Introduction to Business Law Assignment

PART A

Answer all 20 questions

Each question is worth ½ (0.5) mark for a total of 10 marks.

Show your chosen answer to each multiple-choice question by:

• Highlighting in bold, italics or underlining or
• Highlighting in a contrasting colour or
• Converting to a different colour

A1

Which of the following statements is always true?

1. Remedies for a breach of a condition include damages only
2. Remedies for a breach of a condition could include damages and termination
3. Remedies for a breach of a warranty could include damages             and termination
4. Remedies for a breach of an intermediate term include damages only

A2

In which of the following examples could a court decide that the contract is frustrated?

1. A hall is hired, but before you can use it the hall burns down
2. You pay for a ship to transport a container of furniture from China to Australia but the ship sinks in a terrible storm
3. You undertake to construct a tunnel, working 24 hours a day, the work to be completed in 130 weeks. A short time later,       local residents complain about the noise you are making at night. A court orders that you cease your construction for at least eight hours every day
4. All of these are examples of frustration

A3

In the High Court case of Associated Newspapers Ltd v Bancks the High Court:

1. Found for Bancks on the basis that Associated Newspaper’s             undertaking was a condition
2. Found for Associated Newspapers on the basis that Banck’s             undertaking was an intermediate term
3. Found for Associated Newspapers on the basis that Banck’s             undertaking was a warranty
4. Found for Bancks on the basis that Associated Newspaper’s             undertaking was an exception to the Parol Evidence Rule

A4

Under s 18 of the Australian Consumer Law (ACL):

1. the giving of an opinion can amount to misleading or deceptive conduct
2. the giving of an opinion can never amount to misleading or deceptive conduct
3. it is permissible for a person to engage in misleading or deceptive conduct
4. the scope of misleading and deceptive conduct is very narrow

A5

Which one of the following is FALSE?

1. Damages are not the only possible remedy for a breach of contract
2. In Lumley v Wagner, the court made an order for specific performance on the grounds that it was a contract for personal services
3. In an action for damages, loss arising from special or exceptional circumstances is only recoverable where such loss was made known to the offending party at the time the contract was entered into
4. If A agrees to sell B a sofa for $5000 and then refuses to go ahead with the sale, the measure of damages would be the difference between the original contract price and the price B has to pay to get an equivalent sofa from someone else

A6

In striving to prove negligence the first thing that must be done is to:

1. Establish that there was a breach of a duty of care
2. Establish that there was damage resulting from the breach of the duty of care
3. Establish that there was a duty of care
4. Establish that the damage which resulted from the breach of the duty of care was foreseeable

A7

Contributory negligence was found in which of the following cases?

1. Rasbora v JCL Marine
2. Harris v Bulldogs Rugby League Club
3. Insurance Commissioner v Joyce
4. March v Stramare

A8

Tom owns a shop in Burwood. Tom bought a new van for $50,000 to make deliveries of products he sells from his shop.  Will the sale of the van be a consumer contract and so be covered by the statutory guarantees in the Australian Consumer Law? Select the one best answer.

1. The statutory guarantees do not apply because Tom operates a business
2. The statutory guarantees do not apply because the van cost more than $40,000
3. The statutory guarantees do not apply because the van is not being used for personal, domestic or household use by Tom
4. The statutory guarantees will apply to this contract

A9

Which Australian case first adopted the principle from Donoghue v Stevenson that manufacturers owe a duty of care to the users of their products:

1. Stennett v Hancock and Peters
2. Strong v Woolworths Ltd
3. Grant v Australian Knitting Mills Ltd
4. Modbury Triangle Shopping Centre Pty Ltd v Anzil

A10

The decision in the Federal Court case of Glendale Chemical Products Pty Ltd v Australian Competition and Consumer Commission:

1. Means that there is no duty for manufacturers of products to warn of potential injuries from the use of their products
2. Means that manufacturers of products have a duty to warn consumers of every potential risk of using their products no matter how unlikely
3. Means that manufacturers have a duty of care to warn consumers of foreseeable risks of using their products
4. None of these answers is correct

A11

If there is a breach of a statutory guarantee that is not major, which of the following is NOT a way the supplier may remedy the breach?

1. Repairing the goods
2. Replacing the goods with goods of an identical type
3. Directing the consumer to the manufacturer to deal with the problem
4. Providing the consumer with a refund

A12

The required elements to prove fraudulent misrepresentation are:

1. The defendant making a false representation of fact, the representation causing the plaintiff to act, the defendant acting dishonestly or recklessly and the plaintiff suffering a loss
2. The defendant owing the plaintiff a duty of care, the defendant exercising the required duty of care and the plaintiff suffering a loss as a result of the defendant’s negligence
3. The plaintiff owing the defendant a duty of care, the plaintiff exercising the required duty of care and the defendant suffering a loss as a result of the plaintiff’s negligence
4. The plaintiff making a false representation of fact, the representation causing the defendant to act, the plaintiff acting dishonestly or recklessly and the defendant suffering a loss

A13

Robco Ltd sold a machine to a client. The client signed a contract with a term that stated they not been induced to enter into the contract by any representations other than those included in the contract. Before the sale Robco’s salesperson stated the machine could produce 1000 units per hour. When installed, the machine could only produce half that amount. Which one of the following cases would be relevant to this situation?

1. Sweetman v Bradfield Management Services Pty Ltd
2. Bateman v Slatyer
3. Peek v Gurney
4. Krakowski v Eurolynx Properties Ltd

A14

To constitute fraud, there must be more than negligence. The defendant must have intended the false representation, or at least been reckless as to its truth. Which one of the following cases would be relevant to this situation?

1. Sweetman v Bradfield Management Services Pty Ltd
2. Bateman v Slatyer
3. Derry v Peek
4. Krakowski v Eurolynx Properties Ltd

A15

Which one of the following is NOT a factor in determining if there has been a breach of s 18 ACL?

1. Was the conduct made in trade or commerce
2. Was the conduct misleading or deceptive
3. Was the conduct likely to be misleading or deceptive
4. Was the conduct intentional

A16

Which one of the following falls within the definition of a consumer under section 3 of the Australian Consumer Law:

1. A Porsche car sold for $400,000 by a Brisbane luxury car company.
2. Timber purchased for $10,000 to be used by a furniture company to make cupboards
3. A 1999 Commodore car sold by a university lecturer for $3000 (cheap!)
4. All of these answers

A17

The case of Jaensch v Coffey:

1. related to a physical injury suffered by a person that witnessed an accident
2. related to a physical injury suffered by a person that did not witness an accident
3. related to a psychiatric injury suffered by a person who did not witness an accident
4. related to a psychiatric injury suffered by a person who witnessed an accident

A18

What is the key principle arising from the decision in Modbury Triangle Shopping Centre Pty Ltd v Anzil?

1. In general, there is no duty to control persons from inflicting harm upon others
2. It is not reasonably foreseeable that a person would sustain a recognisable psychiatric illness from a clerical error which had quickly been rectified
3. A class of plaintiffs can be large, as long as it is not indeterminate
4. The mere fact that an industry generally follows the same procedure does not necessarily prove that such conduct is not negligent

A19

Which one of the following is correct?

1. The consumer guarantee provisions of the ACL can be limited in certain circumstances
2. The consumer guarantee provisions of the ACL can be excluded and limited
3. The consumer guarantee provisions of the ACL can be excluded in certain circumstances
4. The consumer guarantee provisions of the ACL cannot be excluded or limited

A20

Which one of the following statements is FALSE?

1. A court of equity may award quantum meruit
2. Damages are not the only possible remedy for a breach of contract
3. Where the loss arising from the breach is exceptional, the court may award extra penalty damages as a warning to others
4. Specific performance may be granted in cases involving rare or unique subject matter.

PART B

Answer only three (3) questions

All questions are of equal value

QUESTION 1                       

What would be the appropriate remedy in each of the following breaches of contract? Your answer should state both:

• The most likely remedy and the specific area e.g. 1) equitable remedy – specific performance or e.g. 2) common law damages – reliance losses;

and

• The best supporting case.

Each part is worth 2.5 marks

1. Neil has agreed to install an additional oven in Zoe’s pizza shop. Zoe not only expects increased trade but she also has a special lucrative contract to provide 500 pizzas for a university function. The university function is to be held the weekend after the agreed date of installation but the oven is not installed for a further two weeks.

• Russell agrees to sell Vanessa a painting of Salisbury Cathedral by the great English artist John Constable for $500,000 but later changes his mind and refuses to sell it.

• Famous rock band Mary and the Munchkins breaches its contract to sing at the Sydney Opera House for two weeks in September. Contrary to a clause in their contract with the Opera House, the band agrees to sing at the State Theatre for those same two weeks.

• John contracts with Acme Swimming Pools to install a swimming pool that subsequently leaks and floods the lower basement of his home, because Acme’s employee fails to use the correct sealant,.

QUESTION 2                       

With reference to relevant rules, cases and legislation, discuss the following statement:

A consumer who purchases a consumer good on the basis of an untrue statement by the seller would do best to sue under the ACL instead of common law misrepresentation.

QUESTION 3

Answer both parts

a)

Fred operates a nursery business with several outlets.  Fred purchases his plants from various sources.  Fred’s friend Mary owns a large yard where she lets him store his plants before they are delivered to his various nurseries. For his annual holiday, this year, Fred decides to explore the outback in South Australia where there is no phone or Internet coverage. After a week, Mary receives at her yard a large delivery of extremely expensive exotic plants that Fred had ordered for one of his nurseries in Sydney. Unfortunately, that Sydney nursery is unable to take any of the exotic plants because the manager has fallen ill and the business has to close temporarily. Unfortunately the exotic plants are susceptible to damage from sun and heat so Mary wants to move them to a more shaded and moist yard which she could lease from John for $500 for the three weeks until Fred returns.

Fred returns from his holiday and refuses to pay the $500 for the leasing of John’s yard. If John sues Fred, will he be successful? Explain your answer with reference to the relevant agency rules and cases.

And

b)

Apply the elements for establishing an agency by estoppel to the facts in Pole v Leask.  

QUESTION 4                       

Do the following contracts fall under Section 3 of the Australian Consumer Law (ACL)? For each part:

• Answer Yes or No and
• Explain your answer with reference to the relevant ACL part of Section 3.

1. Dave’s friend Bill, who works in the same accounting department, sells Dave his old 1999 Holden Commodore for $3,000.

• Dave gives his daughter, Rita, a brand new car valued at $150,000 which he purchases from a luxury car dealer.

• Mary purchases an old newspaper printing press worth $30,000 from an antique shop.

• Chloe purchases cotton cloth worth $4,000 from which she plans to make children’s dresses to sell at her weekly market stall.

• Fred buys a truck for $65,000 to transport goods between his Sydney and Melbourne businesses.

QUESTION 5                       

Michael and a few friends are watching a game of hockey at the local sports field owned by the North Sydney Hockey Association (NSHA). Michael, while looking down at his phone to read his text messages, is struck on the head by a ball during the Men’s A Grade Final. He is taken to the hospital in an ambulance and is found to have suffered serious brain damage as a result of the incident. 

If Michael sues the NSHA for negligence, what would he need to prove?  What are the possible defenses available to the NSHA?

QUESTION 6                       

Heavy metal band, The Nasties, has contracted to perform on Boxing Day evening at a popular hotel in Melbourne. One term of the contract states that the band will play all their hit songs. Because of the obscene and racist lyrics, The Nasties’ songs have been banned in many countries. The band has only played for 20 minutes of the planned two-hour Boxing Day concert when the police arrive and order them to stop playing because of complaints about the obscene and offensive lyrics.

The Hotel manager refuses to pay the band for the concert claiming that the contract has been discharged due to frustration. Applying the rules of frustration discuss the arguments for and against the parties being discharged from the contract.

End of Exam