Mavis Smith (Mavis) owns a dress making business in Wellington, New South Wales. Mavis has several suppliers from whom she orders rolls of dress making material to make the outfits she sells. One of those suppliers is Silk & Sequins Supplies (SSS). Two months ago, SSS delivered 10 rolls of dress making product to Mavis store in Wellington. The contract stated that the agreed price for the 10 rolls was $6,000 but SSS have since contacted Mavis and said that they underestimated on the cost of transportation as the rolls of dress making material had to be sourced from interstate and that Mavis needed to pay an extra $1,000. Mavis initially refused to pay the additional sum but when she expressed her reluctance, SSS told Mavis that they would not deliver her second order of dress making material until such time as she paid the extra $1,000.

The delivery of the second order of dress making material was very important to Mavis as it was going to be used to make a wedding dress and six bridesmaids dresses for a wedding that was going to be telecast on television and attended by 600 people. Mavis was hoping that her dresses would also catch the attention of a major international designer who was also attending the wedding and that this may lead to more lucrative work and exposure for her business in the future.

The fear of not being able to supply the dresses for the wedding convinced Mavis to agree to pay SSS the additional $1,000. Mavis has since used 5 rolls of the dress making material.

Mavis now wants to take SSS to court to have her $1,000 repaid as she thinks it is very unfair that she had to pay the extra $1,000 when the contract for the 10 rolls was $6,000.

(a) Advise Mavis on her prospects of having the court rule in her favour. (12 marks)

For the purposes of the below part (b) and in addition to the above facts, assume the following:

Mavis later successfully sues SSS and SSS is ordered by the court to pay Mavis $1000. The Manager for SSS rings Mavis and says that SSS is in financial difficulty and is about to enter voluntary administration. Mavis, fearing she will not be paid the $1000, negotiates with the Manager for SSS that SSS pay Mavis $500 in full and final satisfaction of the debt owed. SSS subsequently pays Mavis the agreed $500 however SSS never goes into voluntary administration and Mavis now wants SSS to pay her the additional $500 (the unpaid part of the $1000 the court ordered SSS pay).

(b) Advise Mavis as to whether she can now enforce payment of the $500. Would your answer be any different if SSS, by agreement with Mavis, paid the $500 and gave her an extra roll of dress fabric worth $100? Why? (6 marks)