QUESTION 6

IRCA Recommended

Ace Constructions enter into a contract with Lismore City Council to build a new car park in the central business district and to complete the work within 30 weeks. Unfortunately a major flood in the city means that Ace is prevented from working for four weeks. Ace now wishes to have the contract terminated due to frustration. Advise Ace in these two scenarios: a) The delay plus the additional flood clean-up costs means that, although they can still complete the job within 30 weeks, Ace will now incur a much smaller profit on the contract. (5 marks) b) The delay plus the additional flood clean-up costs means that Ace will not be able to complete the job within the agreed time and incur a significant loss. (5 marks)