Case Study Assignment Answer
Task:
Problem Question
Part 1:
Sarah and Jane owned a pub. It was really taking off and so they decided to expand their live music operation. They wanted to really make a mark in the live music scene in Sydney but they were also aware of the possible problems that music venues encountered when inner-city suburbs become gentrified. They had already received a couple of noise complaints.
One night after the close, they were having a drink and discussing this issue when Jontie the bartender said he might be able to help. He told them that a friend of his, Fern, had recently moved to Sydney from Melbourne and was trying to establish a sound architecture business. As such on 1 March 2017, Sarah and Jane invited Fern over to discuss how to improve the acoustics and minimize the noise pollution from their pub. Fern met with Sarah and Jane, who said that they were looking for some ideas on how to improve sound for live performances in the pub without affecting their neighbors. They agreed that Fern would prepare a report for the business as soon as possible.
This report would address sound absorption, noise minimization in the existing structure and would also include plans for a new sound pod jutting out into the courtyard which would accommodate an additional performance space. Fern jumped at the opportunity. She wasn’t doing anything else (in fact she was at the pub almost every night) and was keen to build up some experience.
On 1 April 2017, Fern sent Sarah and Jane an initial report outlining a number of low-cost solutions they could implement right away. Sarah and Jane set to work to implement these. The total cost for the improvements was 10 thousand dollars. On 30 April 2017, Sarah and Jane invited Fern over to
treat her to a special dinner with some fancy wines from their collection to thank her for her work. After a few more months (on 1 June 2017, Fern presented Sarah and Jane a plan with full costings. She also presented them with an invoice for her services of 8 thousand dollars. This fee included the
preparation of the 1 April report.
Sarah and Jane are scandalized – they did not think that they had entered into a formal contract with Fern at this point but rather were just scoping things out with her. What is your advice to Sarah and Jane in relation to whether a contract exists between them?
Part 2
After the initial shock, Sarah and Jane decide that actually, Fern has done a great job. The pod is amazing and this project will put them on the map. They, therefore, call in Fern and decide to enter into a ‘legit’ contract with her to see this project to the end.
On 30 June 2017 they draw up a contract using a template they find on the internet which contains the following term:
Fern will project manage the building of the pod for a set fee of 20 thousand dollars to be
paid upon completion of the project on 30 June 2018. Nine months into the project (20 March 2018) Fern’s career has taken off. She has so many projects she doesn’t know what to do. She tells Sarah and Jane that unless she gets some more money, enabling her to employ some people to help her, she will have to pull out of the project. Sarah and Jane agree to a 15% increase in the total contract cost. No other changes are made to the contract.
At this stage, they really don’t want to start negotiating a new contract and they don’t want to jeopardize the finishing time of their original contract – they have announced their line ups for the second half of the year, it includes some big international bands and they can’t afford to risk the
timeline of the project.
The project continues and is finished on time – it’s Amazing! But when Fern asks for her fee Sarah and Jane refuse to give her the additional 15% that they negotiated. What is your advice to Fern here?
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