THIS QUESTION IS FROM 2017 SAMPLE EXAM PAPER AND IS ONLY USED FOR REVISION

Donna owns a large corner block in an outer Brisbane suburb, which is located close to a new train station. She believes that by building a two-bedroom flat over her garage (which will have its own entrance), she can generate approximately $460 per week in rental income.

Donna obtains a quote from Brisbane Constructions Pty Ltd. The quoted cost of construction of the flat is $102,000 and the deposit payable is 10%. The quote states that this amount

'Includes all aspects of the building project including fixtures and fittings but excluding curtains".Donna is very happy with the quote (she thought it may have been over $150,000) and visits Alexander (the employed construction manager for Brisbane Construction Pty Ltd) to tell him that she accepts the quote and to pay the $10,200 deposit. Alexander gives her a receipt for the deposit, but he and Donna become so busy discussing colour schemes they forget to make and sign a written contract.

Later Alexander realises that the quote was missing a "5" as the construction price on the quote should have been "$152,000". Brisbane Construction Pty Ltd was to commence building this morning but they do not turn up. Alexander leaves a message on Donna's answering machine stating that "If you want the work done, the price is $152,000". Donna though there was a contract and is very confused by this message. Donna comes to you for advice as she cannot afford to pay a higher price.

Advice Donna.

You are to assume that the flat construction will comply with all building codes and planning and licensing requirements. Ensure you refer to appropriate case law in your advice.