Businesses should exercise great caution when taking clients out to informal environments for the

purpose of discussing business deals. As seen in the English case of Blue v Ashley, the Court was very

critical of the fact that two intelligent men of business, would go to a pub, become severely intoxicated

and purport to strike a multi-million dollar deal, on the basis of a verbal agreement and a handshake.

Essay question: Do you agree with the judge's criticism and ultimate ruling in the case?

Required: Explain the legal rules for creating a legally binding contract. You must refer to relevant law

each time you state a new legal rule. Then, in light of these rules, critically analyse the conduct of

these two businessmen which led to the judge's decision in the case. Tip: Use sub-headings to

separate your arguments for each element. In your conclusion, give a clear answer to the essay

question above and provide a brief summary of your main arguments.

Q2 - 10 marks

On 1 January, Manor Inn Pty Ltd bought a house for the purpose of turning it into a luxury rental

property. River Renovations Pty Ltd was hired to carry out all the building and construction work at a

contract price of $300,000. During negotiation, Manor Inn made it clear that all building work had to be

finished by the end of November of the same year, since it had already taken Christmas holiday

reservations totalling $50,000 starting on 1 December.

Due to poor planning by River Renovations, only half of the repairs were completed on 30 November,

and Manor Inn Pty Ltd was forced to cancel, and issue refunds for all its Christmas holiday bookings..

which in turn, caused Manor Inn to lose out on a business deal worth an estimated $750,000 with

Tourism New South Wales. River Renovations Pty Ltd was not aware of this deal at the time it signed the

contract.

Essay question: Is River Renovations Pty Ltd liable for either of Manor Inn Pty Ltd's financial losses?

Required: Discuss whether the completion date was a condition in the contract, and if so, the likely

consequences for this breach. Then, discuss whether River Renovations Pty Ltd should pay

compensation for the cancelled reservations; and/ or, whether it should pay compensation for the

loss of the deal with Tourism NSW. You must refer to law