and ‘business torts’) against (i) Action Beef, (ii) Carnet and (iii) Ann Clancy with respect to the above described interference with its business operations. (25 marks)

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