Alicia runs a café at Reservoir station called Fair Fare with a sustainability focus. She doesn’t provide disposable coffee cups.
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Instead, customers wanting a take-away coffee receive it in a clean second-hand mug. Customers who bring their own mug get a small discount. Her business is growing and she has a number of very loyal customers, but at the end of a long day, she sits down and is doing the accounts, while her employee finishes off the last orders as they prepare to close. Alicia gets chatting to Rasheed, one of her favourite regulars. She makes a comment about how stressed she is and how her overdraft account only seems to get bigger and bigger. Rasheed has had twenty years experience running restaurants, and currently works full-time advising a chain of coffee shops on marketing strategies. He says to her, “This café is in such a great spot, and you do such a beautiful job with it. If you ever want to sell the business, I’d love to take it on – and I’d be happy to employ you as the barrista.” A week later, Alicia gets a $400 fine for driving through a red light (“It was orange!” she says) and feels completely overwhelmed by her financial situation. She remarks to Rasheed, “I’ve been thinking a lot about your offer. How much would you consider paying for the business?” He replies, “I’d have to think about it – can I crunch my numbers and bring you a proposal on Friday? How about you email me with the details about your lease and current stock and turnover?” “Absolutely!” says Alicia. She emails through the details that evening. On Friday, Rasheed brings in a simple contract of sale setting out his offered price and all the necessary details for a sale. Alicia is blown away by the price. “$50k – that means I could pay off the overdraft account and my credit card, and still have something left to save towards another business venture in the future”. She looks over the contract and is willing to sign, but wants to have it checked with her solicitors. “Don’t worry”, says Rasheed, “You can send it to them to check it over after you sign, just add in a little note 3 will be signing the amended contract in the next week. Alicia is still not sure what she’s going to do about the sale of business, so she just says, “Oh great, that’s excellent news”. That night, Alicia talks to her best mate Alex about her dilemma. After a lot of discussion, she decides that she’s not comfortable with selling to Rasheed, and that she’s willing to make some changes to the business that will attract more customers and hopefully help the business get back into profit. She sends Rasheed a text, “I’m so sorry, after discussions with my lawyer, I just can’t go through with the sale”.
2. Assuming that Alicia is not contractually bound to sell the business to Rasheed, does the doctrine of promissory estoppel apply to Alicia and Rasheed? (5 marks) Alicia wants to bring in more customers by installing new signage that is visible on the approach to the station. She contracts with Ting to custom build and install a neon sign saying “Coffee = LOVE” for $800. Ting makes the sign exactly as agreed and installs it, but within a few days, Alicia notices that the screws have come loose and the sign is wobbling in the wind. Alicia is worried that it could be dangerous if it fell on someone or smashed. She calls Ting, but only gets voicemail saying that Ting is away on holidays. Alicia wants the sign properly secured before anything happens, particularly as a storm with strong winds is forecast. She pays a local handyperson, Zain, to secure the sign for $200. When Ting’s invoice arrives for the sign, Alicia pays only $600, and emails Ting explaining that she is only willing to pay $600 as the sign was not installed safely, and she has had to pay $200 for re-installation. She includes a copy of her receipt from Zain.
3. Can Ting recover the full $800 from Alicia? (5 marks) Alicia is also keen to find a less time-consuming source of mugs so that she doesn’t have to use disposable coffee mugs. She chats with Alex about it, and Alex suggests she offer free coffees to people who can source them for her. Alicia makes up a little sign that says, “FRIENDLY MUGS WANTED! Bring in a milk-crate (or similar sized box) full of clean, unbroken, second-hand mugs, and we’ll give you a coffee card for twelve free coffees!” She sticks it up behind the till. Ron works at a second-hand shop and regularly sees Alicia when she comes to look for mugs to buy. He has recently moved in with his boyfriend, and they have discovered that they have far too many coffee mugs. He knows Alicia always needs mugs for her café, so he brings a box with all the spare mugs in to the café. He sees Alicia at the door and says, “Here – I thought you might find these handy!” She says, “Thanks so much! Want a coffee?” He sits down and enjoys his coffee. As he is leaving he sees the sign behind the till. He asks Alicia, “So, do I get a coffee card for those mugs?” 4. Is Ron entitled to the coffee card for twelve free coffees? (4 marks) 4 Guide to citation for the common law assignment Legal citation is different to other styles of citation, such as Harvard or other in-text citation. Legal citation involves providing the most relevant legal authority for any statement of legal rules or principles. Citations are provided in footnotes. (If you’re working in MS Word, simply go to the ‘References’ tab and click on ‘Insert Footnote’.) For the purposes of LST2BSL Introduction to Business Law and Ethics, we do not expect you to learn the Australian Legal Guide to Citation, which is the usual approach to legal citation in Australia. That Guide is incredibly complex. Instead, you can simply follow these instructions for citations in your common law assignment. As stated above in the Assignment Instructions, where you state a legal principle which comes from a case, you must provide a citation to the relevant case. You are not expected to read the cases themselves: as long as a case is summarised in the textbook, you can cite the case itself. An example of this would be if you said this in your assignment: If a letter of comfort includes statements which are not promissory, then it probably was not intended to be legally binding.1 Alternatively, you could mention the case name in the sentence of your assignment itself, and just put the case citation in a footnote, like this: As in the case of Commonwealth Bank of Australia v TLI Management Pty Ltd2 a letter of comfort with only non-promissory statements was probably not intended as legally binding. Either way, we expect you to provide a citation to the relevant case for the legal principle you are stating. If you are stating a legal principle that is covered in the textbook or lecture and which does not have a relevant case provided in the textbook, you should cite the textbook. An example of this would be: If an agreement is executed as a deed then there is no requirement for both parties to provide consideration.
3 Please also note that you are not expected to use any materials beyond the lectures and the set textbook. But if you do, you must provide appropriate citations. No bibliography is required. Finally, remember that footnote citations do not count towards your word count, so don’t hesitate to provide citations for any statement of legal principle. If in doubt, provide a citation.