David is very keen on sailing and wants to purchase a yacht. Looking through the for-sale advertisements on treegum, David notices that Peta has a yacht for sale. David contacts Peta and arranges to inspect the yacht. On Thursday afternoon David and Peta meet at the local marina. Peta shows David the yacht.

Peta and David discuss and agree on a number of terms. These include:

A purchase price of $12,000. The purchase price is to be paid in two instalments: A deposit of $1,200 on signing the contract and The balance on transfer of ownership. Peta is responsible for preparing any transfer of ownership and registration paperwork. The settlement or completion date is 10 August 2023. David is extremely happy with the yacht and has just one question. David says that he will purchase the yacht from Peta only if it is less than 10 years old. Peta responds that they can guarantee that the yacht is only 5 years old. On that basis David agrees to purchase the yacht.

Peta has a contract of sale drawn up which David signs and pays the initial deposit. Peta and David met on the 10 of August 2023 and exchange transfer and registration papers and David also transfers the balance of the purchase price to Peta.

A few weeks later and unfortunately for David he discovers that the yacht is closer to 15 years old than the 5 that Peta claimed. David approaches Peta with this information and demands his money back. Peta has a copy of the contract and explains to David that none of the terms of the contract mention the age of the yacht. Peta explains to David that they are only bound by the terms of the written contract and that the document is the entirety of their agreement.

David wants to know if he can sue for breach of contract.

Part A (20 marks)

Provide David with a memorandum of advice that explains the concepts of contract formation. Your advice should include a discussion on offer, acceptance consideration and intention. You should also provide advice on if a contract was validly formed. Your advice is to include relevant case (common) law to support your legal principles. Part B (10 marks)

Advise David as to what only bound by the terms of the contract means and also what, if any, exceptions to this rule may apply. Can David enforce the statement Peta's made regarding the age of the yacht? Your answer should include references to common law.