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Test 1a - Answer Sheet

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Test 1a - Answer Sheet

Test 1 Week 5: Commercial Law 8672D

NINGBO COLLEGE / TAFE Commercial Law 8672D Test 1 Week 5 ANSWER SHEET (90 marks) ______________________________________________ Part A Multiple Choice (20 marks in total - 1 mark each) 1. D 2. B 3. C 4. D 5. B 6. D 7. D 8. D 9. B 10. B 11. B 12. A 13. C 14. C 15. C 16. C 17. A 18. D 19. B 20. C Part B Fill in the „GAPS‟ (20 marks in total - 1 mark each) Individuals or groups who decide to form a legally binding contract are subsequently referred to as PARTIES to the contract. Normally most contracts are EXECUTED without any problems. If, at any time, they have a disagreement concerning their contract the disagreement is referred to as a DISPUTE. Under contract law there is really only one kind of DISPUTE a BREACH OF CONTRACT. If the parties cannot RESOLVE the DISPUTE out of court then they are compelled to go to court to seek a RESOLUTION. The party that has the DISPUTE is called the PLAINTIFF and the other party is referred to as the DEFENDANT. Party A SUES Party B. The parties cannot go to court alone and must be referred to special lawyers called BARRISTERS. A court case is technically called a court HEARING because the judge listens to both parties, considers their arguments and then makes a decision based on the facts of the case. The judge will make a legal decision and then attempt to RESOLVE the contractual dispute with a REMEDY. Normally there are 3 types of REMEDY that can be awarded under contract law 1) DAMAGES, 2) COMPLIANCE and 3) an INJUNCTION. Part C Short Answer Questions (50 marks) (NOTE: Keep ALL answers to one sentence or less!) 1. List the 6 elements in a legally binding contract? (4 marks in total minus one mark for every „element‟ wrong) 1. INTENTION 2. AGREEMENT (or OFFER and ACCEPTANCE) 3. CONSIDERATION 4. CAPACITY 5. CONSENT (real or genuine) 6. LEGALITY (of purpose) 2. Courts use 2 legal presumptions to help determine the intention of parties to enter any agreement. (6 marks in total - 1 mark each) a) What are they? i) Presumption 1: Parties to agreements of a domestic, family of social nature DO NOT intend to create legal relations. ii) Presumption 2: Parties to agreements concerning commercial or business matters DO intend to create legal relations. b) What case supports? i) Presumption 1: Balfour v Balfour [1912] 2KB 571) ii) Presumption 2: Edwards and Skyways [1964] 1 WLR 349 What case rebuts? i) Presumption 1: Wakeling v Ripley (1951) 51 SR (NSW) 183 ii) Presumption 2: Jones v Vernon Pools Ltd [1938] 2 All ER 626 3. Rob looses his „Business Law‟ text book somewhere on the way to class. He puts a message on the main school board offering a reward of RMB100.00 to anyone who finds and returns the book. (10 marks) i) What type of contract has Rob made? UNILATERAL (1 mark) ii) What famous case should be referred to when we see this type of contract? Carlill v Carbolic Smoke Ball co [1893] 1 QB 256 (1 mark) iii) In terms of an offer - what did the court hold in the court case above? “IT WAS A DEFINITE OFFER MADE TO THE WORLD AT LARGE” (3 marks) Ting Ting is walking to her class and sees Rob‟s book on the ground. After she opens the book she discovers Rob‟s mobile number, calls him and the book is returned. On her way back to her house she sees Rob‟s notice on the message board and now wants to claim the reward. iv) Can Ting Ting claim the reward? NO (2 marks) v) What case supports your answer above? R v Clarke (1927) 40 CLR 227 (1 mark) vi) What did the court hold (say) in that case? “ACCEPTANCE CANNOT OCCUR WITHOUT KNOWLEDGE OF AN OFFER” (2 marks) 4. Angela walks into a supermarket and says “look at all the delicious foods on offer”. i) Does a supermarket really make an offer to the customers in to the store? NO (2 marks)

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Test 1 Week 5: Commercial Law 8672D

ii) If the supermarket is not making an offer what is it doing? AN INVITATION TO TREAT or AN OFFER TO MAKE AN OFFER (2 marks) iii) In this example who is the a) offeror: ANGELA (1 mark) b) offeree; SUPERMARKET (1 mark) iv) What famous case supports your answer above? BOOTS or Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401 (2 marks) In the supermarket: v) When might an offer take place? WHEN ANGELA TAKES THINGS FROM THE SHELF WHEN ANGELA PUTS FOOD IN THE SHOPPING BASKET WHEN ANGELA TAKES THINGS TO THE CHECKOUT (2 marks) vi) When might acceptance take place? AT THE CASHIER IF ANGELA ASKS THE SUPER MARKET TO CUT, SLICE OR CHANGE IN ANY WAY THE ITEMS SHE HAS CHOSEN (2 marks) 5. There are 7 rules relating to consideration. 1) List the rules, 2) list the cases (where applicable) that support the rule and 3) what the court held or said. (18 marks) e.g. 1) Rule 1: Consideration is usually essential in every contract. 2) Case: Rann v Hughs (1778) 7 Term Rep 350 3) Court held: Because it was a simple contract and there was no consideration the contract was void. NOTE: WE ARE ONLY MAKING RULES 2-7! GRADING 1) 1 mark for naming the rule 2) 1 mark for naming the case (Rule 4 is an automatic 1 mark) 3) 1 mark for correctly identifying what the court held/said RULE 2: CONSIDERATION SHOULD BE SUPPLIED BY ANYONE SEEKING TO ENFORCE A CONTRACT. 2) Case: Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 3) Court held: “… that only parties to a contract may sue on that contract.” RULE 3: CONSIDERATION NEED NOT BE ADEQUATE BUT MUST HAVE SOME LEGAL VALUE. 2) Case: Thomas v Thomas (1842) 2 QB 851 3) Court held: “… the payment of ?1 a year in rent to the executor was sufficient consideration to bind the executor to his promise.” RULE 4: CONSIDERATION MUST BE CERTAIN OR DEFINITE (NOT VAGUE OR ILLUSORY) 2) Case: NO CASE LAW 3) Court held: “… courts will not enforce a promise that is too vague to have any meaning” RULE 5: CONSIDERATION MUST BE LAWFUL 2) Case: Parkinson v College of Ambulance [1925] 2 KB 1 3) Court held: “Consideration that takes the form of an illegal act, or the promise to perform an illegal act, is not good consideration.” RULE 6: WITHHOLDING LEGAL ACTION (FORBEARANCES TO SUE) CAN BE CONSIDERATION

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Test 1 Week 5: Commercial Law 8672D

2) Case: Hercules Motors Pty Ltd v Shubert (1953) 53 SR (NSW) 301 3) Court held: “… that there was a genuine dispute … the repaint was a compromise to that dispute … and the compromise would afford consideration for the new contract.” RULE 7: CONSIDERATION CAN BE PRESENT OR FUTURE, BUT NOT PAST 2) Case: Roscorla v Thomas (1842) 3 QB 234 3) Court held: “… that the promise by Thomas that the horse was not vicious was not binding … as it had been made by the seller after the sale had been completed.” Or “The promise (that the horse was not vicious) did not form part of the contract between them … [and had] been made independently of the contract. END

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