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Question 2 [30 marks]

Lil' Z is a rapper booked for a giant stadium concert on 7 September. His manager Mike contracts with Gators Pty Ltd to set up and staff gate entries for the concerts. Gators are hired to install equipment to check tickets and bag searches for prohibited items at each stadium entry point, and to hire and pay staff for each entry for 3 hours to ensure all entrants comply with entry requirements. This is crucial as a requirement under local legislation for all major events. If queues at entry gates are too long, or if a weapon is allowed to enter the stadium, Lil' Z will suffer reputational harm. The agreed price is $100,000, and the contract is signed on 7 June. However, since June, numerous problems have increased costs for Gators. The price of petrol has skyrocketed which has made gate equipment transport and custom fitting of the equipment in place much more expensive. Labour shortages have meant that Gators had to offer double the usual rates to hire staff. By 21 July, Gators is having financial difficulties. Gus, the manager of Gators, contacts Mike on 21 July to explain that Gators will not perform the contract because it will make a loss at the agreed price of $100,000. Mike is devastated. He soon discovers there are only two companies the industry, and the other company is fully booked. Mike quickly rings Gus back and said "I'll pay you an extra $50,000 if you finish the job". Gus agrees, and Gators performs its remaining obligations. The concert goes off without a problem. Mike is delighted and pays Gators $100,000. Gus emails Mike immediately asking for the additional $50,000 "as agreed".

Advise Gators whether it can recover the additional $50,000. [30 marks]

Issue RULES/LAW Application/analysis Conclusion