Part A: Contract Law Question

i. Read the two alternative Contracts Law questions below and choose one question to answer.

ii. answer your chosen question using the IRAC method.

iii. Your answer must be supported by relevant law and cases decided by Australian courts (preferably the High Court) and/or scholarly articles. A minimum of 3 references are required for this part of the report.

iv. Your references must be listed in a Reference list at the end of the Part A question.

Part A: Contracts Law Questions

Option 2

Frederick Forthryrt is the author of the bestselling novel The Day of the Yokel, which was published by Metro Publishers last year. Forthryt has just completed his second book, The Fourth Pretzel.

Forthryrt does not believe that Metro treated him well, considering the success of his first book. At a party in late February, Forthryrt met Boswold, who was the chief editor at Boswold Books, and asked whether Boswold would be interested in publishing his second book.

Forthryrt said:

‘Mind you, I wouldn’t settle for anything under 40 grand.’

Boswold said he thought that was a fair price.

On 3 March, the editor at Metro Publishers telephoned Forthryt and asked whether he had competed his second book. Forthryrt answered:

‘Yes, and I’m going to sell it to the highest bidder. And I’m dead serious about that.”

The editor at Metro said his company was prepared to pay him $50,000. Forthryrt said he would ‘think about it’.

On 4 March, Forthryrt received a letter from Havoc Films in which Havoc said I would pay him $45,000 for the rights to make The Day of the Yokel into a film. That afternoon Forthryrt wrote back saying:

‘I accept your offer, but must have final say in who plays the lead role.’

On 10 March, Forthryrt received a letter from Boswold enclosing a Boswold standard form contact. In the letter, Boswold said:

‘Further to our agreement re publication of your second book The Fourth Pretzel, please find enclosed formal contract for $40,000 for your signing.’

The contract included a clause specifying the sale included ‘all rights to newspaper and/or magazine serialisation of the said book’ as a non-severable part of the package Boswold was prepared to pay for. Forthryrt did not read the clause. He telephoned Boswold and told him that Metro was willing to pay $50,000 for the book. Boswold said:

‘Well, we can go as high as $45,000.’

Thinking that Boswold Books would give him better treatment than he had received from Metro, Forthryrt substituted $45,000 for $40,000 as the sum payable under the contract and signed the contract. He then put the contract in an envelope and took the envelope to the local post office where he handed it across the counter to a postal worker he knew.

Outside the post office, Forthryrt met Pickwick, a well-established publisher who had a reputation for treating his authors well. Pickwick said he wanted to publish The Fourth Pretzel and, when Forthryrt replied that Boswold Books had said it would pay $45,000, said:

‘Oh that mob. They’re about to go belly up.’

Forthryrt immediately returned to the post office and persuaded the postal worker to give back the envelope containing the contract. Pickwick then wrote a cheque for $45,000 and he and Forthryrt shook hands on the deal.

Advise Forthryrt fully with respect to the contracts that now bind him (if any), indicating when such contracts were concluded.