Internal Code - MAS1619
Case Study -
Derrick runs a sports tourism agency in Perth. His business provides clients with unique opportunities to attend high profile American sporting events, and meet professional athletes in a private setting. His business also organises the flight, hotel and restaurant reservations for these tours, so that clients can better enjoy the overall experience.
In March 2016, Derrick’s cousin Carmelo, phones Derrick and asks him to book Carmelo a place on the NBA (National Basketball Association) finals tour to take place in June 2016. For the cost of $30,000, participants of this tour are secured tickets to every finals game, and get to attend pre-game functions with past greats of the game such as Michael Jordan and Magic Johnson. Derrick needs to check the availability of places left on that tour, so he says
to Carmelo that he will email him back once he has figured out what he can offer him. Later on that day Derrick emails Carmelo the following:
“Hey Cuz. Good to hear from you today. I have one available spot left on the NBA finals tour running in June 2016. The package includes premium travel and accommodation in each city, so the best I can do pricewise is $25,000. I can’t wait around with this for long, so if you are in, you need to let me know by close of business tomorrow. An email or text will be fine. Cheers Derrick.”
The next morning Carmelo reads the email and is happy with everything that Derrick has stated except the price. A qualified accountant who tries to help out his family whenever he can, Carmelo has done Derrick’s personal and business tax returns for the past 10 years for a nominal fee, which has saved Derrick a lot of money over the years. Two hours before the close of business, Carmelo sends Derrick an email that reads:
“Thanks for letting me know that Derrick. I am in on the tour, but I am only willing to pay $20,000, as times are a bit tough with the accounting business. The rest you can cover for all of that work that I have done for you over the years.” Upon receiving Carmelo’s email, Derrick immediately responds by writing, “Fair enough and all good. You have my bank details so deposit the $20,000 by the end of the month. You are going to enjoy this trip Cuz!”
In late May 2016, a week before the tour is to start, Derrick goes over the tour documentation, and realises that because he had dealt informally with Carmelo concerning his participation on the tour, he had not booked flights and accommodation for him. Because of the popularity of this impending finals series, only the cheapest flights and
accommodation are able to be secured for Carmelo at this late stage. When Derrick notifies Carmelo of this, Carmelo is upset, and insists that Derrick take the cheap flights and accommodation, and give to him Derrick’s premium travel and accommodation for the tour. Derrick refuses to do this, citing the need to stay with the rest of the touring party at all times. After hearing this, Carmelo notifies Derrick that he will be seeking legal advice on the matter.
1 .Using the four-step process, discuss the elements of intention and consideration required for the formation of a contract. In particular, consider whether these elements have been met in order for there to be an enforceable contract between Carmelo and Derrick.
2 .Assume that the elements of intention and consideration required for the formation of a contract exist. Using the four-step process, discuss whether the element of agreement required for the formation of an enforceable contract can be established. Can Carmelo require Derrick to provide him with the premium travel and accommodation for the tour?