ASSIGNMENT QUESTION

You are required to advise each of the Plaintiff and the Defendant for the two legal disputes

that arise from the "Background facts" below.

The two legal disputes are:

1)

Paul v Jacob's River Wines Pty Ltd

2)

Jacob's River Wines Pty Ltd v Darren.

Background facts

Jacob's River Wines Pty Ltd ("JRW") is company engaged in the production and sale in

Australia of a range of wines. In April 2021, JRW decided to introduce its wines bottled in a

new 300ml aluminium slim bottle that has the appearance and feel of conventional glass wine

bottles. The production of the aluminium bottled wine range was scheduled to start at the

beginning of July 2021 in time for a national launch on 1 September 2021. To achieve this

tight schedule, urgent decisions had to be made about JRW's warehousing and bottling

facilities in the Barossa Valley in South Australia.

Across the road from the JRW production facility was a vacant warehouse belonging to Paul

that had been on the market for sale for almost 2 years. This warehouse was only about half the

size required to meet JRW's forecasted needs. However, JRW decided to try and negotiate a

lease of the warehouse from Paul. During preliminary negotiations in May 2021, JRW

indicated it would take only a 1 year lease of the warehouse but that it would consider taking a

5 year lease if Paul was prepared to build an addition to the warehouse. Although initially

reluctant to do so, Paul eventually agreed to make the addition provided JRW took a 7 year

lease. JRW said that it might consider such a longer lease provided that the addition met its

requirements, and that the expanded warehouse was ready by July 2021.

About the middle of May 2021, a draft agreement to lease document had been drawn up by

Paul's lawyer and was sent to JRW for it to read and approve. JRW made several alterations

to the document and attached a set of plans for building the addition. Paul's lawyer then

incorporated all the alterations into a final agreement to lease document, including the agreed

rental of $100,000 per annum and a lease start date of 1 August 2021. Paul signed the final

agreement to lease document on 30 May 2021, sent it to JRW and then he started construction

of the addition in accordance with the plans provided by JRW. However, JRW did not sign

the document even though it was aware that Paul had started construction.

To enable JRW to bottle its wine range, it required a new bottling machine. On 2 June 2021,

JRW entered into a valid written contract with Darren for JRW to buy a new bottling machine

for this purpose, which JRW made known to Darren. This written contract was signed by both

parties and its express contract terms included the price of $2million for the machine. This

was stated to be payable in two instalments, with $200,000 payable on JRW entering into the

contract and the balance of $1,800,000 payable on delivery and installation of the machine at

JRW's bottling facility in the Barossa Valley.

The express contract terms also included clause 15 that made it a "condition" of the contract

that the bottling machine be installed and fully operational by 1 July 2021. However, in June

2021 it became clear that Darren would be unable to meet the 1 July 2021 deadline, but

through no fault on his part. The bottling machine, which had to be imported from Germany,

arrived in Adelaide in a damaged condition and this damage was discovered only when the

machine was unloaded from its plane transport at the Adelaide airport.Assignment & Instructions - 2021 Tri 2

3

The following are the two legal disputes that have arisen.

1)

Paul v Jacob's River Wines Pty Ltd

In late June 2021, Paul received a letter from JRW stating that it had decided not to proceed

with the lease of his warehouse. JRW's only grounds were, first, that a valid contract had not

been entered into and, secondly, in any event its anticipated requirements for warehouse

facilities had changed and these requirements could now be met by alterations to its existing

warehouse. JRW pointed out clause 5 in the agreement to lease document that states:

"This agreement is subject to Jacob's River Wines Pty Ltd being satisfied, in its

absolute discretion, that on completion of the warehouse addition, the warehouse

meets the company's current and anticipated requirements for such facilities."

No other grounds and arguments were relied on by JRW to not proceed with the lease.

Paul immediately wrote to JRW saying that it could not back out of the lease since he

considered that the agreement to lease document was a valid contract. Furthermore, he had

acted on the agreed terms in constructing the warehouse addition that conformed exactly to the

plans supplied by JRW, and the expanded warehouse would be ready by the 1 August 2021

lease start date.

2)

Jacob's River Wines Pty Ltd v Darren

On 2 July 2021, JRW sent a letter to Darren stating JRW's contract to purchase the bottling

machine was terminated by JRW based on the ground that Darren had breached the express

contract term in clause 15 of the signed written valid contract. Clause 15 states:

"It is a condition of this contract that the bottling machine is installed and fully

operational by 1 July 2021."

In the alternative, JRW stated in its letter that the contract had ended based on the ground that

it had been discharged by frustration. No other grounds and arguments were relied on by

JRW to end the contract.

On receiving JRW's letter, Darren replied disputing that the contract could be terminated or

had ended by frustration. The reply included an offer for Darren to pay all costs of alternative

bottling of the wine until the new machine was fully operational, which would be at the end of

September 2021.

Additional background and assumptions

For the first legal dispute in 1), the fourth to sixth required elements of a valid contract are all

satisfied (and so they do not need to be discussed).