(Solution Document) Fern Gully Nurseries Pty Ltd (FGN) contracted with Jim Spade trading as Spade Cu

Fern Gully Nurseries Pty Ltd (FGN) contracted with Jim Spade trading as Spade Cubbys (SC) for SC to construct 20 architecturally-designed cubby-houses, with the houses tobe completed by 1 October 2016 at a contract price of $20,000, with payment to be made on signing.

1 October 2016 was crucial to FGN as time was required to have the cubby houses painted and decorated prior to the busy Christmas season. FGN had already pre-sold 9 of the 20 cubby-houses to a property developer for $18,000. The property developer required them to be delivered onto his site by 15 October 2016 at the latest.

Happy with the terms, both parties signed on 15 June 2016 and FGN paid the $20,000 by electronic funds transfer.

Jim soon realised he had seriously underquoted on the job. He ran out of money in mid-July 2016 and looked as if he wouldn?t be able to complete the contract. Jim toldFGN of the situation and said he wasn?t able to continue.

FGN, aware that it would take longer to have the cubby houses completed if they engaged another builder, and aware they would lose business with the developer,suggested to Jim that he should complete the work in return for which FGN would paySC an additional $10,000. Jim accepted this suggestion and FGN immediately paid$2,000 into SC?s bank account by electronic funds transfer. SC completed and delivered the cubby-houses to FGN on 1 October 2016.FGN has now refused to pay SC the remaining $8,000, claiming that AC provided no consideration for the extra payment.

Advise Jim (In reference to AUSTRALIAN contract law only) 


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