QUESTION: Sigmund Renovations is a large interior design company based in Perth that specialises in entertainment and game room design and remodelling and have a reputation as being market leaders in commercial and residential entertainment room renovations. In October 2019 the Board of Directors at Wanneroo Nursing Home, who are empowered to contract for the nursing home, entered into negotiations with Sigmund Renovations over the remodelling of the entertainment hall at the nursing home. The two parties hold discussions for two months about the design and servicing fees that would be required for the remodelling. Finally, on 12 December 2019 the parties agree that Sigmund Renovations would restructure Wanneroo Nursing Home's entertainment hall to fit a mini ten-pin bowling alley and install an in-wall home theatre system for a total cost of $700,000. Since the local planning and building laws demand that all building and renovations contracts have to be in writing and signed; the lawyers for Wanneroo Nursing Home inform Sigmund Renovations that they would draft a contract, integrating all the details of the agreement, and would have it ready for signature on 10 February 2020. On 3 January 2020 the Board of Directors at Wanneroo Nursing Home get impatient about waiting for the contract to be finalised and instruct Sigmund Renovations to start work on the entertainment hall, assuring them that they would sign the contract immediately it is finalised, and also make the payments when the work is complete. Unbeknown to Sigmund Renovations, the Board of Directors at Wanneroo Nursing Home had in their last election pledged to upgrade the entertainment hall but had failed to take any action for the past three years and were in a rush to fulfil their election promise before the next election which was scheduled for 31 January 2020. On 5 January 2020, Sigmund Renovations started working on the nursing home's entertainment hall after being assured by the Board of Directors that the pending contract would be signed once the lawyers had finalised drafting it. On 31 January 2020, Sigmund Renovations had only completed two thirds of the renovation work on the entertainment hall, costing around $400,000, when the Wanneroo Nursing Home stakeholders elected a new Board of Directors. The incoming Board of Directors had pledged to emphasis on physical health by focusing on increasing outdoor activities for the residents, which would be funded by cutting expenditure on indoor entertainment amenities. Following their election, the new Board of Directors writes a formal notice to Sigmund Renovations on 2 February 2020 demanding that they remove the bowling alley and wall speakers that had already been installed in the entertainment hall and return the hall back to its original state. These removals would cost Sigmund Renovations an additional $100,000. Sigmund Renovations tries to plead with the new Board to honour the renovations agreement concluded in December 2019 but the Board insists that, "there is no formal signed renovation contract between Sigmund Renovations and Wanneroo Nursing Home, and therefore they are not bound to pay Sigmund Renovations for the work done on the entertainment hall". Sigmund Renovations comes to you seeking advice on their legal position. Advise Sigmund Renovations on whether they can take any legal action on the matter. Restrict your analysis to legal principles and cases covered in Contract Law only. (30 Marks) 4 Sample Answer Structure: Students are required to use the IRAC legal problem solving format in answering this question.

What is the Issue?

What is the Relevant law?

Apply the law to the facts:

Conclusion: