Question Three: 16 marks

Justine Jones owns and operates a small motel in Auburn, Victoria. Following some bad reviews online about the outdated decor of her rooms, Justine decides to renovate and modernise her accommodation offering.

Justine contacts Leroy J's Building Construction and speaks to the owner Leroy. She informs Leroy that she would like to replace all of the tiling and carpet in each of her ten motel rooms. She also tells Leroy that she is looking to spruce up the motel's pool with a new fence (the current fence had deteriorated and started to rust). Leroy tells Justine that she is in good hands and that he would be over shortly to "measure and quote".

A few days later, Leroy visits Justine to measure the motel rooms and pool fence. He also shows Justine a sample of tiles and carpet for her to consider. Although he does not have samples for the fencing, he shows Justine a photo of what looks to be a glass balustrade type fence that he had recently installed for another client.

Justine is quite impressed by the modern look of the glass panelling and also likes the regal red wool carpet and timber-look porcelain tiles shown to her. She emphasises that the materials must be of the highest quality and, most importantly, meet all required standards and regulations. Leroy assures Justine that his business uses "

only the highest-grade materials and a lifetime warranty on all works". Pleased with what she hears, Justine immediately agrees to use Leroy's services.

To finalise the agreement, Leroy provides Justine with a standard form contract. The agreement provides for Leroy to procure and install 240m2 of "red carpet" and 60m2 of "matt natural-look timber tiles". It also provides that Leroy would install 45 meters of "pool barrier fencings" (with no further description). The agreement stipulates that Justine must pay the cost of materials and $250 per hour for labour.

Justine signs the contract after quickly glancing at the costs. She does not bother to read the remaining portion of the standard agreement and fails to notice the following term:

"Leroy J's Building Constructions provides no warranty or guarantee that any materials supplied under this Agreement will be of a satisfactory quality, match or comply with any sample or description, or be fit for any purpose, howsoever described or disclosed."

Justine returns the signed agreement to Leroy and asks him how much labour he though would be required to complete the works. Leroy tells Justine that he "can't see it taking any more than 50 hours."

A week later, Leroy returns with the materials and carries on the work as specified under the contract. However, upon completion, Justine is dismayed to find that the carpet installed is a maroon colour (and definitely not plush). She also finds that the tiles are ceramic, which are cheaper and harder to keep clean in comparison to

porcelain. The pool fence is also discovered to be a cheap acrylic Perspex material rather than glass as Justine had originally envisaged.

To make things worse, an inspection by the Boroondara City Council discovers that the pool fence is only 1000mm high when regulations require it to be at least 1200mm. Consequently, Justine is forced to close the motel until a new fence is erected.

Justine is furious and immediately calls Leroy for an explanation. Leroy explains to Justine that he had "only installed what she had ordered". Justine asks about the lifetime warranty on all works and materials, to which Leroy responded, 'that's not in the contract."

A few days later, Justine receives an invoice from Leeroy demanding that she pay $160,000 within 30 days. This includes $140,000 for materials ($70,000 for "red carpet", $50,000 for "timber-look tiles", and $20,000 for "pool fence material") and $20,000 for 80 hours of labour. She tries to call Leroy to discuss, but he is now refusing to take her calls.

Justine is horrified by the situation and refuses to pay a cent. She has come to you for advice as to whether she is required to pay Leroy. She tells you that she has spent

$40,000 rectifying the pool fence, and has lost $25,000 in income while she was forced to close the motel. She would also like to know whether she has access to any remedies under contract law.

Required:

Using case and statutory law, advise:

a) whether Justine has any obligations to pay Leroy; and

b) whether Justine has access to any remedies under contract law.