The wine shop Extravagant Wines is meeting all sales expectations, and it is turning a healthy profit. Extravagant Wines enters into a contract to buy twenty cases (240 bottles) of a 2017 vintage premium wine made from shiraz grapes from Koala Winery in Victoria. Under the contract each bottle costs $50. After the contract is entered into, the wine wins an award for the worlds best shiraz at the 2021 World Wine Awards and its market price skyrockets to $400 per bottle. Koala Winery is keen to avoid its obligations under the contract, so it can keep the award-winning wine and sell it at the new higher market price. The owner of Koala Winery (Barry) sets up a company, Gumtree Grapes Pty Ltd, and transfers the wine to the company. Barry is the sole director and shareholder of Gumtree Grapes Pty Ltd. When Extravagant Wines follow up about the wine order via email, Koala Winery writes back the following message: Sorry, but the wine is no

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longer in our possession. We are happy to give you compensation for breaching the contract (given your expected profit of 10% on each bottle, we will offer you $1200 in compensation).

In Part B you must use your knowledge of Australian company law to write a report which:

1. Describes what argument will be raised by Barry in his attempt to avoid liability under the contract

   with Extravagant Wines.

2. Advises Extravagant Wines whether it should sue for the wine or accept the offer of compensation

   from Koala Winery. In your answer you must describe the likely outcome of this case if it is litigated in court and identify, describe and apply one relevant case law authority.