- Kara & Karl Kelsey – owners of Karacal Kitchens
- Nia Netsuke – home owner in Battery Point
- Barry Brickle – Karl’s cousin and employee of Karacal Kitchens
- Mark Smith – 15-year-old worker
- The Facts:
- Kara and Karl Kelsey own and operate Karacal Kitchens, a small business operating from premises at Coleman Street in Moonah. The business custom designs, manufactures and installs bespoke kitchens. The business began operating in 2010 and by the end of 2018 it employed two cabinet makers and two designers. One of these designers is Barry Brickle, he has worked for Karacal Kitchens since the partnership was established in 2010. He is Karl’s cousin and he lent the partnership $100 000 when it commenced business. He has not been repaid these funds but receives interest from the partnership. He works for a salary, designing kitchens and on occasion he assists in the manufacture and installation of kitchens.
- Nia Netsuke owns a home in Battery Point in Hobart. Barry Brickle lives next door to Nia and in December 2018 she asks Barry for a quote to design, manufacture and install a new kitchen in her home. Barry is thinking about retiring from his work with Karacal Kitchens so decides to provide the quote to his neighbour without informing the partnership. He has his own large shed at his home in Battery Point and believes he will be able to create the kitchen and install it without informing Karacal Kitchens.
- Barry provides drawings and design specifications to Nia. He quotes $45 000 for the work. This quote is not written up using the standard form used by Karacal Kitchens. Barry prepares the design while on site at the Karacal Kitchens business premises in Moonah.
- Nia accepts the quote and Barry commences work on the kitchen on the 20 January 2019. He believes that it will take between three to four weeks of work to construct and install the new kitchen. Barry books three weeks leave with Karacal Kitchen. He approaches his friend’s grandson Mark Smith who is fifteen years old and looking for work. Barry offers Mark 20 hours a week work, assisting in the construction of Nia’s kitchen. He agrees to pay him $20 per hour.
- At the end of February Nia’s kitchen is not complete, Barry has been too sick to work, and Mark has little ability to work unsupervised. Rather than disappoint his neighbour, Barry approaches Kara Kelsey and lets her know he has started work on a kitchen for his neighbour. Kara is annoyed but agrees to have the partly assembled kitchen moved to the factory in Coleman Street, Moonah. The kitchen is then finished and installed by Karl into Nia’s home in the first week in March. Karacal Kitchens sends Nia an invoice for $50 000 for the kitchen. Nia objects to paying this amount, saying she had been quoted $45000. Barry also sends an invoice to Karacal Kitchens for $12 000 saying he had purchased a lot of material himself that he used to construct Nia’s kitchen. Mark also sent an invoice for his work to Karacal Kitchens – (60 hours X $20 per hour) = $1200. He says he is owed this for working in Barry’s shed on Nia’s kitchen.
You are approached by Kara and Karl Kelsey, they are seeking advice on the following issues:
Questions on Contracts: Formation and Contents
- Are there any enforceable agreements between any of the parties? If so who are the parties to the agreement and what are the terms?
- Can either Barry, Karl and Kelsey argue that there is no contract with Mark because he is a minor?
- Can Nia use the legal principle ‘privity of contract’ to argue that she does not have to pay Karacal Kitchens for the kitchen?
Question on Contracts: Validity and Ending
4. Can Karl and Kara use the legal principle of ‘termination by subsequent agreement’ to make
the contract between Karacal Kitchens and Nia fully enforceable?
Questions on Competition and Consumer Law and Law of Agency
- Would the Australian Consumer Law apply to any of agreements? Why/why not?
- What legal relationship do you believe Barry has with Karacal Kitchens? Is he an employee or
- an agent and why does it matter?