Basil owns and operates ‘Basil’s Mountain Tours’, a tourist coach business that specializes in taking senior citizens on day trips to the Blue Mountains. Basil’s tours are popular with elderly passengers because of their reputation for comfortable coach seats, air conditioning, and safety.

On 15 February 2022 Alice, the manager of Golden Grove, a central coast retirement home, makes a booking with Basil for 30 of Golden Grove’s elderly residents. The contract provides for a one-day tour of the Blue Mountains on 1 March 2022 and this date is an essential term of the contract. Alice insists that the data is essential and can’t be substituted with another date because she needs to ensure that all the travelers have been certified by Golden Grove’s doctor to be fit for travel – and that by then have received their third COVID booster. The contract also provides that the bus is air-conditioned with leather reclining seats and first-class safety features.

On 18 February 2022 Basil discovers that the coach’s air-conditioning is faulty and needs to be replaced. Basil contracts with Motor Air- Con Ltd (MAC) to reinstall a new air-conditioning system. The contract price is $3000 and the contract provides that work must be completed by 25 February 2022. After the existing air-conditioning is removed, Vijay, the managing director of MAC, advises Basil that there will be a delay in having the new air-conditioning installed on time.

When Basil asks Vijay for the reason for the delay, Vijay tells Basil that the cost was calculated on one technician doing the work but he now finds that one technician could not do the work within the time frame. Vijay assures Basil that he can make sure the deadline is met if he employs an additional technician at a cost of $800. Basil is hesitant but agrees to pay the extra money as he had already received advance payment from Alice for the Golden Grove tour on 1 March 2022.

MAC completes the air-conditioning by 25 February 2022 and the tour on 1 March 2022 proceeds satisfactorily with positive feedback from passengers about the comfort and safety of the coach. Basil decides that he is only required to pay MAC the original contract price of $3000. After Vijay notices that Basil has only paid $3000 into MAC’s bank account, Vijay contacts Basil to remind him about the extra $800 ‘as agreed’. When Basil advises Vijay that he was only obliged to pay the originally agreed price of $3000 Vijay threatens to take legal action for recovery of the extra $800.

q1

Discuss, in a problem-solving format, whether Basil is legally bound to pay the extra $800 to Motor Air Con Ltd..

Your answer should be based on the common law of contract (specifically the rules and case law on sufficiency of consideration and practical benefit)

Note: promissory estoppel may also be applicable but it is preferred that you confine your discussion to the law on sufficiency of consideration and practical benefit.

q2

Assume that in the scenario Basil had advertised his tours on Basic Mountain Tours website and in Sydney newspapers as being:

The best in Sydney with a brand-new coach equipped with leather reclining seats and air-conditioned comfort that is far superior to any other Blue Mountains coach tour.

Instead of the facts in the scenario, Basil declined to pay Vijay the extra $800 following which Vijay refused to complete the air conditioning replacement. The Golden Grove tour left on 1 March 2022 without the bus is air-conditioned. It was an unusually cold day for early March and the elderly passengers returned to Sydney suffering from cold and flu symptoms because the coach was not airconditioned. They also complained about back pain because the vinyl seats in the ten-year-old coach did not recline and they had to sit upright for over five hours. The passengers were also disappointed to learn that there were at least three other similar Blue Mountains tour operators who used the latest model air-conditioned coaches.

Discuss, in essay style, which sections of the Australian Consumer Law (ACL) may have been breached by Basil and the remedies that may be imposed as a result of these breaches. In your answer also discuss the business and ethical implications of Basil’s conduct.