BUMAN103A Business Law: Case of Peter

Questions:

Q1.

Peter, Paul and Mary are students who are keen to earn an income in their spare time to finance their studies. Peter has a truck, Paul owns a lawnmower and Mary has a computer. They print flyers advertising PPM Mowing Service, their registered business name, which they drop in neighbourhood letterboxes. Within a short time they have a list of regular clients. Peter cuts the grass, Mary removes the clippings in her truck and Paul keeps the accounts. Peter decides that they need an industrial ride-on mower and orders one from FastCut Mowers in the name of PPM Mowing Service. Paul and Mary were not consulted about this purchase. Meanwhile Mary develops a separate business relationship with many of PPM’s clients by removing rubbish from their properties on weekends while Peter and Paul are busy studying. These clients pay Mary in cash which she deposits in her personal bank account. Mary does not disclose these jobs to Peter and Paul. When FastCut’s bill arrives, Paul is particularly upset when he realises there is insufficient money in the accounts to pay for the ride-on mower.

  1. Are Peter, Paul and Mary carrying on a partnership?
  1. Assuming that Peter, Paul and Mary are in partnership would Paul and Mary be liable to contribute to the purchase of the ride-on mower?
  1. Is Mary in breach of any partnership duties as a result of carrying out her weekend work?

Q2.

Chris had heard that the current owner of Lyndhurst Farm (Lyndhurst) was thinking of selling. On 28 April he wrote a letter to the owner, James, in the following terms: ‘Are you interested in selling Lyndhurst? If so, at what price?’ James owns Lyndhurst Farms and the surrounding paddocks on a separate title. James received the letter on 29 April and replied that day by facsimile addressed to Chris stating: ‘I will sell you Lyndhurst Farm for $500,000. The terms and conditions will be those in the Law Institute of New South Wales standard form real estate contract. Please reply before 5 May.’ Unfortunately, James’ secretary Patsy, when sending the facsimile, misdirected it, and it was received by Helen. Realising her mistake immediately, Patsy re-sent the facsimile to Chris and telephoned Helen to tell her that the facsimile was sent to her by mistake.

On 1 May Chris sent a letter to James, saying: ‘I accept your offer to sell Lyndhurst Farm and surrounding paddocks for $500,000.’ However, on the same day the market went into a spectacular dive, and by 5 pm Chris had lost a lot of money. Feeling that he could no longer afford Lyndhurst, he sent a facsimile to James, which James received at 6 pm, saying that he no longer wished to purchase the property. At this point James had not received Chris’ letter of 1 May.

Helen had been extremely interested in purchasing Lyndhurst and, ignoring Patsy’s advice to disregard the facsimile, she had faxed an acceptance of the offer immediately upon receipt of James’ mis-sent fax.

On 1 May James received Chris’ facsimile and decided to follow up on Helen’s fax. He sent her a reply by fax, saying: ‘I am in receipt of your facsimile of 29 April. I advise that the price is $500,000 for Lyndhurst alone.’

Helen received that fax on 1 May and replied that she would purchase Lyndhurst for $500,000. On 3 May James replied that he would accept that price.

On 4 May Chris recovered all of his losses on the stock market and made a profit. He telephoned James to say that he would now purchase Lyndhurst for $500,000.

Is there a contract between Chris and James?

Is there a contract between James and Helen?

Remember to justify your responses with relevant cases and/or legislation, as appropriate.

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