Two Practice Qns Contract Weeks 2-5 PDF

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Summary

few questions for weeks 2-5 with some direction of answers...

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Case scenario I: Ka-Lee v Cosmic Pharma (5 marks)

Cosmic Pharma is a company which produces home-remedies. Cosmic Pharma is well known for their “medicines” that claim to cure or alleviate symptoms of respiratory diseases. It has a worldwide presence, including in Australia. While the entire world was on tenterhooks coping with the COVID-19 pandemic, the company saw a great opportunity to market new products. Thus, two weeks after the virus spread outside China, Cosmic Pharma launched a new product along with an aggressive advertising campaign: The Corona Snort Pill (CSP). Ads quickly appeared in all corners of the online world: Facebook, Instagram, Donald T.’s tweets, online newspapers, Tinder, to name a few. The ads claim that the CSP will keep people immune from the deadly Corona Virus. Indeed, the ad says that if anyone should fall sick with COVID-19, despite snorting the pill as instructed, Cosmic Pharma would pay $10,000. As evidence of its seriousness and good faith, Cosmic Pharma announced that it had deposited $100,000 into a special account as a guarantee of payment. The success of the advertising campaign was instant. Hordes of people emptied shelves around the world. Australia was no exception. Amy Ka-Lee, a healthy 82-year-old lady, saw the advertisement in February this year. Considering her age and the alarm the virus has raised, she decided to buy the CSP. She snorted the pill with enthusiasm and religiously 3 times a day, as instructed on the package. Unfortunately, after one month of purchasing the CSP she got the COVID-19. She stayed for weeks in hospital. She almost died. Last week she returned home. Today, while she was chatting on zoom with one of her grandchildren, a current student of commercial law, she asked whether she could sue Cosmic Pharma, if they refused to pay the reward. Discuss whether Ms Ka-Lee and Cosmic Pharma have a valid contract. (5 marks) Note: The small/unreadable text in the ad is not relevant when answering this question.

Case scenario II (5 +5 +10 = 20 marks)

Petrorex Ltd, an Australian energy corporation, is one of the world's largest oil and gas companies. Cylinder Pty Ltd is the world’s largest manufacturer and supplier of pipelines in the oil and gas sector. Last year, Petrorex and Cylinder entered into a 20 year contract for the manufacturing, installation and maintenance of a 5-kilometre pipeline connecting Petrorex’s new offshore platform with its onshore oil plant at Kwinana in Western Australia. The parties agreed on a price of $25,000,000. Also, the parties expressly agreed in the contract that: Cylinder shall not contract with any entity to perform in whole or in part the work without the express written approval of Petrorex. The pipeline was installed in January this year and entered into service on 1 February. Three weeks after the pipeline was operational, it exploded. As a direct consequence of the explosion, all Petrorex operations had to be stopped for 55 days. Official investigations concluded that the gas explosion was caused by poor design and improper installation of the pipeline which, to the surprise of Petrorex, were not made by Cylinder. In fact, Cylinder had subcontracted the design and installation of the pipeline to a Chilean company, Easy Amigo Plumbers. You work at Petrorex. The CEO has entrusted the drafting of a report on the pipeline related losses to you. Specifically, the report must address whether Petrorex can (a) terminate the contract and (b) seek compensation for the following: ·

$20,000,000 for the installation of a new pipeline

·

$10,000,000 for loss of profit corresponding to the 55 days that the premises had to remain shut

·

$5,000,000 in fines

a) Advise whether Petrorex may terminate the contract with Cylinder. (5 marks) b) Advise whether Petrorex is entitled to receive compensation for its losses (as detailed above) and, if so, how much. (5 marks) Note: Analyse this question without considering part (c) (below) of this question.

c) Assume for the purpose of this question only, that the following term was part of the contract signed by Petrorex and Cylinder:

Exclusion clause. Under no circumstances shall Cylinder be responsible to Petrorex for any injury or property damage suffered by Petrorex in respect of: a) damage or destruction arising from any defect in or failure of the pipeline.

Advise whether Cylinder can rely on the exclusion clause and, if so, to what extent. (10 marks)...