Law Question: PART A: HYPOTHETICAL PROBLEM

Jamies mountain biking reached new levels after the purchase of his dual suspension bicycle. After winning several races, he was the talk of the local mountain biking community. In fact, in April 2023, Jamie decided he would capitalise on his renown and build a new mountain bike trail network (Tropical Bikeland) on some property he owned just outside of Mossman in Far North Queensland.

Jamie planned for Tropical Bikeland to be a world class mountain bike trail network, catering to a range of different skill levels, and including accommodation and dining options at a trail hub. He had plans drawn up and approved by the local council, and started to figure out who would carry out the necessary landscaping and building works. It was clear it would be a significant and expensive construction project.

There was one obvious choice: Jamies father Samuel owned a specialist construction firm with the capacity to carry out the works. Jamie and Samuel were close and had a warm relationship, regularly spending time together on the weekends, and talking on the phone once or twice a week.

Jamie shared his plans for Tropical Bikeland with Samuel, explaining that he wanted to make sure his business venture appealed to a wide range of people. He explained he would like to have it completed by 30 August 2024 in time for a big international mountain biking competition. Samuel offered Jamie to do the job for a substantially discounted family rate, but Jamie explained that he wanted to be treated like a normal customer given it was a commercial project and the stakes were high. He also said that they should not discuss it at family events to keep family and business separate.

On 30 August 2023 Jamie and Samuel sat down and put together a Heads of Agreement for all the important aspects of the construction project. The issues they discussed and agreed included:

A total amount payable of $5 million, with a $1 million deposit payable by 30 September 2023. The rest would be payable on completion of the works.

The works would be completed by 30 August 2024.

All the trails set out on Jamies plan would be constructed according to competition

standard.

Land would be cleared and prepared to allow for the construction for

accommodation and dining options. These buildings would be constructed at a later date.

Jamie said he would have his lawyers draw up a formal contract setting out what they agreed and would then send it to Samuels offices for formal execution.

Jamie paid the $1 million deposit and work on constructing the trails began in early September. Jamie also started advertising the opening of his new trail network and organised for it to be the location of the significant international mountain bike competition in early September 2024. The competition fees, tickets and sponsorship opportunities promised to make Jamie over $300,000.

3

The work on Jamies property continued at a reasonable pace until January, when disaster struck: it was a particularly bad wet season and work on Tropical Bikeland was impossible for almost a month, and some of the landscaping that had been mostly complete had to be redone.

On 17 February 2024, Jamie and Samuel met at Jamies office to discuss how the progress of the project. Samuel told Jamie that the work was now at least a month behind schedule, mainly due to the weather. Jamie explained to Samuel that the delays could cost him $300,000 if it was not completed in enough time for him to prepare for the competition, as well as substantial reputational damage. Samuel said he would reflect on what could be done to get it done on time.

On 25 February 2024, Samuel called Jamie and explained that if Jamie agreed to pay an extra $250,000 he would be able to hire additional contractors and equipment to get the work completed on time. He said as part of this he would make sure that as well as preparing the other sites for the accommodation and dining options, he would make sure an open-air dining facility was completed before the deadline. Jamie was annoyed that Samuel was proposing to charge him so much more for the work, but reluctantly agreed to ensure that he could still host the international competition.

With the help of the additional contractors, Samuel and his team worked hard to make sure the trails were completed in time for the competition. He also built a large open-air shed and installed three barbecues and enough seating for fifty people. He called Jamie on 29 August 2024 and told him that the work was now complete and that he would be sending through an invoice shortly.

Jamie inspected the trails the next day and while he was broadly happy with the work that was done, he noticed that some of the landscaping was messy, and that the open-air dining facility was litle more than a glorified barbecue area. He called Samuel and said that while he was grateful for the work Samuel and his team had done, it wasnt worth $5 million, let alone the additional $250,000. He said he would give him some money to compensate for the work hed done, but not the full amount.

Samuel was furious. He said that Jamie knew that they had a deal and that hed raised him to stick to deals. He told Jamie that the landscaping and building had cost him over $5 million and that if he didnt pay the agreed amount, he would speak to his lawyers. Jamie said that while he was sorry Samuel was upset, they did not actually have a contract as his lawyers had never got around to writing up a formal document. Samuel hung up the phone in disgust and immediately called his lawyers.

In preparation of the exam, consider whether Jamie is obliged to pay Samuel the $5,000,000 as per the heads of agreement, as well as the extra $250,000 that was agreed in February.

When preparing your answer, ensure that you focus on relevant legal principles including whether the promise can be enforced and any other remedies that may step in to help Samuel recover the money.