Discuss how the law relating to the doctrine of privity of contract was unsatisfactory prior to the passing

of the Contracts (Rights of Third Parties) Act 1999, and explain how the 1999 Act has improved the law.

Assignment Question

1. Gareth operates a car hire and event organization company. He had entered in to a profitable contract with two tour operators in Melbourne i.e Visit Victoria and Peninsula Tours. The tour operators use the cars for taking their high-end customers on a sightseeing tour of Victoria's top tourist attractions. He is also expanding his business. Over the course of the contract the following events happen.

2. His contract with Visit Victoria requires him to provide eight cars every day in order to take visitors to tourist spots along the Great Ocean Road corridor. After two months, Gareth realises that the rising cost of operating the fleet has made it impossible to continue to provide the cars without incurring losses. He approaches Visit Victoria and informs them that he will be unable to deliver all the cars required starting from the following day. On the following and subsequent dates, Visit Victoria are expecting an influx of visitors and it would be impossible for them to make alternative arrangements to pick up visitors from the airport and take them on tour. Given this, Visit Victoria agrees to make $50 additional payment per car per day if Gareth agrees to continue to provide the cars. Gareth agrees but Visit Victoria refuses to pay when invoice is sent after the service was rendered.

i) Is Visit Victoria under obligation to make the extra payment?

ii) What if the expected travellers are unable to come to Melbourne due to an eruption of a volcano which made air travel impossible?

Discuss.

3. The following happened in regards to the contract with Peninsula Tours. The agreement stipulated the provision of five cars with drivers every day. Due to resignation of drivers and breakdown of some of the cars, Gareth informed Peninsula Tours that he can only provide three cars per day while he recruits additional drivers. Gareth goes ahead and gets the cars fixed and hires additional drivers. He spent nearly $7000. However, after two months Peninsula Tours demanded payment of compensation for the two cars not provided totalling $1200. Is Gareth under legal obligation to pay the compensation? What if Peninsula Tours changes its mind and decides to take the three cars only after Gareth had spent considerable amount of money for fixing the two cars and hiring drivers? Discuss.

In addition to his tour operation business, Gareth also owns an event organisation business. One summer he organised a music concert at a winery in Yarra Valley. For this purpose he hired a Melbourne based Event Rental Pty Ltd to provide large tents, portable stage, electrical sound systems and marquees. Two days before the event, a car delivering the equipment was involved in a serious accident and the delivery items were destroyed. The singer refused to sing given the substandard sound system that Gareth brought at the last minute from a neighbouring wine estate. Julie who travelled from inter-state for this occasion to celebrate her birthday is seeking a compensation for the disappointment she suffered in addition to refund. She is seeking $1000 for the disappointment and a refund of $800.

Question

Discuss the rights and obligations of the parties in light of the law.