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Ever since she was a little girl, Claudia had dreamed of becoming a celebrity chef. If it was food-related, she
was into it: by the time she finished high school she had two food blogs, a YouTube channel, an appearance on
Junior Masterchef and even a semi-successful Instagram under her belt – page after page of sumptuous plates
shot under perfect lighting.
While Claudia dreamed of culinary school and opening a three-star restaurant, her parents had other plans,
insisting that she go to university instead. Reluctantly, Claudia enrolled at the University of Sydney in 2016 and
found her Commerce degree to be surprisingly enjoyable. CLAW1001, of course, was her favourite subject, and
it wasn’t long after finishing the course (with a highly respectable Distinction grade) that she began to think
about how she might put the skills she had learned to good use.
Claudia knew from her studies in BUSS1001 the importance of spotting business opportunities, and it wasn’t
long before she realised that a golden opportunity was right in front of her. “The food on campus is terrible”,
she said to herself. Why not combine her love of food with her newfound love of business? After applying
Porter’s five forces and conducting a careful SWOT analysis, Claudia was convinced that there was a market on
campus for a food truck selling quality treats students really wanted to eat (and photograph): gourmet
dumplings, proper hand-made sushi, cold-drip coffee, artisanal cronuts and deconstructed Nutella
sandwiches.
After a frantic night of writing recipes and drawing up business plans, Claudia approached the University to ask
about how she might get started with her idea and was told that she would first need to obtain a licence to sell
food on campus from the Sydney University Students Society. Later that week, Claudia met with Paige, the
society’s president, who passed a thick pile of paper across the table to her. “The annual license fee is here”,
Paige said, pointing to a page in the contract. “Read the rest of the terms and conditions if you like, when
you’re happy sign it and you’re good to go”.
Claudia knew from her CLAW1001 studies that it was important to always read contracts, so she quickly took a
look at the terms and conditions. She noticed a clause on page 27 of the contract, which was written in very
small but bold font:
Clause 84(a)(3): All food license holders serving coffee must use only Scadente brand coffee beans, which
shall be purchased from the Sydney University Students Society at a price which the Society sets from time
to time.
“What’s this about? I was hoping to use my own suppliers for coffee”, asked Claudia, launching into an
enthusiastic lecture about the benefits of single-origin, mountain-grown organic beans.
“Oh, I’m glad you asked, because this is quite important” replied Paige. “We have a relationship with the
supplier and this enables us to pass on to you the best possible prices.”
“So there’s no room to change that term?” “No”, Paige said firmly. “It’s for your own benefit and ensures that
we provide the best possible coffee to our students”.
Sceptically, Claudia looked at the price list that the Society was charging for coffee and to her surprise thought
it was fairly reasonable. She signed the contract with a shrug, musing that her unique cold-drip preparation
methods would set her apart from the competition in any case.
The next few weeks were an exciting time for Claudia as she decorated her food truck, took promotional photos
and launched a successful viral social media campaign via the USYD Rants page on Facebook. Realising she
would need more than one chef to make her vision a success, she contacted Jimmy, an acquaintance who she
had met on Junior Masterchef some years ago, and offered him a job at her new food truck. Excited at the
prospect of finally holding down a stable job, Jimmy called Claudia to discuss the position.
“So it’s just like, cooking right?”, Jimmy asked. “I’m hopeless at serving customers.”
“I just need you to help out”, replied Claudia. She knew the importance of ensuring all of her contracts were in
writing, and later that day sent Jimmy an employment contract to sign based on a template she had found
online. In the contract, under the heading “Employment Duties”, Claudia had written:
Food preparation and other related duties.
Jimmy signed the contract without looking at it and sent it back to Claudia the next day.
Before long, the day of the grand opening of CFC – Claudia’s Food Corporation – finally arrived. With great
fanfare, Claudia and Jimmy set up the food truck underneath the tree at the front of the Abercrombie Building.
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The coffee had been brewing all night, the dumplings were juicy and freshly steamed; the sushi rolled to
perfection. The cronuts were piping hot and the smell wafted up Codrington Street, rapidly drawing a large
crowd.
Claudia beamed with delight. It was going to be a good day.
Claudia seeks your advice on the following. Answer each question separately. Focus on contract law issues
only. (5 marks each)
1. The grand opening of CFC has gone spectacularly well. By 11:15am, the queue had stretched all the way
to the Merewether Building and was showing no signs of abating. While Jimmy worked the kitchen,
Claudia was flat out serving customers. Checking her Facebook, Claudia saw her first negative social
media post complaining about the length of the queue, and was horrified.
“Jimmy!”, shouted Claudia. “Come out here and help me serve, we have enough food prepared!”
“But…I don’t deal well with…customers…”, mumbled Jimmy. He had always been nervous around large
crowds. Flustered, Claudia shrieked “I’ll double your pay for today if you just get out here, have you
seen the line?!” Jimmy stepped out to the counter reluctantly and, with the two of them working
together, the length of the line began to drop. At the end of the day, however, Claudia has refused to
pay Jimmy the extra money promised, saying “he did a lousy job anyway”. Jimmy is furious.
2. A week after the grand opening, Claudia received a letter from the Sydney University Students Society
advising her that due to an unexpected budget shortfall caused by a decline in Society membership,
the price of Scadente brand coffee beans was increasing to triple its original price per kilogram.
Claudia has called Paige to demand an explanation but has simply been told “the contract is the
contract – you’re doing good enough business anyway so you can afford it”.
3. Over the next week or two, CFC became a campus sensation. Soon, Claudia was thinking about the
possibility of expanding to other University campuses. Claudia’s friend Manuela has approached her
about the possibility of setting up an outlet of CFC at the University’s Cumberland Campus. Excited at
this opportunity, Claudia entered into a contract with Manuela in which Manuela would receive
Claudia’s secret recipes and the right to operate a CFC outlet at Cumberland, in exchange for a
fraction of Manuela’s profits. The Cumberland outlet of CFC opens to great success a few weeks later.
One day soon afterwards, however, the usual 11am line-up outside CFC on main campus has vanished.
Confused, Claudia checks social media and sees a flurry of Instagram posts and tweets about the new
campus sensation, MCM – Manuela’s Culinary Monopoly, a new food truck set up just outside the Law
School Building. The line stretches all the way over the City Road footbridge to the SciTech Library.
MCM’s food offerings are suspiciously similar to Claudia’s. In a rage, Claudia stormed over to MCM to
find Manuela smiling and greeting customers there. “How could you DO this to me?!”, she shouted.
Manuela simply shrugged. “Well, I read your contract carefully and there’s nothing there to say I
couldn’t do this”, she said with a smile.
4. In an effort to cut costs now that her daily patronage has shrunk, Claudia has stopped using Scadente
brand coffee beans and has switched to her preferred brand of single-origin, mountain-grown organic
beans which were much cheaper (and taste much better anyway, according to Claudia). In response,
the Sydney University Students Society has terminated the contract with Claudia and revoked her
licence. “My dreams are shattered, and all over a brand of coffee!”, moans Claudia to you. “Surely they
can’t do this?”
In addition to the 20 marks allocated for the above, 5 marks will be allocated for structure, evidence of
research, expression, spelling/grammar and correct referencing for a mark out of a total of 25 marks.
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