Part A

William is the audit-in-charge of an auditing project, while Skylar and Katherine are audit juniors under Williams supervision.

In March 2020, because of tight deadline of an auditing project, Skylar and Katherine worked till 2am every day for the whole month. Since Skylar was from a very wealthy family, she did not care whether the firm paid overtime compensation, but just enjoyed working.

After the hard work of Skylar and Katherine, the auditing project was completed on April 1, 2020 without any delay. William said to Skylar and Katherine, After the firm has received the audit fee, I will give you two a big bonus! However, William broke his promise and did not pay any bonus to Skylar and Katherine.

Skylar did not care the money, but her boyfriend felt unfair. He forced Skylar to ask for the bonus that she deserved.

What is the best defence available to William for not to pay the bonus? You shall identify why consideration is critical for the bonus agreement, and is this contractual element valid in the bonus agreement. (12 marks)

Part B

After the above bonus conflict in 2020, Katherine felt disappointed with William. Unlike Skylar, Katherine has to support her family but her salary was just barely enough. In January 2021, Katherine borrowed one months salary from William. The salary has not been repaid.

In March 2021, Katherine wanted to resign because of the bad experience in 2020. William asked Katherine to stay on her job, he agreed that she was not required to repay the borrowed salary. Katherine agreed and stayed on her job.

However, in July 2021, William broke his promise again and claimed against Katherine for the repayment of the salary borrowed.

(1) How William may justify his argument that Katherine is required to repay the salary borrowed? (7 marks)

(2) Does Katherine has any defence not to pay the salary borrowed? (6 marks)

You shall NOT focus on employment law, or offer-and-acceptance issues for this question.