CHM108, Introduction to Business Law Report 1 Sample
Joon Kim migrated to Australia with his wife from South Korea in 2019. In October 2021, they sold their apartment in Seoul and decided to build a house in Frankston, Victoria. They bought a block of land and signed a Building Contract with a small builder Betta Homes Pty Ltd (the “Builder”) on 15 January 2022. Joon Kim has limited English and his wife doesn’t speak any English. A Korean friend helped them and explained the following key clauses to them before they signed the Building Contract:
a. The commencement date for the construction: 30 January 2022. The completion date: 30 January 2023
b. The duration of the construction: 12 months
c. The payments of the construction are in 6 instalments:
- 20% initial payment upon signing the construction contract
- 15% payment for completion of the foundation
- 20% payment for completion of frames
- 20% payment for lock-up
- 20% payment for completion of the construction
- 5% payment for issuing certificate of occupancy
d. Payments must be made within 7 days when receiving the invoices from the Builder. Otherwise, the Client (Joon Kim and his wife) must pay an interest of 10% of the overdue amount to the Builder.
e. The Builder will not be responsible for the delays of the construction due to any unforeseeable situations including extreme weather; labour strikes; unpredictable financial crisis; shortage of building materials; “Act of God”; nature disasters such as bush fire, earthquake, typhoon, flood, etc.
f. The Builder will try its best to avoid delays or damages. No penalty will be payable by the Builder to the Client in any circumstances.
g. The Builder will build the house in accordance with the industry standards. The Builder gives no further guarantee or warranty regarding the qualities of workmanship or materials.
h. In case of any dispute, the Client and the Builder will go to the VCAT for a dispute resolution.
Unfortunately, on 30 January 2023, Joon Kim and his wife had found that their home was still at the stage of completion of frames. The building site was also muddy with rainwater, waste plastic bottles, paper, and other rubbishes. The Builder blamed the extended impacts of the COVID-19 pandemic on the home building industry and the shortage of tradesmen in general. Basically, Joon Kim’s home construction came to a stop after he paid the third instalments. He paid the Builder 45% of the total payment. Joon Kim and his wife were extremely angry with the status of the construction and demanded a compensation from the Builder. The Builder referred to the exclusion clauses in the Building Contract and refused any liability for the delays by using the excuses of the Covid-19 impacts. Joon Kim and his wife wanted to terminate the Building Contract and claim damages from the Builder at the VCAT because they believed the delay was caused by the Builder’s laziness and mismanagement. Please advise Joon Kim and his wife of the following questions:
Please note the following writing requirements: you must apply the requirements strictly when writing this assignment:
(a) Please discuss and analyse the rules of performance of contract, then apply the rules to the given fact in the above scenario.
Requirements: i. you must write 300 relevant words
ii. You must give 5 relevant references (cases or other resources) to support your writing/discussions.
(b) Please discuss the relevant rules on exclusion clauses in a contract and apply the rules to the given fact in the above scenario.
Requirements: i. you must write 300 relevant words for this sub-question.
ii. You must give 5 relevant references (cases or other resources) to support your writing/discussions.
(c) Please discuss rules on damages when there is a breach of contract. Can Joon Kim and his wife claim any damages (compensation) from the Builder under the Building Contract?
Requirements: i. you must write 300 relevant words
ii. You must give 5 relevant references (cases or other resources) to support your writing/discussions.
This assignment requires you to improve your research skills. Please write up your answers with supports of cases and references. Please remember, it is always better to have some in-depth discussions and critical analysis in an assignment.
General Instructions
Use the IRAC analysis to address the legal issues raised in this assign. Please support your arguments with relevant materials including legislation and case law. You should try to use the legal referencing style, the Australian Guide to Legal Citation (AGLC), in this assignment.
The link to the AGLC is on the StudentWeb. Using footnotes to cite your sources. A bibliography is not required when using the AGLC. You can also find the AGLC on Melbourne University’s website, http://www.law.unimelb.edu.au/mulr/aglc.
This Assignment is an individual assignment.
Solution
(a) Please discuss and analyse the rules of performance of contract, then apply the rules to the given fact in the above scenario.
Issue - Performance of Contract:
The primary issue in this scenario revolves around whether Betta Homes Pty Ltd, the Builder, has breached the Building Contract by failing to complete the construction within the agreed-upon timeframe and if Joon Kim and his wife can take legal action based on this breach.
Find sources to support the below text directly no books i want articles , blogs or journal -
Rule :
In Australian contract law, the performance of a contract is guided by several fundamental principles:
1. Time is of the Essence: Timeframes specified in a contract are generally considered essential unless stated otherwise. Uni assignment help, Parties are expected to adhere to agreed-upon dates for performance.
2. Performance in Good Faith: Parties must act in good faith and perform their duties honestly. Good faith implies making genuine efforts to fulfil their promises without deceit or misconduct.
3. Performance within Scope: The work or performance must conform to the contract's terms and conditions. Any deviation from these terms may constitute a breach.
4. Payment Terms: Payment obligations should be met promptly, as agreed upon in the contract. Delays in payments can also be considered breaches.
Application:
Joon Kim and his wife entered into a Building Contract with Betta Homes Pty Ltd, setting a commencement date of 30 January 2022 and a completion date of 30 January 2023, thereby establishing a clear timeframe for the project. Furthermore, the contract specified a 12-month construction duration, indicating a precise timeline for performance. However, as of 30 January 2023, it is evident that only the frame stage of construction has been reached, signifying a substantial breach of the contracts stipulated timeframe.
Conclusion:
Betta Homes Pty Ltd has indeed breached the Building Contract by failing to meet the contractually agreed-upon completion date. Under Australian contract law, this breach makes the Builder liable for the delay in performance. Consequently, Joon Kim and his wife are well within their rights to pursue legal action or seek remedies because of this breach.
The case law to support the answer are:
Blomley vs Ryan (1956) 99 CLR 362
AGC (Advances Ltd) v McWhirter, Supreme Court of NSW (1977) 1 BLR 9454
TABCORP Holdings Ltd v Bowen Investments Pty Ltd (2009)
(b) Please discuss the relevant rules on exclusion clauses in a contract and apply the rules to the given fact in the above scenario.
Issue - Exclusion Clauses in the Contract:
The issue at hand centres on the validity and enforceability of the exclusion clauses within the Building Contract and whether these clauses can absolve Betta Homes Pty Ltd of liability for the construction delays.
Rule :
Australian contract law dictates that exclusion clauses are subject to key principles:
1. Principle of Reasonableness: Exclusion clauses must be reasonable and not unreasonably biased towards one party, particularly the party invoking the clause. A reasonable clause is one that fairly allocates risks between the parties.
2. Interpretation against the Drafter: In case of ambiguity or uncertainty, exclusion clauses are generally construed against the party seeking their protection. This principle ensures that any doubts about the meaning of the clause are resolved against the party that drafted it.
Application:
Within the Building Contract, there exist exclusion clauses asserting that Betta Homes Pty Ltd bears no responsibility for delays caused by unforeseeable events, such as extreme weather or labour strikes. To determine their validity, it is imperative to assess whether these clauses are reasonable in the context of the contract and whether the delay can be primarily attributed to factors covered by these exclusion clauses.
In the given scenario, while the contract may include such exclusion clauses, their reasonableness may be subject to scrutiny. Courts may consider the bargaining power of the parties, the clarity of the clauses, and whether Joon Kim and his wife had a reasonable opportunity to negotiate the terms. Additionally, if it can be demonstrated that the delay resulted from factors not explicitly covered by these exclusion clauses, such as mismanagement or negligence on the part of the Builder, then these clauses may not fully shield the Builder from liability.
Conclusion:
The validity and enforceability of the exclusion clauses within the Building Contract may be open to challenge in court, especially if it can be demonstrated that the delay was principally caused by factors not explicitly covered by these exclusion clauses. Depending on the outcome of such an assessment, these exclusion clauses may not entirely shield the Builder from liability for the construction delays.
The case law to support the answer are:
? Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272.
? Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500.
? Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 .
? Australian Competition and Consumer Commission v Chrisco Hampers Australia Ltd (2015) 239 FCR 33 .
(C) Please discuss rules on damages when there is a breach of contract. Can Joon Kim and his wife claim any damages (compensation) from the Builder under the Building Contract?
Issue Damages for Breach of Contract:
The central issue in this context revolves around whether Joon Kim and his wife can claim damages (compensation) from Betta Homes Pty Ltd due to the breach of the
Building Contract.
Rule :
Under Australian contract law, damages are a common remedy for breaches of contract. The innocent party is entitled to seek compensation for losses incurred as a direct consequence of the breach.
Application:
Betta Homes Pty Ltd.’s breach of the contract, as demonstrated by the delay in construction extending beyond the agreed-upon timeframe, has likely resulted in financial losses for Joon Kim and his wife. These losses could encompass increased costs associated with temporary accommodations, additional financial burdens stemming from interest on loans taken to finance the project, and potentially other financial hardships incurred due to the delay.
In the event of a breach of contract, the principle of causation comes into play, which requires demonstrating that the breach was the direct cause of the losses suffered. Here, the breach of the contract's timeframe directly led to financial losses for Joon Kim and his wife.
Conclusion:
In light of the breach of the Building Contract, Joon Kim and his wife may indeed have a valid claim for damages resulting from the Builder's failure to fulfil their contractual obligations within the stipulated timeframe. However, the actual quantification of these damages will depend on the specific losses suffered and will necessitate a comprehensive assessment, backed by appropriate evidence, to ascertain the extent of the financial impact. It is crucial for them to consult with legal counsel to evaluate their options and pursue their claim effectively.
The case laws to support the support the answers are:
1. Andrews v ANZ Banking Group Ltd (1988) 164 CLR 205
2. Shevill v Builders Licensing Board (1982) 149 CLR 620
3. South Australian Cold Stores Ltd v Electricity Trust of South Australia (1965) 115 CLR 247
4. Shaddock (L) & Associates Pty Ltd v City of Parramatta (1981) 150 CLR 225
Bibliography
‘ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204: Court Finds Chrisco’s Lay-by Agreements Unfair - TimeBase’, www.timebase.com.au (13 November 2015) https://www.timebase.com.au/news/2015/AT442-article.html
‘AGC (Advances) Ltd v McWhirter’, Australian Contract Law https://www.australiancontractlaw.info/cases/database/agc-v-mcwhirter
‘Andrews v ANZ Group Ltd’, Australian Contract Law https://www.australiancontractlaw.info/cases/database/andrews-v-anz
Aydogan, Meryem, ‘What Are Damages for a Breach of Contract?’, LegalVision (24 March 2016) https://legalvision.com.au/damages-for-breach-of-contract/
Aydogan, Meryem, ‘What Are Damages for a Breach of Contract?’, LegalVision (24 March 2016) https://legalvision.com.au/damages-for-breach-of-contract/
Bui, John, ‘Exclusion Clauses in Australia - Contracts and Commercial Law - Australia’, www.mondaq.com (13 March 2023) https://www.mondaq.com/australia/contracts-and-commercial-law/1292700/exclusion-clauses-in-australia
‘Fedral Legislation’, Australian Contract Law https://www.australiancontractlaw.info/legislation
‘Darlington Futures v Delco - Summary’, www.lawteacher.net (14 June 2019) https://www.lawteacher.net/cases/darlington-futures-v-delco.php
‘Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115 – Law Case Summaries’, Lawcasesummaries.com (13 March 2018) https://lawcasesummaries.com/knowledge-base/koompahtoo-local-aboriginal-land-council-v-sanpine-pty-ltd-2007-hca-61/
‘L Shaddock & Associates Pty Ltd v. Parramatta City Council’, Ato.gov.au (2017) https://www.ato.gov.au/law/view/document?DocID=JUD%2F150CLR225%2F00002
Law Case Summaries, ‘Blomley v Ryan (1956) 99 CLR 362 – Law Case Summaries’, Lawcasesummaries.com (30 March 2018) https://lawcasesummaries.com/knowledge-base/blomley-v-ryan-1956-99-clr-362/
MacLeod, Nadia, ‘Six Principles of Contract Law» Peaceful Path to Settlement’, Peaceful Path to Settlement (23 March 2018) https://peacefulpath.com.au/six-principles-of-contract-law/
‘Shevill v Builders Licensing Board (1982) 149 CLR 620 | Student Law Notes - Online Case Studies, Legal Resources and Audio Summaries’, www.studentlawnotes.com https://www.studentlawnotes.com/shevill-v-builders-licensing-board-1982-149-clr-620
‘South Australian Cold Stores Ltd v Electricity Trust of South Australia [1965] HCA 67 - BarNet Jade’, jade.io https://jade.io/article/65882
‘Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272 – Law Case Summaries’, Lawcasesummaries.com (12 May 2019) https://lawcasesummaries.com/knowledge-base/tabcorp-holdings-ltd-v-bowen-investments-pty-ltd-2009-236-clr-272/
Utz, Clayton, ‘Australian Contract Law | Association of Corporate Counsel (ACC)’, www.acc.com (7 May 2015) https://www.acc.com/resource-library/australian-contract-law#
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