Contract a 2014 Tutorial Book

7/24/2019 Contract a 2014 Tutorial Book

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LAW2101

CONTRACT A

Tutorial Book

Semester 1, 2014

This Tutorial Book should be read in conjunction with

the Contract A Unit uide and Readin! uide 201"


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Prepared by:Dr Jeannie Marie Paterson and Dr Rebecca Giblin (and amended by the 20!"ontract # Teachin$ Team%"layton "ampusMonash &ni'ersityProduced and Published by:aculty o) *a+Monash &ni'ersity

"layton, -ictoria, #ustralia, ./00irst Published 200/

"opyri$ht 20!

1T R R34#*35 #ll materials produced )or this course o) study are protected bycopyri$ht5 Monash students are permitted to use these materials )or personal studyand research only, as permitted under the "opyri$ht #ct5 &se o) these materials )orany other purposes, includin$ copyin$ or resale may in)rin$e copyri$ht unless +ritten

permission has been obtained )rom the copyri$ht o+ners5 3n6uiries should be made tothe publisher


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Tutorial 1O##er $ Acce%tance

1 &hort answer 'uestions ( !i)e reasons #or *our answer includin! re#erence

to authorit*

5 7hat are the di))erences bet+een: (a% an o))er8 (b% a pu))8 and (c% an in'itation

to treat9

52 7hat is an acceptance9

5. 7hat is a countero))er9

5! 7hat is a battle o) the )orms9

5;


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Tutorial 2

Consideration


to authorit*

5 7hat is consideration9

52 7hat does it mean to say that ?consideration must mo'e )rom the promisee@95. 7hat is meant by ?consideration must be su))icient but need not be ade6uate@9

5! 7hat is past consideration, +hat is the le$al e))ect o) past consideration, and

+hen may +hat appears to be past consideration be $ood consideration9

5; 7hat is the ?eAistin$ le$al duty@ rule9

5= 7hat is the practicalbene)it eAception to the ?eAistin$ le$al duty@ rule9 Do you

a$ree +ith 4anto+ J@s decision inMusumeci v Winadell Pty Ltd9

2 +roble, - !i)e reasons #or *our answer includin! re#erence to authorit*

25 Does your client +ant the price rise apparently a$reed on ! June 200 to be

bindin$9

252 7hat ar$uments support this position9

25. #re these ar$uments likely to succeed9

2


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Tutorial 4

5ntention and Certaint*


to authorit*

5 7hat is the di))erence bet+een an a$reement and a contract9

52 7hat is the role o) presumptions in relation to determinin$ intention to createle$al relations9

5. 7hat are the di))erences bet+een an illusory promise, an uncertain promise and

an incomplete contract9

5! 7hat does it mean )or a contract to be eApressed to be ?subCect to )inance9 #re

such contracts en)orceable9


25 #re there any issues o) uncertainty in any contract bet+een "hocolate Printers

*td and McRobertson 36uipment 4uppliers *td9

252


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Tutorial "

6or,alities and /sto%%el


to authorit*

5 7hat types o) contract must be in +ritin$9

52 7hat is necessary )or a contract to satis)y the re6uirements o) section 2= o) theInstruments Act 1958(-ic%9

5. 7hat is the di))erence bet+een common la+ estoppel and e6uitable estoppel9

5! 7hat is the e))ect o) the decision in Waltons Stores Interstate! Ltd v Ma"er#

5; 7hat are the elements )or establishin$ an estoppel9

5= 7hat is the e))ect o) an estoppel9


25 Do "hocolate Printers *td ha'e an estoppel ar$ument in any le$al action

a$ainst McRobertson 36uipment 4uppliers *td relatin$ to the ability o) the

machine purchased to per)orm the +ork )or "hocolate "on)ectionaries9

3Aplain your reasonin$5

!


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Tutorial 7

/8%ress Ter,s


to authorit*

5 ?# party +ho has si$ned a contractual document is usually bound by the terms

o) that document e'en i) that party has not read the document be)ore si$nin$ it5@7hat is the authority )or this statement9 7hat are the eAceptions9

52 7hen do the terms contained in a displayed si$n or document )orm part o) the

contract bet+een the parties9

5. 7hat is the parol e'idence rule and +hen does it apply9

5! 7hen does a statement made durin$ ne$otiations become a contractual term9


7hat are the terms, i) any, relatin$ to the type o) )oil on +hich the machine

sold by McRobertson 36uipment to "hocolate Printers can print9

>) you are representin$ McRobertson, +hat +ill be your ar$uments, and +hat

is your likelihood o) success9

>) you are representin$ "hocolate, +hat +ill be your ar$uments, and +hat is

your likelihood o) success9

;


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Tutorial

2011 /8a,ination +a%er

Question One

Armstrong Jones (AJ) owns and manages Pace Suites (PS), a hotel andserviced apartments in Melbourne. In June 2!, AJ tendered "or, and won, acontract to host the Melbourne Motor #acing (MM#) events scheduled "or 2$March to % April 2!!.

A condition o" AJ&s contract with MM# 'orporation (MM#') was that a widerange o" speci"ied "acilities within PS was to be re"urbished and a new showroom built to be read b 2$ ebruar 2!!. I" the wor* was not completed bthe scheduled date, AJ was to pa to MM#' li+uidated damages o" 2-,"or each wee*, or part thereo", until completion.

AJ invited tenders "or the re"urbishment and construction wor*. Ian 'rap (I'),who owns and manages a construction business called ualit 'onstructions,won the contract. /he price "or the wor*s, incorporated into a detailedcontractual document between AJ and I', was !- million. /he contract,which was signed b AJ and I', also contained the "ollowing clauses0

'lause $0 /he contractor (I') ma use the services o" sub1contractors as he deems "it. I' does not guarantee the+ualit o" the wor*manship or an materials used b ansuch sub1contractors. either is I' liable "or an loss or

damage that ma "low "rom the wor* o" an sub1contractor.

'lause 20 /he contractor (I') must complete all wor* no later than!- ebruar 2!!.

3n !- 4ecember 2!, I', who (b himsel" and through sub1contractors) hadcompleted about 56 o" the wor* re+uired under the contract, wrote an emailto AJ stating that he would have to stop wor* because he had 7alread spent!- million dollars on the pro8ect and there is still a lot to be done9. :e stated

=


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"urther that the onl wa out is "or AJ to agree to an additional pament o" $million, as costs have been much higher than he (I') anticipated.

AJ, who thought that I'&s tender price o" !- million was on the low side,responded that he understood the mar*et, and would pa the additionalmone i" he could a""ord to do so. :e continued0

7;n"ortunatel, I am in serious "inancial di""icult, and I am counting onm hosting the MM# events to save me. I ma still have to sell someassets. I am con"ident ou can propose a solution that suits us both< I

see in ou unmatched ingenuit. /his has to resolve +uic*l so thepro8ect can get bac* on schedule, otherwise I will go under, "or sure9

3n 24ecember 2!, I' sent AJ an email proposing that he can "inish thewor* with borrowed "unds in e=change "or the new showroom and the land onwhich it is situated being trans"erred to him (I') straight a"ter the MM#events. AJ phones I' and sas, 7I agree with our proposal. Please move "astto complete the wor* on time< the paperwor* "or the showroom will be donelater9.

Required:

Advise the speci"ied parties as to their legal rights and>or liabilities in the"ollowing scenarios. Each scenario is separate and does not follow onfrom the other.

A. I' completed the wor* on time. MM#' was pleased with the "acilities atPS, and has e=tended AJ&s hosting contract "or another - ears. :owever,

AJ has re"used to trans"er the showroom to I', although he (AJ) has donewell "inanciall "rom hosting the MM# events. AJ sas that the Showroom

is crucial to his hosting o" the MM# events in the "uture, it is the newest o"all o" his PS "acilities and, besides, he does not thin* he is legall obligedto trans"er the showroom to I'.

IC seeks your advice as to his legal position relating to his

contract with AJ

(30

Marks)

E


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B. I' completed the wor* on time. :owever, be"ore "inal inspection could

ta*e place, "ault electrical wor* done b Spar* Plus, the sub1contractor

used b I', caused "ire and damage to a large part o" the re"urbished

buildings. AJ is unable to host the MM# events. ?hile both I' and Spar*

Plus have insurance, I' disclaims liabilit, re"erring to 'lause $ o" his

contract with AJ.

AJ seeks your advice as to whether he has a contractualclaim against IC and/or Sparky Plus

(12 Marks)

C. hould !ictoria le"islate to reform the #ommon $aw rule on %ri&it'

Discuss this question in the context of cases and secondary

texts with which you have become familiar in your study ofContract A this year

(8

Marks)

/


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Question wo

@mma runs a dr cleaning business. 3ne o" her regular customers is eorge,who has used her services man times. 3ne da, eorge hands in hisdesigner suit "or dr cleaning. @mma gives him a receipt. 4uring the drcleaning process, @mma "ails to handle the suit with reasonable care, and thesuit gets spoiled with irremovable stains. eorge is "urious and demands that@mma pa him !, to purchase another suit o" similar +ualit. @mmare"uses, pointing to the clauses printed on the bac* o" the receipt. She has

printed these clauses on the bac* o" receipts since she started the business.'lause % on the bac* o" the receipt reads0

7All articles are received and treated entirel at the owner&s ris*. oliabilit is accepted "or loss o", or damage to, articles through ancause whatsoever.9

Meanwhile, @mma intends to upgrade her dr cleaning e+uipment. Inparticular, her current shirt pressing machine can onl process ! shirts perhour, which is too slow. @mma meets with Bob, who is a representative o"S@' Pt Ctd, a compan importing and selling dr cleaning machiner. @mmatells Bob that she needs a shirt pressing machine that can process at least 2shirts per hour. Bob sas that S@'&s new astPressDD, which costs !,,is e=actl what she needs. @mma replies that she would li*e to bu oneastPressDD. Bob ta*es a document with several pages out o" his suitcaseand sas to @mma that this document contains the terms o" their agreement.3n the "irst page o" the document, Bob enters the details o" @mma&sbusiness, astPressDD as the sub8ect matter and !, as the price. :ethen hands the document to @mma and tells her that she needs to sign it i"she wants to purchase a astPressDD. @mma signs the document withoutreading it.

/wo wee*s later, @mma receives a astPressDD. It turns out that it can onlprocess !- shirts per hour. ?hen @mma complains to S@' Pt Ctd, she isre"erred to the "ollowing clauses in the document she signed0

'lause -0 S@' Pt Ctd does not give an guarantee as to theamount o" shirts that the machine can process per hour.

'lause D0 /his document contains all terms o" the contract. o oralterms "orm part o" the contract.


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In order to rela= "rom the stress o" her business, @mma decides to become amember o" her local gm operated b I/ Pt Ctd. She goes to the counter o"the gm and sas that she would li*e to become a member. She is handed adocument which states that the membership is initiall "or one ear, and thatthe membership "ee is - per month. It also sas that the contract is sub8ectto the standard terms and conditions o" I/ Pt Ctd, which are set out in abrochure available at the counter. @mma sees the brochure but does not readit. She signs the document and pas the "ee "or the "irst month. /wo wee*slater, @mma receives a letter "rom I/ Pt Ctd in"orming her that hermembership "ee will increase to 5- per month "rom the "ollowing month.

?hen @mma contacts I/ Pt Ctd to complain, she is re"erred to clause E inthe terms and conditions o" I/ Pt Ctd, which reads0 7I/ Pt Ctd is entitled toincrease the "ee b up to -6 at an time.9

Required:

Advice Emma on her rights and obligations under her contracts withGeorge, SEC Pty Ltd and FIT Pty Ltd

(*+ Marks)

E,- O %/%ER

FFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFF

0


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"hocolate Printers *td54pecialist PrintersTea Trader see )rom your +ebsite that you can supply re)urbished )leAoprint machines5 7e+ould be interested in ac6uirin$ such a machine ur$ently and re6uest your best

price and deli'ery )or a siA colour machine +ith a 'arnishin$ stand5

7e are interested in printin$ coated and uncoated papers )or +rappin$ polyesterand also metallic )oils )or use in the con)ectionery market and similar )ields5Typical plain and coloured aluminium )oil )or chocolate +rappers may be o) /micrometer thickness5

There is no other )leAoprint operator in Gibbsland and +e belie'e the machineyou supply +ill enable us to de'elop a commandin$ lead in the Gibbslandmarket5 #t present users o) )oil products in particular ha'e to import the

printed products, +hich is eApensi'e5 7e ha'e identi)ied another possiblesource )or a machine to )it our re6uirements, located in Bel$ium5 7e +ouldho+e'er pre)er to use the ser'ices o) an #ustralian supplier such as yoursel)5

Fours )aith)ully,(4i$ned%Roland"hocolate


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McRobertson 36uipment 4uppliers *tdThe Tramshed DocklandsMelbourne, -ictoria

Mr Roland "hocolate"hocolate Printers *td4pecialist PrintersTea Trader


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"hocolate Printers *td54pecialist PrintersTea Trader am$lad +e had a )e+ days to be tourists5

The Ma$iprint leAometiA machine looked to be Cust +hat +e need5 >t appears much

more suitable to our needs than the alternati'e machinery o))ered to us )or purchaseby the Bel$ium )irm mentioned in my earlier correspondence5

>t is imperati'e that +e mo'e )ast on this5 7e si$ned a contract +ith Presti$e"hocolate "on)ectionaries yesterday, +hich +e must be able to ser'ice by ; July5>t is an eAcellent contract )rom +hich +e can eApect to earn a pro)it o) !00,000 ayear5 The contract runs )or )our years, subCect to rene+al at the end o) that period5&nless somethin$ uneApected happens, +e can anticipate a lon$ period o)handsome pro)its5

There is one other concern5 >t no+ appears that Reliable Printers, another printin$)irm in Gibbsland, is also considerin$ the purchase o) a )leAoprint machine5 Theyha'e not decided yet but, i) our machine is in place and producin$, they certainly+ont make the purchase5 They +ould $o )or the Presti$e "hocolate "on)ectionariesaccount i) they had any possibility o) $ettin$ it5 7hile there are other uses )or themachine, o) course, the market in the Gibbsland re$ion is 'ery small and it is thePresti$e "hocolate "on)ectionaries account that makes the )leAoprint machine most+orth+hile5


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The rele'ant Bel$ium )irm has indicated that they could supply us +ith suitablemachinery +ithin the re6uired time )rame5


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McRobertson 36uipment 4uppliers *tdThe Tramshed DocklandsMelbourne -ictoria

= May 20

Mr Roland "hocolate"hocolate Printers *td4pecialist PrintersTea Trader am $lad you enCoyed the trip to Tasmania5 That e'enin$ at "radle Mountain +assomethin$ to be remembered5

The only +ay to $et the machine to you 6uickly +ould be )or it to be dispatcheddirectly to you )rom


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"hocolate Printers *td54pecialist PrintersTea Trader


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McRobertson 36uipment 4uppliers *tdThe Tramshed Docklands

Melbourne -ictoria

2E May 20

Mr Roland "hocolate"hocolate Printers *td4pecialist PrintersTea Trader am 'ery pleased that you are so satis)ied +ith the Ma$iprint leAometiA Mark /)leAoprinter machine5 Fou can be assured that +ith this machine you +ill be able tomeet all the needs o) your customers5

ur contract is enclosed +ith the copy o) this letter sent by courier5 Please si$n andsend it to me immediately so that the machine can be sent to you 6uickly5 # copy o)the manu)acturer@s manual )or the Ma$iprint leAometiA Mark / )leAoprintermachine is also enclosed5 3'en thou$h the machine is easy to operate and is a 'eryreliable machine, you +ill certainly +ish to ha'e a copy o) the manual5

ur Bank details +ill be sent to you directly5

ur personnel are already in t has been a pleasure doin$ business +ith you5

7ith best +ishes,(4i$ned%1orman

3nclosure: "ontract>nstruction Manual

E


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McRobertson 36uipment 4uppliers "ontract (3Acerpts%

McRobertson 36uipment 4uppliers *td (herea)ter 4eller% a$rees to sell and "hocolatePrinters *td5 (herea)ter Buyer% a$rees to purchase one second hand E stand Ma$iprintleAometiA Mark / )leAoprinter machine5

5 Price is .!,000 plus pre)erence share options in "hocolate Printers *td (totalcontract 'alue !2,000%5

25 Machine is to be re)urbished by 4eller on installation at Buyers premises5

(4i$ned%

Mr 1 3 McRobertsonMcRobertson 36uipment 4uppliers *td

(4i$ned%Mr R "hocolate"hocolate Printers *td

/


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/8tract #ro, .anu#acturer9s .anuel #or .a!i%rint 6le8o,eti8 .ark :

4ubstrate *imits o) Per)ormance:

Paper (bleached +ood pulp% H !0 GramsIs6uare metre#luminium oil H 0 micrometers (mm%


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McRobertson 36uipment 4uppliers *tdThe Tramshed Docklands

Melbourne -ictoria

E June 20

Mr Roland "hocolate"hocolate Printers *td4pecialist PrintersTea Trader am +ritin$ +ith un)ortunate ne+s5 The Ma$iprint leAometiA Mark / )leAoprintermachine has been dissembled and packed )or shippin$ to -ictoria5


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"hocolate Printers *td54pecialist PrintersTea Trader ha'e $i'en care)ul consideration to your last letter5 > understand your di))icultiesalthou$h they do not represent $ood ne+s )or us5 >t is essential that +e ha'e themachine operatin$ on time and accordin$ly > am prepared to accede to your re6uest5

Fours )aith)ully,

(4i$ned%Roland "hocolate

2


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7illiam 4+ainMcRobertson 36uipment 4uppliers *tdThe Tramshed Docklands

Melbourne -ictoria

0 July 20

Mr 1 McRobertsonMcRobertson 36uipment 4uppliers *tdThe Tramshed Docklands

Melbourne -ictoria

Dear Mr McRobertson,

This is to con)irm +hat > told you on the telephone5 7e installed the Ma$iprintleAometiA Mark / machine at the premises o) the "hocolate Printers andre)urbished it once installed5 By July +e had started doin$ the test runs andmade the )inal adCustments5 The machine +orked per)ectly5

7e turned o'er the machine to Mr5 "hocolate on / July 205 The )irst Cob they+ished to use it )or +as to print aluminium )oil +rappers )or "hocolate"on)ectionaries5 7e +ere at the hotel preparin$ our lu$$a$e )or departure +hen Mr"hocolate called us5 t may be that there are +ays to $et around theproblems, but > ha'e my doubts5

> +ill keep you in)ormed o) de'elopments5

Fours truly,(4i$ned%7illiam 4+ainoreman


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"hocolate Printers *td54pecialist PrintersTea Trader t has +orked on the 'arious paper products, butnot on the )oil products )or con)ectionary +rappin$5 The machine creases the )oil andtears it, and multiple colour runs on )oil are badly out o) re$ister5

Four personnel ha'e been +orkin$ dili$ently to try to )iA matters5 > do not )aulttheir e))orts5


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)or it at present5 My )ear is that they +ill soon be )ully occupied +hile +e sit +ith anidle machine5

>) your personnel are not able to brin$ the machine into )ull operation soon, +e +illeApect you to co'er all o) our eApenses and losses5

Fours )aith)ully,(4i$ned%Roland "hocolate

2;


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McRobertson 36uipment 4uppliers *tdThe Tramshed DocklandsMelbourne -ictoria

0 4eptember 20

Mr Roland "hocolate"hocolate Printers *td4pecialist PrintersTea Trader


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> look )or+ard to hearin$ )urther )rom you5

Fours sincerely,

(4i$ned%1orman McRobertson

2/

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Contract a 2014 Tutorial Book