Contract Law Question (attached)

AUSTRALIAN CONTRACT LAW 1. Patronage at Carl’s Car Wash has declined sharply. Despite advertising to promote his new, eco-friendly setup, Carl’s customers do not seem to like the smell of the Mother Earth detergents and have turned to other establishments, despite Lisa’s claims that sales would skyrocket.55 2. Carl has contacted Lisa to try and get out of the supply contract early, “just like she promised”, but Lisa has refused, saying only that “you agreed to the terms – that’s just too bad.” 3.Carl has discovered that the lease of the 1NST-A-CLEAN 2000″ high pressure washer does not have an end date and has given Lisa notice of his intention to terminate this lease as well. Lisa has not responded to this and has continued to invoice Carl for the lease of the equipment. 4. Realising his business is in dire straits, Carl has not bothered searching for suitable finance for his purchase of a “Dominator” drone from Dorn. He in fact has no intention of doing so and no intention of proceeding with the sale and has ignored Dorn’s repeated calls and enquiries.Additional Instructions attached
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Australian Law Context:
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Use IRAC method for answering (Issue, Relevant law, Apply law [cite cases] to facts to solve
issues, Conclusion.)
Footnote citing of cases
Question:
Carl’s Car Wash, a well-established small business in Coogee, has been providing hand car wash services
to residents of the area for many years. Carl, the proprietor, can frequently be seen strutting around his
beachside lot in his boardshorts with a bucket and sponge in hand, cleaning and polishing everything
from exotic supercars to family SUVs while showing off his tan.
In recent times, however, Carl’s business has been gradually declining. Many of his wealthy Eastern
Suburbs customers have become conscious of the threat which global climate change poses to their
idyllic beachfront lifestyle and started taking their Hummers and Maseratis to more high-tech, ecofriendly businesses using biodegradable detergents, recycled rainwater washes and solar-powered car
vacuums instead. Carl knew he had to revitalise his business to compete with these new trends.
One morning, while Carl was on the beach doing his morning yoga, he ran into Lisa who was out for a
run. They had met many years ago while studying CLAW1001 and had become close friends, though
they had not been in contact for several years. They decided to go and get breakfast at a local cafe,
where, over green smoothies and avocado toast, they talked about each other’s businesses. It turned
out Lisa had left her job as a business law consultant to become an ‘eco-entrepreneur’, and had
designed and marketed her own popular line of cleaning products under the brand name Mother Earth.
Hearing about Carl’s business troubles, Lisa wasted no time in telling him about her newly launched,
100% biodegradable Mother Earth car detergent, wax and polish range. “Everyone in the car wash
industry is talking about it”, she said. “All my clients that have switched to using it have seen their sales
go through the roof! Yours will too. I’m certain of it!”
This was good news for Carl, as the contract with his current supplier was about to expire and he was
looking for a new supplier of car wash products. Lisa suggested to Carl an arrangement under which she
would supply him with 36 ten-litre cartons of Mother Earth car cleaning products each month at her list
price for a period of three years. Carl was delighted with this proposal, which he accepted. As they were
leaving the restaurant, however, Carl began to have doubts about their agreement.
Carl: Three years is a long time to be stuck using the same products…
Lisa: All of my customers are signed on for 3 years – those are the standard terms for all my contracts.
But look, just between friends, if it doesnâ??t work out I’ll let you out of the contract early – we’ll sort it
out if the time comes.
Placated, Carl went back to work. The first shipment of Mother Earth arrived soon after and Carl was
immediately impressed with how it seemed to cut through dirt and grime with ease. He soon realised
that he would need to upgrade to something a bit better than a bucket and sponge to get the most out
of his new investment. Visiting Lisa’s warehouse later that week, Carl entered into a written contract to
lease a set of new “INST-A-CLEAN 2000” electronic high-pressure washer hoses with built in brush and
detergent dispenser. The contract contained a long list of standard lease terms and conditions, with
blank spaces for the start and end date of the lease to be entered. Lisa, conscious of Carl’s earlier
concerns, left the end date on the lease blank. Carl did not look at the agreement but simply signed the
form.
Just as Carl was about to leave, Lisa mentioned that she knew of a startup, Dornâ??s Drones, who had
developed a unique new solar-powered drone – the “Dominator” which could fly directly to where a
customer’s car was parked, spray it with water and detergent and wipe it clean, then fly back – all at the
swipe of an app. “There are a few car washes in Melbourne using it but none in Sydney – you could be
the first!” she suggested.
Carl thought this was a real opportunity to grow his business. He sent off an online enquiry and soon
Dorn, the proprietor, flew up from Melbourne to give Carl a demonstration of the technology. Carl was
extremely impressed, but balked when Dorn told him the price.
Carl: That’s awfully expensive for a drone.
Dorn: Just a drone? Did you not see how much money we raised on Kickstarter for this? The
number of patents we have on our advanced machine learning technology? Ã?ber and Amazon
are both bidding to buy us out. I’ll have you know this is no ordinary drone.
Carl: I’d love to buy one, I really would, but I’d have to borrow money to do so.
Dorn: Do what you want, but the price is the price.
After a few momentsâ?? thought Carl decided the price was worth it to allow him to be the first Sydney
operator of Dorn’s new technology. Dorn presented Carl with a written contract to purchase one
“Dominator” drone from Dorn’s Drones at the nominated price. Because Carl did not have the funds
to finance the sale immediately, Dorn included the following clause into the contract:
Clause 127: This Contract of Sale is subject to the Buyer obtaining suitable finance.
A few weeks later, Dorn called Carl to enquire as to whether he had managed to obtain finance yet.
Carl replied that he had not started looking yet and needed a few more weeks. In fact, all has not
been well for Carl. A number of things have happened.
Advise Carl on contract law issues only arising from the following.
·
·
·
·
(5 marks): Patronage at Carl’s Car Wash has declined sharply. Despite advertising to promote his
new, eco-friendly setup, Carl’s customers do not seem to like the smell of the Mother Earth
detergents and have turned to other establishments, despite Lisa’s claims that sales would
skyrocket.
(5 marks): Carl has contacted Lisa to try and get out of the supply contract early, “just like she
promised”, but Lisa has refused, saying only that “you agreed to the terms – that’s just too bad.”
(5 marks): Carl has discovered that the lease of the 1NST-A-CLEAN 2000″ high pressure washer
does not have an end date and has given Lisa notice of his intention to terminate this lease as
well. Lisa has not responded to this and has continued to invoice Carl for the lease of the
equipment.
(5 marks): Realising his business is in dire straits, Carl has not bothered searching for suitable
finance for his purchase of a “Dominator” drone from Dorn. He in fact has no intention of doing
so and no intention of proceeding with the sale and has ignored Dorn’s repeated calls and
enquiries.
In addition to the 20 marks for the questions above, 5 marks will be allocated for structure, evidence
of research, expression, spelling/grammar and correct referencing for a mark out of a total of 25
marks.

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