2018 LAW00150 Introduction to Business Law Assignment 2 LEGAL PROBLEMS (30 marks) Marking criteria for all problems. Each problem is worth 5 marks. You will be assessed on your ability to: · identify...

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2018 LAW00150 Introduction to Business Law Assignment 2 LEGAL PROBLEMS (30 marks) Marking criteria for all problems. Each problem is worth 5 marks. You will be assessed on your ability to: · identify the legal issues; · apply your knowledge of the law to identify the relevant rules or statutes for the problem; · identify the relevant cases; and · reach a conclusion whilst explaining your reasoning Note – there is NO rubric for this assignment as each problem has clearly stated expectations Problem 1 (5 marks) Topic 3 only Charlie operates a flower shop. He agrees to sell his business to his sister Ali for $45,000. They both use their own solicitors to negotiate the terms of a formal written agreement. The agreement contains a restriction that Charlie cannot, in the following two years, open another flower shop within 2 kilometres of the one he has just sold to Ali. After six months, however, Charlie opens another flower shop just one kilometre away. Ali wants to sue Charlie for a breach of contract but fears the agreement was not intended to be legally binding because they are siblings. Ignore any restraint of trade issues in your answer a) What is the issue you need to consider? (1mark) b) What are the relevant legal rules relating to this problem? (1 mark) c) What are the main cases related to this problem? (1 mark) d) Based on this information, if Ali sues Charlie for breach of contract, will she win in court? What is your answer – yes? or no? Explain your answer. (2 marks) Problem 2 (5 marks) Topic 3 only Nick is organising a university student party at the student union building. He approaches the local police, wanting them to keep out “undesirables” such as drug addicts and Brisbane Bronco supporters. The station sergeant informs him that he would have a patrol car call in periodically during the evening. Nick says he actually wants an officer stationed outside the entrance all night but is informed this will cost him $1000. Nick agrees to this proposal. After the big event, when Nick receives the account from the Police Department, he refuses to pay. The Police Department sues Nick for a breach of contract. a) What is the issue you need to consider? (1mark) b) What are the relevant legal rules relating to this problem? (1 mark) c) What are the main cases related to this problem? (1 mark) d) Based on this information will Nick win in court? What is your answer – yes? or no? Explain your answer. (2 marks) Problem 3 (5 marks) Topic 3 only Mike, a motor mechanic, owes Helen $5000 due and payable on 24 June 2018. He phones Helen and informs her that he has lost his job and there is no chance he can hope to pay the full debt for a while because there are no job opportunities for mechanics in the area. Helen says “if you can bring me $1000 on 24 June, and while you’re here check my BMW’s steering because I’m worried there’s something wrong with it, I promise I will not sue you for the rest.” Mike does as Helen asks and then learns that she is suing him for the outstanding amount. a) What is the issue you need to consider? (1mark) b) What are the relevant legal rules relating to this problem? (1 mark) c) What are the main cases related to this problem? (1 mark) d) Based on this information, if Helen sues Mike for breach of contract will she win in court? What is your answer – yes? or no? Explain your answer. (2 marks) Problem 4 (5 marks) Topic 4 only Lizzie sees a big sign in the window of the local video shop advertising a special membership offer of 100 overnight DVDs for the next three months for only $100. The sign also lists the numerous terms and conditions of the membership contract. Lizzie pays the $100 joining fee and commences to enjoy recently released movies at that cheap price. Several weeks after joining Lizzie rents an overnight DVD and, because she falls ill, does not return it for eight days. When she does return the DVD, the shop owner tells her that she must pay an extra $140, referring Lizzie to a term of the contract that states: “Hire of DVDs under this agreement is restricted to overnight hire only. Any such DVD not returned by 3pm on the following day must be paid for at the rate of $20 per day.” The normal late fee in the DVD-hire industry is $5 per day. a) What is the issue you need to consider? (1mark) b) What are the relevant legal rules relating to this problem? (1 mark) c) What are the main cases related to this problem? (1 mark) d) Based on this information, if The DVD store sues Lizzie for breach of contract will the store win in court? What is your answer – yes? or no? Explain your answer. (2 marks) Problem 5 (5 marks) Topic 4 only Tori took her best dress to the dry cleaners because it was badly stained at a recent party. She was asked to sign a small document which looked a bit like a receipt but was headed Agreement and contained the following clause, We will not be responsible for any loss or damage of whatever nature or howsoever caused. Tori’s dress is damaged beyond repair and she demands compensation from the dry cleaner’s owner who flatly refuses and draws her attention to the above clause in the agreement. Tori hadn’t actually read the wording before she signed because it never occurred to her that anyone could avoid their obligations in this manner. a) What is the issue you need to consider? (1mark) b) What are the relevant legal rules relating to this problem? (1 mark) c) What are the main cases related to this problem? (1 mark) d) Based on this information, if Tori sued the dry cleaners for the destruction of her dress would she win in court? What is your answer – yes? or no? Explain your answer. (2 marks) Problem 6 (5 marks) Topic 5 only Sandra wishes to buy a new copier for her accounting business. She tells Mr Smith of Smith’s Office Equipment that she needs one that can handle large volumes and can sort and complete work very quickly and asks for his advice on which copier she should purchase. He recommends a particular model that Sandra purchases for $12,000. Within a week she discovers that her new machine is very slow, continually overheats and is unable to handle the large amounts of work she requires. Parts of the copier have fallen off and cracks have appeared in the glass. When she tells Mr Smith he responds that it’s not his concern and she should take it up with the manufacturer. Refer only to the Goods Act 1958 (Vic) as per your textbook a) What is the issue you need to consider? (1mark) b) What are the relevant sections of the Goods Act? (1 mark) c) What are the main cases related to this problem? (1 mark) d) Based on this information, Does Sandra have any rights against Smith’s? What is your answer – yes? or no? Explain your answer. (2 marks) Slide 1 TOPIC 3 Making the contract Part 2 Ch 5 of Textbook Remember the 4 elements Offer Acceptance Intention consideration The last two elements Intention and Consideration As well as offer & acceptance… For a contract to exist, there must not only be agreement, but also: intention to be legally bound; and consideration. Intention (cont) For social or domestic agreements, courts begin with the presumption that the parties did not intend to contract. – see Balfour v Balfour Intention (cont) For commercial agreements, the courts begin with the presumption that the parties intended their agreement to be legally enforceable. – see Carbolic Smoke Ball case Intention (cont) The ultimate question is always whether a reasonable person present at the time would have concluded that the arrangement was contractual. Ermogenous v Greek Orthodox Community of SA Thus each presumption is rebuttable if there is evidence indicating a contrary intention – see Todd v Nicoll (domestic/social) & Rose & Frank v Crompton (commercial). Letters of comfort and heads of agreement/letters of intent Letters of comfort are provided where the provider does not wish to give a formal guarantee Kleinwort Benson v Malaysia Mining One party wants them to be binding the other doesn’t With heads of agreement or letters of intent – look at wording for intention Air Great Lakes v Easter and Coal Cliff Collieries v Sijehama Letters of comfort Consideration What is it? Both parties must provide something of value in return for the promise made to them Must be present in every simple contract Not required for deeds (contracts under seal) Example of Deed History of consideration Read green section on p. 200 Contract law a relatively recent development. Chancery (Equity) would intervene to uphold promises on the basis of conscience. Look at the intention (position in most civil law countries) Common law courts only looked to see if valuable consideration Parties to a contract Examples of consideration Consideration may be: A promise to do something A promise not to do something Doing something Carlill v Carbolic Smoke Ball Co Refraining from doing something A benefit flowing to the promissor A detriment to the promisee Examples of consideration Executed Where you have acted upon your promise (present consideration) Executory Where you are yet to act upon your promise (future consideration) Examples Here’s $2 for this loaf of bread (both executed) Here’s $20 for the meal I’ve just ordered which will be delivered by waiter in 10 minutes ($20 = executed and meal = executory) Consideration - Rules Consideration must move from the promisee Dunlop Pneumatic Tyre v Selfridge (see next slide) Only parties to the contract can sue for breach of contract (privity of contract) If a promise is made to two or more persons jointly, only one of those persons need provide consideration (‘joint promisee rule’) – see Coulls v Bagot’s Executor (no case note) Privity rule has exceptions eg Trident …from the promisee… The privity rule - example Alice promises to pay $500 to Barry if Barry will build a garage for Clive. Barry agrees, but then fails to do the job. Can Clive sue Barry for breach of contract? Figure 5.4 Consideration – Rules (cont) Consideration may not be past Consideration can be present (executed) or future (executory) see Roscorla v Thomas but compare with Re. Casey’s Patents; Stewart v Casey. Consideration – Rules (cont) Consideration must be sufficient Sufficient consideration Consideration need not be adequate or fair but must have value in the eyes of the law Consideration may