Introduction

Contract law represents a complex set of rules that governs obligations which are generally founded in a binding legal agreement1. Knowledge of contract law and the definition of a valid contract is vital in order to manage a business wisely in an efficient and law abiding manner, and having this knowledge can allow for an efficient analysis of contracts and the elements within. Often issues arise within an organisation when dealing with contractual obligations, such as misinterpretation or breach of contracts, from which major legal issues can be created. In the first of the following questions, a breach of contract has occurred and using the rules of law and elements of a contract, it is to be determined whether Wilson the production promoter for King Kong: The Musical and presumed aggrieved party in this case has grounds to sue Mega Complex Pty Ltd for damages that occurred during one of the shows. This case deals with elements of contracts such as consideration and intention, and also deals with determining what type of contract it was and whether there was a breach of contract at all due to the nature of their contract. The second question deals with a misinterpretation between an organisation and an employees renewal of contract, after Walter Bunsen, and employee of Test Tubes Ltd rejected a job offer from a different company under the presumption that his contract with Test Tubes Ltd would be renewed.

Argument Q1
Wilson, a promoter for popular stage productions was working on the publication King Kong: The Musical, and when searching for venues large enough to handle the shows large sets, came across Mega Complex Pty Ltd, the multi-purpose venue. Before making a final decision on whether or not to hire the venue, Wilson asked Baldwin, the manager of Mega Complex, directly as to whether or not he could handle such a large production. Baldwin replied that it was no problem, and later that day Wilson signed the standard hire contract, which was fairly vague in regards to finer details. He also paid the $250K advance payment before the first show. Opening night saw the bars run out of alcohol before the first performance because of failure to order the correct amount of supplies, resulting in many complaints. Wilson was assured that this would not happen again, however on the second night, the crane used to work the mechanical ape failed at the end of Act I, and then gave way halfway through Act II due to poor maintenance by Mega Complex management, destroying much of the set and causing audience members to panic and flee. While the actors managed to see the show to the end, many left early. By the end of the show, Wilson met with Baldwin to inform him that he failed to make good with his promises, and that the contract they had was over. He cancelled the remaining shows, but was served with a bill for $250K by Mega Complex. While the contract doesnt deal directly with the bars or crane, the discussions between Baldwin and Wilson before the contract was signed can be considered legally binding as there was intention in what was said, and Baldwin agreed to these extra terms. Wilson does not want to pay Mega Complex the bill for $250K, and now wants to attempt to sue them for the damages caused by Mega Complexs negligence. There are many factors that affect whether or not Wilson has grounds to sue Mega Complex, including how the elements of a contract affect whether or not certain aspects of the contract are legally enforceable, how a Parole Evidence Test can determine whether or not Wilson can successfully sue Mega Complex, as well as other relevant aspects of the law that can assist Wilson in his case. When Wilson first met Baldwin to enquire about the hiring of Mega Complex Pty Ltd for the stage production, there were discussions held before the actual signing of the written contract. A
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Ciro, Tony, Vivien Goldwasser and Reeta Verma, Law and Business, (Oxford University Press, 3 ed, 2011) 59.

contract can be defined as a legally binding agreement between two or more parties, with emphasis on the dual concepts of agreement and legally binding2, and can come in multiple forms, whether it be wholly written, wholly oral or a mix of both written and oral. In the case of Wilson and Baldwins contract, this is both a written and oral contract. The conversation between Wilson and Baldwin before the written contract was signed can be considered a part of their contract, because there was intention behind the question from Wilson (can you handle it?), and Baldwin accepted this verbal clause through his reply, No worries, mate. Even though it was a seemingly informal exchange between the two, because there was an offer made by Wilson that had both intention and acceptance from both the promisor (Baldwin) and promisee (Wilson), it became legally enforceable. Acceptance requires both parties to consent to an offer, and without this mutual agreement, the contract cannot be signed. If one of the parties is silent about the offer, and the other party goes ahead with their side of the contract, then the silent party does not have to go through with their part, as no contract has been signed. This happened in the Turner Kempson & CO Pty Ltd V Camm3 case, in which a series of letters regarding purchasing raspberry pulp were exchanged. Turner Kempson, assuming that Camm had agreed to their contract, sued him when the pulp was not sent. It was decided that because Camm never agreed to the contract, did not owe Kempson the pulp, because there was no official contract between them, and no promises were made. There was also consideration in this exchange, which is an exchange of something for another. Baldwin promised that Mega Complex could handle the musical production, and in exchange Wilson made a promise to hire the multi-purpose complex for the show. As these elements are all seen in this conversation, we consider this a legally binding contract that Wilson and Baldwin have entered into. An important part of the contract that could affect Wilsons ability to sue Baldwin and Mega Complex is whether the breach of term is a condition or warranty. If the breach was of a warranty, which is a term not essential to the contract4, then Wilson would not be able to sue. If the only issue Mega Complex had was the bars running out of alcohol due to a mistake in supply orders, then Wilson would not be able to sue, as that is only a minor problem created, and not a vital term to the contract. If the breach was of a condition, which is considered a vital term in the contract, then Wilson would have the right to sue for damages. The damage caused by the crane not only to the set of the show, but also to the stage productions reputation goes right to the heart of the contract, and after Wilson and Baldwins verbal conditions, Wilson most definitely would be able to sue under these conditions. Another important factor to take into account is whether Baldwins statement to Wilsons question was a term or misrepresentation. Misrepresentation can occur when one party makes a statement to another that causes the other to become involved in a contract5. The major difference between terms and misrepresentation is that terms are contractually binding, and involve a promise being made, while representations do not. An example of misrepresentation can be seen in the case Oscar Chess Ltd V Williams6. In this case, a false statement was made about the year make of a car, and Oscar Chess wanted to sue Williams for damages on this basis. The court ruled against him, due to the fact that he was not knowingly deceived, and the statement Williams made had no promissory effect on the contract, so he did not have to pay Chess. It is important to understand whether Baldwins statement to Wilson was a misrepresentation or term, because misrepresentations do not have any legal bindings and therefore there is a chance that Wilson could
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Ciro, Tony, Vivien Goldwasser and Reeta Verma, Law and Business, (Oxford University Press, 3 ed, 2011) 60. [1922] VLR 498 4 rd Ciro, Tony, Vivien Goldwasser and Reeta Verma, Law and Business, (Oxford University Press, 3 ed, 2011 135. 5 rd Ciro, Tony, Vivien Goldwasser and Reeta Verma, Law and Business, (Oxford University Press, 3 ed, 2011) 128. 6 [1957] 1 WLR 370

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not sue Mega Complex for damages from the crane, unless it was due to fraudulency or negligence, whereas with terms it is, and Wilson would no doubt be able to sue. Another important factor to take into account while Wilson is attempting to sue Baldwin is the different remedies for a breach of contract. It is considered a general rule that an award of damages is a sum of money paid to the innocent party who suffers a breachdamages are compensatory7. Under the basis of this general rule Wilson would be able to sue Mega Complex for the crane damages, but he would only have a chance to be compensated for the damages, but not make a profit and benefit. While the exclusion clause8 can be looked over in this case simply due to the fact that it says anything Baldwin says binds Mega Complex Pty Ltd, therefore making it assumed there is no exclusion clause, it is still an important term of a contract to be looked into. The exclusion clause is a term within a contract that renders anything said outside the written contract void. If this was a part of the contract between Wilson and Mega Complex, then the conversation they had prior to signing the written contract would no longer be relevant to the case, and Wilson would have a much more difficult time attempting to sue Baldwin. The court would also use the parole evidence rule9 to determine whether the whole contract was written, or if there were other aspect of it such as Wilson and Baldwins oral agreement. Due to all of these elements of a contract, and rules of law, it is advised that Wilson does have grounds to sue Baldwin for damages caused by the faulty machinery on the second night of the show, and should not have to pay anything to Baldwin and Mega Complex Pty Ltd as it is within his rights to end the contract they had.

Bibliography
Ciro, Tony, Vivien Goldwasser, Reeta Verma Law and Business, 3rd Edition, (Australia: Oxford University Press Australia Higher Education, 3rd ed, 2011)

Ciro, Tony, Vivien Goldwasser and Reeta Verma, Law and Business, (Oxford University Press, 3 ed, 2011) 328. 8 rd Ciro, Tony, Vivien Goldwasser and Reeta Verma, Law and Business, (Oxford University Press, 3 ed, 2011) 156. 9 rd Ciro, Tony, Vivien Goldwasser and Reeta Verma, Law and Business, (Oxford University Press, 3 ed, 2011) 131.

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