Sarah is very keen on sailing and wants to purchase a yacht.  Looking through the for-sale advertisements on treegum, Sarah notices that Andy has a yacht for sale. Sarah contacts Andy and arranges to inspect the yacht.  On Thursday afternoon Sarah and Andy meet at the local marina. Andy shows Sarah the yacht.  

Andy and Sarah discuss and agree on a number of terms.  These include:

• A purchase price of $12,000.
• The purchase price is to be paid in two instalments:
  • A deposit of $1,200 on signing the contract and
  • The balance on transfer of ownership.
• Andy is responsible for preparing any transfer of ownership and registration paperwork.
• The settlement or completion date is 10 August 2023.

Sarah is extremely happy with the yacht and has just one question. Sarah says that she will purchase the yacht from Andy only if it is less than 10 years old. Andy responds that they can guarantee that the yacht is only 5 years old.  On that basis Sarah agrees to purchase the yacht. 

Andy has a contract of sale drawn up which Sarah signs and pays the initial deposit. Andy and Sarah met on the 10 of August 2023 and exchange transfer and registration papers and Sarah also transfers the balance of the purchase price to Andy.

A few weeks later and unfortunately for Sarah she discovers that the yacht is closer to 15 years old than the 5 that Andy claimed. Sarah approaches Andy with this information and demands her money back. Andy has a copy of the contract and explains to Sarah that none of the terms of the contract mention the age of the yacht. Andy explains to Sarah that they are only bound by the terms of the written contract.

Sarah wants to know if she can sue for breach of contract.

 

Questions ( apply the IRAC method to answer ):

• Provide David with a memorandum of advice that explains the concepts of contract formation.  Your advice should include a discussion on offer, acceptance consideration and intention.  You should also provide advice on if a contract was validly formed.
• Advice should  to include relevant case (common) law to support your legal principles