QUESTION 1

Joe signs a contract to build a house for a client, the price is agreed and a time schedule is set for the completion of the new house. Joe employs two apprentices who are on lower wages than usual tradespersons and he also employs another two labourers on a day to day basis.

Joe organises work to begin, but the foundation work takes much longer than anticipated due to a need toremove some large rocks buried within the soil. The labourers he uses have found work elsewhere and thereappears to be no one else that he can find to do the heavy work needed on the new construction. One of theapprentices has now finished his apprenticeship and will have to be paid full trade wages. The otherapprentice has had to move interstate and is no longer available.

Joe is stuck without labour to finish the construction of the house, and the cost of having to employ tradespeople will mean he will lose money on the construction of the house. Joe wants to end the contract and believes under the circumstances that the contract is frustrated and impossible to complete. Joe informs the client that he cannot continue the work, but would like to be paid for work on the foundations.

REQUIRED

1.Can Joe claim the contract is frustrated?

2.Can Joe ask for payment for work done?

QUESTION 2

Gary runs a metal fabrication business in inner city Melbourne and has a long term lease of his factory. He has just won a tender to supply metal frames to be used in the construction of a high-rise apartment development. The contract to supply the metal frames will commence in six month's time, and there will be work for about 18 months of the project, which is estimated to last two and a half years.

A month before the first work orders are due, Gary is informed by his landlord that the state government, as part of the new East-West Tunnel Link project, has compulsorily acquired the property, and he has to vacate the premises within six months in accordance with the terms of his lease.It will take Gary time to find another factory and could take another six months to set up the factory to commence production of the metal frames.

REQUIRED

Advise Gary in relation to the contract to supply the apartment developer.

QUESTION 3

(a) Alan enters into a contract to build a granny flat at the rear of Joan's property ata cost of $55,000 with construction to be completed within four months from the date of the contract. Alan orders building materials from Jeff, who runs the local timber and hardware store. The building materials are delivered a month late, though Alan tells Jeff that should not be a problem and accepts delivery of them. A week later Alan changes his mind.

REQUIRED

Advise Alan of his legal position.

(b) Alan constructs the granny flat to frame stage and refuses to complete the rest of the project for reasons unrelated to the contract. Alan claims payment for $15,000 being the value of the work done to date.

REQUIRED

Advise Joan.