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Running head: MASTERS OF ACCOUNTING1Masters of AccountingName:Institutional Affiliation:
MASTERS OF ACCOUNTING2Masters of AccountingQuestion 1IssueThe issue is that Qantas Airlines Ltd got into contract with Airbus Corporation Ltd so that Airbus may build for it a new airplane. Using such airplane would earn Qantas $ 800.00 profit per day. The contract had numerous. One of the terms says that the plane must travel 10000 km at 800 km per hour. Another term among the many terms agreed upon was that the aircraft must have an in-flight video system that is able to show 36 channels of entertainment to passengers. However, after signing of the contract the Airbus forwarded a package of documents that included the contract itself, examples of the color scheme to be used, and also attached another document with a title ‘Limitation of Liability’. In the attached document Airbus stated that its liability for breach of contract is $ 300 000. When the airplane was delivered the engine was as per the contract, but due to company confusion, they loaded the wrong software into entertainment system that had 34 channels instead of 36. It will take one week for the software toget reconfigured. Therefore, Qantas Airline needs full advice on its legal position. LawIn this regard contract law provides the rights, duties and obligation of each party that hasentered into legally abiding agreement. Parties entering into a contract have the responsibility to make whatever the requirements they feel will satisfy their needs in relation to the conditions andsubject matter of the transaction (Grisham, 2016). A contract is a legal a binding agreement. For a contract to be valid, it must satisfy the following three essentials; agreement, intention to be legally bound, and consideration. The law requires that any party may fail to perform as per the
MASTERS OF ACCOUNTING3agreement will have breached the contract. Moreover, when one party violates the agreement, theinjured party may claim for damages. On the other hand, if the goods and services are not satisfactory, the buyer has the right reject them and claim for damages (Grisham, 2016). The damages may include the Liquidated damages and Compensatory damages. Under s. 17 Sale of Goods Act 1923 an implied condition clause states that the seller has a right to sell, and that agreement to sell will have right to sell at time property transfer (Yu,1999). Also s.18 of the Sales of Goods Act an implied condition states that goods should correspond with description.ApplicationThe case between Qantas and Airbus shows that there was an offer, acceptance and consideration. Qantas wanted an airplane of which Airbus agreed to manufacture as per the contract. This means that the two parties were expecting to gain something from the contract as stated under consideration doctrine. Qantas expected to receive a plane while Airbus expected to receive money out of it. Additionally, offers can be expressed orally or in writing or be implied from conduct. The cases Brambles Holdings Ltd v Bathurst City Council (2001) and Empirmall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) the court held that the agreement could be inferred from conduct. Under section 266 of the Sales of Goods Act, the Airbus is required to repair, replace, refund or pay for the damages within a reasonable time (Dewez, Ramberg, Uribe, Cabrillac & Pradera, 2011). In this case, it is evident that Qantas expects to make $800.00 profit per day, however, because of the one week requested by Airbus it will lose a lot of money. Therefore, for it to recover the damages, Airbus will have to take the responsibilities for the damage. If the defect is a major failure, the buyer in this case Qantas Airlines can either reject the plain or claim
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