Question 2 (8 marks)

Olivia inherited a large sum of money from her grandmother. She decided to purchase a holiday unit from Blue Skies Pty Ltd (Blue Skies) as an investment property. Prior to signing the contract, Blue Skies advised her that they would be constructing wetlands adjacent to her property, which would give a lovely view and likely increase the value of her property.This commitment was backed up with copies of drawings, designs and emails. It was upon that commitment that Olivia purchased the town house and signed the contract. Clause 38 of the contract states:

Entire agreement

To the extent permitted by law, in relation to the sale of the Land by the Vendor to the Purchaser, this Contract:

(a)embodies the entire understanding of the parties, and constitutes the entire terms agreed on between the parties; and

(b)supersedes any prior written or other agreement between the parties.

After purchasing the unit, it became apparent that Blue Skies was no longer going to construct wetlands. Olivia knows that you are studying Law for Commerce and remembers you mentioning something about collateral contracts. She decides to sue Blue Skies for a breach of a collateral contract.

Advise Olivia if she will succeed in her claim and why. Please use case law to support your answer.