BLO1105 – Business Law
Business Law Students Manual
2009 Edition
This Manual contains materials essential for all
students undertaking Business Law, including: -
•
•
•
•
•
•
Course Guide for Business Law;
Unit of Study Syllabus for Business Law:
Lecture Program for the Unit of Study;
Tutorial Programs and Questions;
Past Examination Papers; and
Other essential data regarding the Unit of Study.
Manual compiled by Gerry Box and Andy Schmulow
Tutorial Program compiled by Gerry Box (School of Law), Brendon Stewart
(School of Law) and Helen Murphy (Teaching and Learning Services)
SCHOOL OF LAW
Faculty of Business & Law
VICTORIA UNIVERSITY
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BUSINESS LAW STUDENTS MANUAL
TABLE OF CONTENTS
ITEM
DESCRIPTION
PAGE/S NUMBER
1
Table of Contents
1
2
Introduction
2
3
Assessment Criteria
3
4.
Online Exercises
3
5
Assignment instructions
3 -16
6
Assignment Topics for 2009
17 - 18
7
Tutorial attendance and Participation
19
8
Final Examination
19
9.
Subject Content
20 – 22
10.
Teaching Method
22
11.
Texts and References
22
12.
Plagiarism
23
13.
Student Support programs
23
14
The Internet as a Research Tool
23 - 24
15
Lecture Guide
25 – 37
16
Tutorial Programs
38 - 79
17
Unit of Study Guide for Business Law
81 – 86
18
Introduction to Past Examination Papers
87
19
Past Examination Papers
88ff
BUSINESS LAW STUDENTS MANUAL
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Introduction to Business Law
This Manual is prepared for the use of students enrolled in the Unit of Study Business Law at
Victoria University at all campuses where the Unit of Study is offered.
The Manual contains information required by students of Business Law, including the Unit of
Study Course Guide, Tutorial Programs, a listing of books and references, and summaries by
Topic of all components of the Business Law syllabus.
It is therefore necessary for all students of Business Law to acquire the Manual to enable them to
adequately prepare for tutorials to be held during the Semester. The Manual is thus required
reading for all Business Law students.
Preparation and Participation
The scope of the Unit of Study is large, but manageable if students maintain a constant level of
application. On a weekly basis, this involves taking comprehensive lecture notes and attending
and participating in a tutorial. If the prescribed work is read prior to these programs and the
questions are attempted by students before tutorials, substantial benefit can be derived from
attendance. Students often ask whether their lecture notes should be re-written and expanded
after lectures. Although this is a time-consuming exercise, there is a case for doing so, given that
the final examination is an open-book exam. Re-writing lecture notes is best done on a regular
basis after each lecture, as the task will become impossible if too many lectures have to be rewritten at one time. In a nutshell, students should plan to take the following steps, commencing
in the first week of the semester:•
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•
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Attend all lectures and take comprehensive notes;
Consider the benefits of re-writing expanded lecture notes while memory is still fresh;
Read all set work for tutorials a week ahead;
Attempt to answer all set questions for tutorials;
Be prepared to participate in tutorial discussion to maximise the benefit of attendance;
Try to keep ahead of the lecture schedule by reading in the prescribed texts the topics to
be covered in the next week. This will greatly improve the quality of the notes taken
during lectures;
Start research early for the assignment question. Many assessment tasks will be due for
completion in and around week 8 of semester. There are substantial benefits to be gained
by getting assignment research under way at an early date to avoid being overtaken by
many tasks requiring attention later in the semester.
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BUSINESS LAW STUDENTS MANUAL
Assessment Criteria
The prescribed assessment in this Unit of Study comprises: • An assignment plan in Week 4
• An assignment of 2,000 to 2,500 words for submission in Week 8
• Tutorial attendance and participation
• An “open book” three hour final examination
5 marks
25 marks
10 marks
60 marks
Participation.
STUDENTS MUST NOTE: TUTORIALS ARE COMPULSORY.
IF YOU MISS MORE THAN TWO (2) TUTORIALS YOU WILL
FAIL THE PARTICIPATION ASSESSMENT. STUDENTS WHO
ATTEND A TUTORIAL WITHOUT THEIR TUTORIAL WORK
PREPARED MAY BE MARKED AS ABSENT.
Assignment.
The Assignment topic will be available to students during the first week of semester, and must
be completed and submitted to Tutors on the date specified in the instructions, usually week 8 of
semester. Assignment preparation is a major task, and students are advised to commence
research for the assignment early in the semester. The difficulties associated with completion of
assignments by the due date are compounded by the fact that assignments may be due for
submission in other Units of Study at about the same time. The objective of early distribution of
the assignment topic is to minimise the possible problems resulting from this inevitable timing
requirement. Instructions for students follow for assignment preparation, and students should
ensure that they comply with these instructions.
Assignment work is an important component of student assessment, requiring students to
complete an assignment of 2,000 to 2,500 words on a topic which will be available during the
first week of semester. This will be a research assignment, based upon a selected topic and
requiring students to undertake their own research of materials as a basis for their completed
assignment project.
Practical guidelines for assignment work are as follow: •
The assignment must be submitted by the due date. Penalties are imposed for late
submission. Extensions of time for submission of assignments will be entertained only if
made in writing and with supporting evidence of any factor claimed to justify an
extension of time.
BUSINESS LAW STUDENTS MANUAL
•
•
•
•
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•
•
•
•
4
Assignments must be accompanied by an assignment cover-sheet (obtainable from
Faculty and School offices). The cover-sheet details must be completed by the student.
The cover-sheet incorporates a receipt, which can be retained by the student as proof of
lodgement.
A copy of the assignment must be retained by the student.
The assignment should typed on A4 paper, with double or equivalent spacing, using one
side only of the paper and leaving a 5cm margin on the left-hand side of the page.
There are no inflexible rules regarding the format of the assignment, but time taken to
present written work in an attractive, easily-read format is never time wasted. Students
may use chapters and headings as they see fit to enhance the presentation of the work.
The marking of a large number (sometimes hundreds) of assignments within a limited
time-frame is a daunting task for examiners, and originality of approach, good (even
novel) presentation and inspired (but not frivolous) humour is usually well rewarded.
The word range (2,000 to 2,500 words) should be observed. Strategies (such as
relocating case summaries in appendices) can always be devised to bring the word count
back to the upper limit, but nothing will save an assignment that is patently too short.
All pages should be sequentially numbered and the assignment securely stapled and
submitted in an appropriate binding or folder. Resist the temptation to “individually
wrap” each page of the assignment, as this makes the exercise of commenting on the
work very tiresome and time consuming.
A synopsis is optional. A synopsis is not an introduction, but a (brief) summary of the
assignment itself, explaining the direction which the assignment is taking. It is best
prepared after completion of the assignment. A synopsis prepared beforehand is a
statement of intention rather than a statement of achievement, and the two may be quite
different. Although prepared after completion of the assignment, it should appear at the
beginning.
A bibliography is also required, listing all references used in the written work and in
research conducted on the topic. The list will include details of all texts, articles in
journals and magazines, newspaper articles from which information was obtained.
The assignment topic will be available to students in the first week of semester and the
assignment is not due for submission until the 8th week, (the exact date for submission
will be clearly announced in lectures). There is really no excuse for unacceptable work
being submitted. Similarly, applications for extension of time are not likely to receive
sympathetic consideration. An early start is recommended. As mentioned earlier,
students are likely to be placed in the situation of having to submit a number of
assignments or to complete a number of tests at about the same time during the Semester,
since adequate time for preparation and for marking must be given and allowed. The
topic of the assignment may not necessarily be covered in lectures or tutorials prior to
BUSINESS LAW STUDENTS MANUAL
5
the date upon which the assignment must be submitted. If this is the case - and even if it
isn't - there is no point in delaying commencement of research into the assignment topic.
•
•
If it is established that the whole or part of the work of one student has been copied and
submitted as original work by another student, neither student will receive any mark for
the relevant work. Inevitably, both students will fail the subject and may, at the
discretion of the examiner, be subject to other disciplinary processes within the
University. On the other hand, there is much to be said for joint or even group research
and discussion of the topic, which can reduce the individual research commitment and
enhance understanding of the issues. If students do undertake joint or team research with
the intention of sharing the product of that research, this is quite acceptable so long as
their written assignment work is original and exclusive. Sharing the research burden is
acceptable. Sharing submitted assignment work is fatal. See and read carefully the notes
on plagiarism that follow these instructions
Footnotes or end-notes must be used to acknowledge the source or sources of
information contained in the assignment. Footnotes are preferred, but are more difficult
to achieve than end-notes with some word processing programs. Either is acceptable. For
more information about footnoting generally, see Summers and Smith (2006)
Your research essay (assignment) in Business Law focuses on a particular
area of contract law. You are expected to read a number of texts on the topic,
researching it thoroughly. Using this information, you are expected to present
a detailed analysis of the topic in essay form, demonstrating that you have a
good understanding of it.
Research topics may contain a quotation from a legal text. A first step is to
locate the quotation in the relevant text. Because these quotations provide a
context or background for the essay topic, it is useful to read the section of
the text from which the quotation has been taken. In addition, it is important
to consider the relevance of the quote to the question. You need to determine
whether the quote is integral to the question and needs to be discussed in your
response to the question. On the other hand, the quote may just provide
background to the topic, which means that you won’t need to incorporate it
into your discussion of the topic.
What does researching the topic mean?
Researching the topic requires you to go to the library to locate texts on it.
You are expected to read at least three or four texts and possibly some journal
articles, researching the topic thoroughly and gathering the necessary
information on the topic. As you read try to gain a real understanding of the
topic rather than just copy down slabs of the material. You need to be
selective in your reading, only taking notes on the material relevant to the
topic. Do not be hesitant about asking library staff to help you locate texts
and journal articles.
Elements of the essay
BUSINESS LAW STUDENTS MANUAL
6
The essay should have an introduction, a body and a conclusion.
Introduction: - provides background information
- arouses interest in the topic
- offers a viewpoint
- defines terms
- indicates overall structure and key areas to be discussed
Body:
- key areas of topic are presented in logical order
Conclusion: - summarises key points of body
- restates viewpoint
- future directions
It is acceptable to use headings, so you can break up your essay into sections
with headings. You are required to write a logical and well-structured essay
which includes a discussion of legal principles, relevant cases and, if
required, statute law.
There is additional helpful information on writing the assignment on the website under
the heading “Research Essay”.
When you commence work on the assignment (research essay) topic, the first step is to break
it down into manageable parts. You need to understand exactly what the question on the topic
is asking you to do. It is asking you to view the topic from a particular perspective. It is not
acceptable to just write everything you know about the topic without referring to the question.
It is necessary to analyse the topic first and understand clearly what you are expected to do,
otherwise, you will not be able to research the topic effectively, nor will you be able to write
a successful essay on the topic.
To understand what the question is asking you to do, it is necessary to identify the key words
and phrases which give you direction. It is also useful to underline them. These words and
phrases are:
 process or directive words and phrases
 content words and phrases
 limiting words and phrases
Process or directive words
These words indicate the way that the question should be answered. In essay questions, you
could be asked to critically analyse, to assess, to compare, to discuss, to evaluate, to outline
and so forth (for more examples of directive words, refer to Appendix A on p.229, Crosling
and Murphy, How to Study Business Law, 3rd edition). Students often overlook these words
and end up not really answering the question.
BUSINESS LAW STUDENTS MANUAL
7
Content words and phrases
These words and phrases identify the focus of the question. They tell you what the question is
about and give information on the topic.
Limiting words and phrases
These words and phrases limit the aspects of the topic which you have to discuss when
answering the question.
Note: Quite often, content words/phrases are also limiting words/phrases.
Furthermore, when you are reading and trying to understand what the question is asking you
to do, make sure you check the meaning of any words you do not understand.
The following example is provided to illustrate the process which has been outlined above.
Study it carefully.
Outline the historical evolution and current trends in the development of unconscionability in
the law of contract.
Process or directive word - Outline (this means to give the main features or general principles
of unconscionability).
Content words/phrases - historical evolution, current trends, unconscionability, law of
contract.
Limiting words/phrases - historical evolution, current trends.
This question requires you to trace the history of and to describe the present trends in the area
of unconscionability in contract law. If you are not sure what unconscionability means look it
up in a legal dictionary.
Before reading on the topic of unconscionability, it is a useful procedure to develop a plan for
the essay.
This helps: •
•
•
to clarify the issues which the question is asking you to focus on;
to create a structure for your response to the question; and
to focus your reading on the topic.
Of course, after reading on the topic, this plan may need to be modified.
A plan for a typical topic could be: -
BUSINESS LAW STUDENTS MANUAL
Introduction:
• define any terms or words used in the topic;
• offer an opinion/viewpoint on the area of law covered by the topic and the
direction in which the law is heading
• indicate structure of discussion
Body:
•
•
Historical background;
discuss the development of the relevant law ;
•
Current trends in the relevant area of law (main focus)
•
Discussion would include recent developments in the common law (judgemade law) and provisions in relevant legislation (eg. Trade Practices Act).
Conclusion:
• sum up key points
• express opinion/viewpoint resulting from discussion
• future directions
Incorporating cases into your essay
You will be incorporating cases into your discussion of the topic, so it is important that they
are integrated into the flow of your writing. You can introduce case discussion with phrases
such as:
‘Unconscionable behaviour is illustrated in the case of …………….v………….where
…’.
‘An attempt to take unfair advantage of the other party is demonstrated in the case
of …………………v………………’.
‘The case of ………………v…………… shows how one party might aim to unfairly
disadvantage the other party. In this instance, …’.
For further information on topic analysis and developing a plan, refer to Chapter 8 in
Crosling and Murphy, How to Study Business Law, 3rd edition.
For more detailed information on note taking techniques, see Chapter 7 of Crosling and
Murphy, How to Study Business Law.
Taking Notes
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BUSINESS LAW STUDENTS MANUAL
When preparing to take notes, it is first necessary to read texts and journal
articles to locate the relevant material for your essay topic. Strategies for reading
for understanding and meaning have already been outlined in a previous tutorial.
Notetaking is an essential part of the essay writing process. You will be
expected to read a number of texts/articles on the topic and to document the
relevant material from these sources. Your topic analysis of the essay question
and your plan will assist you in locating and noting the relevant material for
your task. Of course, you may adjust your plan as you read and take notes,
because you will be learning more about the topic and will understand more
fully the appropriate structure/plan which should be applied to the essay
question.
In Business Law, your notetaking for the essay will focus on describing and
explaining legal principles/concepts, and on the development and application of
these in cases. You will be using a combination of direct quotes and
paraphrasing to elicit this information.
Direct Quotations
These should be carefully selected and copied directly from the text/article.
They should be used when:
 giving a specific description or definition (for example, this may be a
definition of a legal principle or concept).
 expressing an important idea or argument (this may be a view of a legal
principle and how it has been applied in a particular case).
 the original words of the author are expressed so concisely and aptly that
they add weight to the point being expressed (this could be a judge’s opinion
of a legal principle as it has been applied in a case, or his/her assessment of
the legal implications in a case).
It is important to limit the use of direct quotations because, if too many are used
in your essay, it will fragment the flow of your writing and the essay will lack
cohesion and unity.
Short quotations
A short quotation is one to three lines and should be integrated into the flow of
your writing. It should be enclosed with quotation marks.
In the following example, notice how the student has integrated the quoted rule
into the flow of her writing:
There have been several rules established in relation to acceptance and one of
the most important rules is that ‘[a]ny conditions as to the method of acceptance
imposed by the offeror must be complied with.’
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BUSINESS LAW STUDENTS MANUAL
Long quotations
A long quotation is more than three lines. It should be indented and no quotation
marks are required. It is also important to introduce long quotations in the text of
your essay. Study the following example:
Because there have been so many disputes in cases about whether acceptance
has, in fact, occurred, several rules as to acceptance have been subsequently
developed.
These rules are that:
a) acceptance must be absolute and unqualified;
b) any conditions as to the method of acceptance
imposed by the offeror must be complied with;
c) acceptance must be made in reliance on the offer;
and
d) except in cases where the offeror has dispensed with
the need to be told of acceptance, acceptance must be
communicated.
Referencing quotations
In your essay, it is always necessary to acknowledge the source of your direct
quotations. In law, the preferred referencing style is footnoting.
When you use the ideas or words of another writer, you must acknowledge them
by citing the article or text from which they came. If you do not acknowledge
your source of this information and claim they are your own, then you will be
guilty of plagiarism.
Paraphrasing
When taking notes in preparation for writing your essay in Business Law, most
of the time you will be paraphrasing the relevant information from the
texts/articles. You will be paraphrasing key legal principles and the relevant
aspects of cases.
Paraphrasing is a technique where material from texts is rewritten in your own
words without changing the original meaning. The paraphrase is usually as long
as the original passage.
Strategies to assist your paraphrasing are:
(a) to read the passage several times to understand its meaning;
(b) to identify:
(i) the main idea;
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BUSINESS LAW STUDENTS MANUAL
(ii) the main supporting points; and
(iii) the supporting details to assist with your understanding of the passage;
(c) to check the dictionary for any words you do not understand;
(d) to use synonyms where possible, but remember you cannot replace important
legal
terms. They are essential to the meaning of the passage. You can only
replace
general words;
(e) to change the word order of sentences.
Following is an example of a paraphrase. Study it carefully.
Original passage on one of the rules of acceptance (from Khoury and Yamouni,
p. 32)
(ii) Conditional acceptance. Acceptance must be unqualified - conditional
acceptance is not adequate. It sometimes happens that the parties enter a
written agreement which they express to be ‘subject to contract’ or
‘subject to a formal contract being prepared’. What is the legal position
with regard to such an agreement? The answer seems to be that, in the
absence of strong evidence to the contrary, a legally binding agreement
does not exist until such time as a formal contract has been prepared for
and executed by the parties to it.
(legal words which cannot be changed are emboldened; general words which
can be changed are underlined.)
Paraphrase of passage
(ii) Conditional acceptance. Acceptance has to be unqualified - it is not
sufficient to have conditional acceptance. A written agreement is
occasionally negotiated by parties which they express as being ‘subject to
contract’ or ‘subject to a formal contract being prepared’. How is such an
agreement interpreted legally? Without strong opposing evidence, the
answer appears to be that a legally binding agreement does not occur until
there has been the preparation of a formal agreement and it has been
executed by the parties to it.
Notice the extensive use of synonyms and the changing of the word order in the
paraphrase. Also, forms of words have been changed. For example, ‘prepared
for’ has been changed to ‘preparation’.
Composing your essay
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BUSINESS LAW STUDENTS MANUAL
Remember that helpful information for your assignment is also found on the
website in the research essay section.
After taking notes on the relevant information for your essay, you will need to
arrange these notes into a logical structure to answer the essay question. You
will need to consider your selection and presentation of the relevant content.
Your topic analysis and plan will have assisted you in guiding your reading and
note taking. During the process of reading and taking notes, you may well have
refined and changed your plan, given that you would have done extensive
reading on the topic. This final plan will also provide you with a basic structure
for your essay, so your next step is to organise your notes into the different
sections of this plan. This final plan will include the key aspects which you need
to discuss in your essay. You will need to sift through your notes and be
selective in your choice of material.
When composing your response to the question on the topic:
 refer regularly to the question.
 check that you have all the necessary material to answer the question fully
and effectively.
 do not just string together the notes you have selected to incorporate into
your response to the question.
 develop your own response to the question, supporting it with relevant
arguments, including the relevant legal principles and cases, based on your
research and notetaking.
 select material which is relevant and appropriate to include in your
introduction, body and conclusion; this will assist you in producing a wellorganised, cohesive essay.
Linking words and phrases
In Tutorial 1, linking/signalling words and phrases are discussed in relation to
assisting in the understanding of the meaning of information provided in cases.
These words and phrases can also give your essay cohesion and unity. They
provide important links between sentences in a paragraph and between
paragraphs in an essay. The appropriate use of linking words and phrases allows
a smooth transition from one paragraph to the next, linking together the aspects
being discussed. As has been suggested in Tutorial 1, pp.26-27 in Crosling and
Murphy, How to Study Business Law, have a comprehensive list of these
linking words. Do refer to them when you are writing your essay. A few
examples of these words are: therefore, consequently, however, furthermore,
thus, hence, also and as well. These are commonly used linking words and
phrases but there are many more, so do use them in your writing. The linking
words and phrases on pp.26-27 refer specifically to those most commonly used
in legal texts.
When referring to legal principles and particular aspects of cases in your essay,
you can use the following signalling words and phrases. These words and
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BUSINESS LAW STUDENTS MANUAL
phrases introduce or signal to the reader what is happening in the different
aspects of your essay.
For example, if you are discussing a legal principle, you may introduce this
discussion with:
The law in this area states that…
The law states that…
The law requires/stipulates that …
When discussing cases/precedents, you may introduce the discussion with:
In Smith v Jones (1981), the judge concluded/indicated/ stated that…
It was held in the case of ………..v……….. that …
The case of ……………v……………
demonstrates/clarified/highlights/shows/explains/
manifests/exhibits/exemplifies…
Brown v Anderson (1980) established the precedent that…
It was held that…
Smith J upheld that…
In the course of his judgment…
In the view of …
More phrases for introducing case discussion are provided in Tutorial 3. In
addition, there is a comprehensive list of signalling words, phrases and
sentences in Appendix D, pp.234-235, Crosling and Murphy, How to Study
Business Law.
Your discussion of a case in your essay may resemble the following. (The case
of Central London Property Trust Ltd. v High Trees House Ltd [1947] KB 130
is used for this purpose.)
The doctrine of estoppel, in its traditional form, would not assist the debtor,
since it was always limited by the courts to apply to representations of existing
or past fact, and did not apply to representations of future intention. That
position was changed in the landmark case of Central London Property Trust
Ltd. v High Trees House Ltd [1947] KB 130. In this case, High Trees, which
leased a block of flats from Central London in 1939, had difficulty in filling the
flats because of the outbreak of war. In 1940, the parties agreed that the rent
would be reduced by half. High Trees paid the rent at a reduced rate for five
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BUSINESS LAW STUDENTS MANUAL
years and in 1945 the flats began to fill again. Central London sued for the
payment of the full rental when the flats became full. Denning J stated that
Central London was entitled to the full rental when the flats filled again.
However, he argued that they would have been estopped from going back on
their promise had they attempted to sue for the arrears for the years 1940-45
because it would have been detrimental to High Trees, despite the fact that there
had been no consideration from High Trees in exchange for the promise.
Consequently, Denning J extended the doctrine of estoppel so that it did apply to
representations of future intention, or to promises, as a result of which
promissory estoppel was established, so long as the promisee has acted to his or
her detriment in the particular case.
Synopsis
You will be asked to write a synopsis (abstract or summary) for your Business
Law essay. This should only be a summary of the key areas you have covered
(not the details) and the general conclusions you have reached. The synopsis is
approximately 5 to 10 percent of the length of your essay, so, if your essay is
2000 words, your synopsis will be 150 to 200 words. It should be written as one
paragraph. The synopsis is presented after the title page and before the essay
itself. This way the reader can see, in advance, the key areas which have been
covered in the essay and the essence of your argument.
You should write your synopsis after you have written your essay. It is a
summary of what you have written, not an indication of what you intend to
write. Hence, it is usual to write the synopsis in the present or past tense, not in
the future tense.
Using footnotes in your essay
As has already been stated, this is the preferred referencing style in Business
Law. You put a raised number at the end of the information you are citing.
These numbers run in order throughout the essay: 1,2,3…
When footnoting, the details of the origin of each of the numbered references
are given at the foot of each page. Alternatives to footnotes, such as endnotes or
Harvard System notes are no longer acceptable in law essays and assignments
and footnotes as described above must be used.
What information is required in the footnote?
 first name and/or initials and surname of author
 full title of book (underlined or italicised)





edition number (if applicable)
date of publication*
publisher*
place of publication*
page number of reference
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BUSINESS LAW STUDENTS MANUAL
The order of this information can vary, but choose an order to present it and use
it consistently.
For example:
1. R. B. Vermeesch and K. B. Lindgren, Business Law of Australia, 11th
Edition, 2005, Butterworths, Sydney, p. 233.
You can shorten the information when you are citing the same author(s) on
subsequent occasions.
For example:
2. Vermeesch and Lindgren, Business Law, p.224.
When citing journal articles, use the following format:
 first name and/or initials and surname of author
 title of article
 name of journal
 volume number
 issue number (if applicable)
 date of issue
 page number/s
Note that the article title can be in inverted commas, while the journal title is
underlined or italicised.
For example:
D. Khoury, ‘Promissory estoppel: a sword unsheathed’, Law Institute Journal,
Vol. 64, November 1990, pp. 1054-6.
When citing sources from electronic media, similar conventions apply as
for traditional texts. Use the following format:
‰
author’s name
‰
date electronic resource was published
‰
title of the material
‰
version (if applicable)
‰
the medium (eg. CD Rom, internet)
‰
name of the publishing company
date the site visited (if it is an internet document)
(adapted from Student Learning Unit /Study Skills site published
by Teresa de Fazio)
‰
If you are accessing cases from an internet website, for example,
from Austlii (http://www.austlii.edu.au) your citation would read as
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BUSINESS LAW STUDENTS MANUAL
follows:
FCTv Henderson (1943) 68 CLR 29,
http: //www.law.flinders.edu.au/tax/caselaw/taxacc.htm (July 19, 1999).
Citation of cases
You can cite the case details in full in the text of your essay, or in a footnote.
Case details should include:
date case
reported
set of law
reports
Legione v Hateley (1983) 57 ALJR 292
parties
volume no. page no.
Italicise or underline parties’ names.
Bibliography
This is on the last page of your essay. It is an alphabetical list of all the sources
of material which you have used in your essay, as well as the material which
have you have read in preparation for the essay. Choose a format for ordering
the texts/articles you have used or referred to and use it consistently.
You need to include the following information:





author’s surname followed by initials or first name
title of book underlined or in italics
edition number
year of publication
name of publisher and place of publication
For further information on these aspects of your essay, please refer to Crosling, G. and
Murphy, H., (2000), How to Study Business Law, Chapter 8, 3nd edition, Butterworths,
Sydney.
16
BUSINESS LAW STUDENTS MANUAL
17
Assignment Topic – Semester One, 2009
The common law of contract envisages two equally powerful negotiating partners,
both aware of the caveat subscriptor (let the signatory beware) and the caveat
emptor (let the buyer beware), voluntarily taking upon themselves contractual
obligations in return for contractual rights. Yet we have various statutorily implied
terms which exist to protect consumers in Victoria.
What are these terms, when do they apply. How effective do you believe them to be
and are they necessary?
NOTES FOR STUDENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
You are required by week 4 of Semester to prepare a Plan of your assignment, which
must be submitted to your Tutor at your Tutorial in Week 4. The plan must be of
approximately 500 words, and it must detail how you propose to address the
assignment topic. The plan may be in point form if desired, and will be allocated a
mark out of a possible 5 marks. A copy of the plan must be retained by you and
attached to your completed assignment when submitted in Week 8.
The assignment must be of 2,000 to 2,500 words in length.
The assignment must be typed or printed on one side only of A4 paper with 1.5 or
double spacing and leaving a left-hand margin wide enough for examiner’s
comments and corrections.
The completed assignment must be submitted with an “Assignment Cover Sheet”
available from School of Law and Faculty of Business and Law Offices and duly
completed in all respects, including Tutor’s name and day and time of tutorial.
The assignment must include footnotes, a bibliography and may include a synopsis.
Students are advised to study the notes on assignment preparation and the notes
on plagiarism contained in the Business Law Students Manual.
Assignments will be marked out of a possible 30 marks.
Assignments submitted after the due date will incur a penalty for late submission of
one mark for each day by which the assignment is overdue, unless an extension of
time has been obtained from the subject lecturer or tutor prior to the due date. Any
application for extension of time must be lodged on the appropriate form obtainable
from the Faculty office and must be accompanied by any supporting evidence of the
facts upon which the application is based.
The completed assignment must be lodged with your tutor at your scheduled tutorial
during Week 8 of semester.
The assignment topic may not be covered in lectures or tutorials prior to the due date
for submission. Students should accordingly commence their own research into the
assignment topic.
Andy Schmulow
Business Law Co-ordinator.
February, 2009.
18
BUSINESS LAW STUDENTS MANUAL
Assignment Topic Semester Two, 2009.
When introducing the Trade Practices Act 1974 (Cth) into the Commonwealth
Parliament in 1974, Senator Lionel Murphy, in his second Reading Speech
said: - “Clause 52 prohibits misleading or deceptive conduct – and does so in
general terms. It is important that there should be such a provision if the law
is not to be continually one step behind businessmen who resort to smart
practices”.
Explain the legal significance of s.52 of the Trade Practices Act and its effect
upon the conduct of business by corporations in Australia since 1974.
NOTES FOR STUDENTS
1. You are required by week 4 of Semester to prepare a Plan of your assignment, which
must be submitted to your Tutor at your Tutorial in Week 4. The plan must be of
approximately 500 words, and it must detail how you propose to address the
assignment topic. The plan may be in point form if desired, and will be allocated a mark
out of a possible 5 marks. A copy of the plan must be retained by you and attached to
your completed assignment when submitted in Week 8.
2. The assignment must be of 2,000 to 2,500 words in length.
3. The assignment must be typed or printed on one side only of A4 paper with 1.5 or
double spacing and leaving a left-hand margin wide enough for examiners comments
and corrections.
4. The completed assignment must be submitted with an “Assignment Cover Sheet”
available from School of Law and Faculty of Business and Law Offices and duly
completed in all respects, including Tutor’s name and time and day of tutorial.
5. The assignment must include footnotes, a bibliography and may include a synopsis.
6. Students are advised to study the notes on assignment preparation and the notes on
plagiarism contained in the Business Law Students Manual.
7. Assignments will be marked out of a possible 25 marks.
8. Assignments submitted after the due date will incur a penalty for late submission of
one mark for each day by which the assignment is overdue, unless an extension of time
has been obtained from the subject lecturer or tutor prior to the due date. Any application
for extension of time must be lodged on the appropriate form obtainable from the
Faculty office and must be accompanied by any supporting evidence of the facts upon
which the application is based.
9. The completed assignment must be lodged with your tutor at your scheduled tutorial
during Week 8 of semester.
10. The assignment topic may not be covered in lectures or tutorials prior to the due date for
submission. Students should accordingly commence their own research into the
assignment topic.
Andy Schmulow
Business Law Co-ordinator.
February, 2009.
BUSINESS LAW STUDENTS MANUAL
19
Tutorial Attendance and Participation.
Tutors will monitor the attendance and participation of students at weekly Tutorial classes .
Students will be allocated a mark (out of 10 marks) for this component of assessment. Weekly
tutorial classes are structured in such a way that they provide the opportunity for exchange of
ideas among students, and between students and Tutor. They are the ideal forum for reviewing
material covered in lectures and questioning of the concepts dealt with in lectures and covered
by individual student's reading in the subject.
Tutorials are a vital component of the student learning process in all Units of Study studied at
tertiary level, but this applies even more emphatically in the study of law in a common law
legal system, where problems are resolved by the application of an adversarial approach.
Final Examination.
The Final Examination, of three hours duration, is an "open-book" examination. This means
that students may take into the examination and have access to any written or printed materials,
including text books, lecture notes and any notes of their own choosing . The only exception is
that students may not take Victoria University library texts into the examination room. Whilst
open-book examinations mean that students do not have to rely upon their memory for case
details and other information (since they can access this information whilst the examination is in
progress), a higher standard of work is expected from students. The material which is most
beneficial to students in open-book examinations is a comprehensive set of the student's own
notes and materials, properly collated for ready access. Students should keep this in mind in the
early stages of the semester, since there is a strong case for creating and maintaining a detailed
set of lecture notes, and tutorial materials.
Marking Criteria.
In order to obtain a pass in the subject, all aspects of assessment must be completed to a
satisfactory standard of competence. Accordingly, students who fail to attempt all assessment
components will fail the subject. The examiners retain the discretion to award a pass in the
subject to a student who, having attempted all assessment components, fails to complete one of
such components to a pass standard. Students should note that this discretion cannot be
exercised in favour of any student who attains a mark of less than 25 (out of 60) in the
Final Examination.
BUSINESS LAW STUDENTS MANUAL
20
Unit of Study Content
There are two components in the Business Law Syllabus. The first is the Australian Legal
System, and the second is Contract Law. The first week of lectures and tutorials will relate to
aspects of the Australian Legal System, with the remainder being concerned with a detailed
examination of the Law of Contract.
The first component of the subject addresses briefly topics chosen from the following: •
Australian Legal System
An Introduction to the Australian Legal System
•
The sources of law in Australia
•
Common law and the Doctrine of Precedent
•
The adversary system
•
The court system
•
Tribunals
The Commonwealth of Australia Constitution
•
•
•
•
•
•
•
•
•
The origins and structure of the Constitution
Parliament
The Executive
The Judiciary
Division of power between States and Commonwealth
Amending the Constitution.
Legislation and Statutory Interpretation
•
•
•
Legislation
Statutory Interpretation
Statutory Intervention
Students who have undertaken Legal Studies at VCE level will find that this component of the
syllabus will to some extent be a revision of aspects of the VCE subject. Other students should
consult the "Reading Guide" for information concerning recommended sources of information
to provide suitable background material.
A detailed examination of the Law of Contract will follow, with concentration upon the
following topics:•
•
•
•
•
•
•
•
•
Introduction to Contract Law
Intention to Create a Contract
Offer
Acceptance
Consideration
Contents of the Contract
Exclusion Clauses
Implied Terms
Formalities
BUSINESS LAW STUDENTS MANUAL
•
•
•
•
•
•
21
Capacity to Contract
Mistake
Misrepresentation
Duress, Undue Influence and Unconscionable Conduct
Discharge of Contract
Remedies for Breach of Contract.
A detailed summary of lecture content appears later in this Manual. Lectures will follow the
sequence detailed in that summary.
Teaching Method
Students are required to attend two hours of lectures each week. Some lecture streams are
structured to have two one-hour lectures, and others have one two-hour lecture. Check the
timetable for relevant details of your chosen Lecture Stream.
All students will attend a one-hour tutorial each week.
•
Lectures
During lectures, students should attempt to take detailed notes. These notes will form the
basis of the student's Unit of Study materials and, if properly collated and indexed, will
be a useful source of reference during the final open-book examination. As lecture
group sizes are large, the opportunity for students to ask questions during lectures is
inevitably restricted, and tutorials provide a much better forum for questions.
•
Tutorials
Tutorial groups comprise approximately 20 students, and the objective of tutorials is to
enable students to participate actively and ask questions about any relevant matters being
discussed. The tutorial programs have been devised to promote discussion on important
aspects of the subject, and it is essential that students read the tutorial materials before
the tutorial is attended, and be prepared to become involved in discussion about issues.
Tutorials are extremely important in the process of learning law, and the importance of
preparation and attendance cannot be over-emphasised. Students will benefit from
tutorials in direct proportion to their individual preparation for them.
Students are reminded that 10% of the marks in the subject will be allocated for
attendance at and for participation in tutorials.
Texts and References
Students are required to purchase the “Business Law Manual”, which is available from VUT
Bookshops. Students are encouraged to purchase the prescribed texts listed below, which are
BUSINESS LAW STUDENTS MANUAL
22
also available from the Bookshops. In addition, students may wish to purchase the preliminary
reading text or texts from among the listed recommended texts.
•
Prescribed Texts
An Introduction to the Law of Contract, Stephen Graw, Law Book Company,
6th Edition, 2008. Thomson Legal & Regulatory
Business Law for Business Students, David Parker and Gerry Box, Thomson
Custom Publishing, 2nd Edition, 2008.
•
Recommended Texts
"How to Study Business Law", Crosling & Murphy, Butterworths, 1999. This book
introduces students to the methods of study that are required for the completion of law
units. It is especially useful to students who have not undertaken legal studies before and
those for whom English is a second language. It develops skills for coping with legal
vocabulary, effective reading of texts, note taking skills and methods of writing
assignments and answers to problem questions.
"Understanding Contract Law", Khoury & Yamouni, Butterworths, 6th Edition, 2003
"Australian Business Law", Latimer, CCH, 27th Ed., 2008
"Business Law of Australia", Vermeesch & Lindgren, Butterworths, 11th Ed., 2005
"Contract Law", Australian Black Letter Law Series, Clarke, Butterworths, 1993
"Concise Contract Law", Gillies, The Federation Press, 1995.
"Business and the Law", Terry & Giugni, Thomson Legal & Regulatory, 2005
"Cheshire and Fifoot's Law of Contract", 6th Australian Edition, Butterworths,
"Australian Commercial Law", Turner, Law Book Co., 24th Ed., 2003
"Understanding Business Law", Pentony, Graw, Lennard & Parker, Butterworths, 3rd
edition, 2003
Note: There are numerous texts on the subject of contract law, or which include contract law as
part of a broader analysis of business or commercial law. Any recognised text dealing
with contract law will be useful to students. Care should be taken when reading English
texts to note that only those Australian cases which were appealed to the Privy Council
might be noted. This could therefore exclude recent Australian cases of consequence.
BUSINESS LAW STUDENTS MANUAL
23
Plagiarism
Plagiarism is the act of plagiarising the work of another. Plagiarism, as defined by Victoria
University is: “A practice that involves the using of another person’s intellectual output and
presenting it as one’s own.”
It is acceptable to quote directly from a written and published work, but the source must be
acknowledged when we do so. Failure to do so implies that we are trying to pass off as our own
original work and ideas the work and ideas of someone else. This is not acceptable.
When researching for an assignment, for example, it is inevitable that many ideas will be
extracted from other people's work. This is quite acceptable, so long as appropriate
acknowledgment is given in footnotes or end-notes to the assignment. Failure to do so will result
in loss of marks.
Student Support Programs
On some campuses, support programs are offered by Teaching and Learning Services. These
programs are open to all students from all campuses where the subject is offered, but
presentation of the programs will usually occur only at the Footscray Park campus. Details will
be available to students from other campuses. The programs are assessment-specific,
concentrating upon preparation for assignment and final examination at appropriate times during
the semester.
The Internet as a Research Tool
All students now have access to the Internet - at least through the University's internal facilities,
and should regularly visit the websites maintained by the Faculty of business and Law and by
webct.
These sites contain much useful information for students of Business Law. For example,
answers to tutorial questions are placed on this site progressively during the Semester, and
various strategies to assist students are outlined. Students are also reminded of deadlines
applicable to various aspects of their necessary work in the subject.
There are many other useful internet sites available for student access, and many of these sites
are of special benefit to students of law subjects. For example, the site conducted by the
Australasian Legal Information Institute (http://www.austlii.edu.au) includes all Acts of the
Commonwealth Parliament in full and detailed reports of all reported decisions of the High
Court and the other Federal Courts. The Acts and court decisions of all of the States are also
being added to this website. The States are also establishing websites to enable access to State
BUSINESS LAW STUDENTS MANUAL
24
Acts of Parliament and State Court decisions. The relevant website to access to see Acts of the
Victorian Parliament and decisions of Victorian State Courts is http://dms.dpc.vic.gov.au.
Legal publishers, such as Thomson Legal, Butterworths and CCH also maintain sites containing
useful information for law students, and students are encouraged to access these sites to facilitate
their research.
The Internet is a rapidly-growing source of information for tertiary students in general and for
law students in particular. Students who fail to familiarise themselves with the Internet as a
research facility will be disadvantaged in their studies. Care should be taken, however, when
using the internet for assignment research. If using global searching facilities you may obtain
access to significant amounts of information that appears to be relevant to the topic, but if it
sourced in America or Canada (for example) it may not be relevant to Australian law.
A good starting point for information is to contact the University Library staff, who are fully
conversant with developments with the Internet, and are keen to share their knowledge with
students. Students are strongly advised to learn about this convenient source of information and
knowledge and maximise its use in their individual study programs.
Lecturers in the School of Law are also familiar with Internet access facilities for Law Students,
and will be happy to assist students requiring further information in this area. Students are
reminded that all Law Lecturers have defined student consulting hours, which are detailed on
individual lecturer's timetables posted on their office doors. Consulting hours are times when
Law Lecturers are available for student consultation. They may well be available at other times
when not conducting lectures or tutorials or visiting other campuses, but they are available
during specified consulting hours.
If you are experiencing difficulty contacting your lecturer or tutor personally, the email is a
valuable asset in facilitating communication between students and staff. It is much more
efficient than telephone contact and staff will usually be in a position to respond to email
enquiries from students within 24 hours.
BUSINESS LAW STUDENTS MANUAL
25
BLO1105 Business Law Lecture Guide
Textbook Referencing Guide
G = Stephen Graw, An Introduction to the Law of Contract (6th edition, 2008, Thomson Lawbook Co)
P = David Parker & Gerry Box, Business Law for Business Students (3rd edition, 2008, Thomson Custom
Publishing)
T = Clive Turner, Australian Commercial Law (24th Edition Thomson Lawbook Co)
1. Introduction to the Australian Legal System
(Weeks 1 and 2 of lectures)
The sources of Australian Law [G 1 - 10] [P1]
A brief history of the development of Australian Law [G 1 - 10] [P2]
Common Law and Precedent [G13] [P5]
Law Reports [P11]
The State and Federal Court Systems [G 18 - 23] [P11]
Court Hierarchy in Australia [G18][P16]
High Court [G19][P21] www.hcourt.gov.au
Supreme Court [G19][P20]
County Court [G19][P19]
Magistrates Court [G18][P17]
Federal Court [G21][P21] www.federalcourt.gov.au
Family Court [G21][P22] www.familycourt.gov.au
Privy Council [G20][P16]
Federal Magistrates Court [G23][P23] http://www.fma.gov.au
Tribunals [G23] [P23]
Alternative Dispute Resolution (“ADR”)
The Doctrine of Precedent [G13][P7]
Example the myth of “terra nullius” [G1][P3, 42]
Cooper v Stuart (1889) 14 App Cas 286 [G5][P2]
Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 (Gove Land Rights)
Mabo v State of Queensland (Mabo no 2) (1992) 175 CLR 1 [note G2][P3, 42]
Classifying the different branches of the law
•
•
•
Criminal Law [P26] [T43]
Civil Law [P28]
Tort [P28][T24]
26
BUSINESS LAW STUDENTS MANUAL
•
•
•
•
Contract Law [P31][T55]
Constitutional Law [P31]
Administrative Law [P31]
The Rules of Equity [G5] [P32]
The Constitution of the Commonwealth of Australia
The origins and structure of the Constitution [P39]
The division of legislative power between Commonwealth and States [P43]
Amending the Constitution [P47]
Rights and Guarantees under the Constitution [P49]
The Adversary System [P13][T44]
•
•
Onus of proof [P26][T24]
Standard of proof [P26]
Legislation and statutory interpretation [G13][P47]
Statutory Interpretation [G8] [P52]
Re Sigsworth: Bedford v Bedford [P54]
Introduction to the Law of Contract.
What is a contract? [G27][P59]
2. Intention to Create Legal Relations
(Week 3 of lectures)
[G97][P69] [T72]
Domestic Agreements
Balfour v Balfour [1920] AC 445 [G99][P71]
Cohen v Cohen (1929) 42 CLR 91 [G99][P72]
Murphy v Simpson [1957] VLR 598 [G99][P72]
Social Agreements
Coward v Motor Insurers Bureau [1962] 1 All ER 531 [G100][P73]
Cameron v Hogan (1934) 51 CLR 358 [G101] [footnote 9 P73]
Ermogenous v Greek Orthodox Community [2001] 209 CLR 95 [G101] [footnote 9 P73]
Rebutting the Presumption of Intention
McGregor v McGregor (1898) 21 QBD 424 [G102][P75]
Merritt v Merritt [1970] 1 WLR 1211 [G102][P75]
Wakeling v Ripely (1951) 51 SR (NSW) 183 [G103][P75]
Riches v Hogben [1986] 1 Qd R 315 [noteG103][P76]
Todd v Nicol [1957] SASR 72 [note G103][P76]
Simpkins v Pays [1955] 1 WLR 975 [G104][P78]
Carlill v Carbolic Smoke Ball Co [1892] 1 QB 256 [G48][P78]
Leonard v Pepsico Inc 88 F Supp 2d (SDNY 1999), affd 210 F 3d 88 (2nd Cir 2000) [G51][footnote 7 P88]
27
BUSINESS LAW STUDENTS MANUAL
Expressly Excluding the Intention to be Legally Bound
Jones v Vernons Pools Ltd [1938] 2 All ER 626 [G105][P79]
Honour clauses
Rose & Frank Co v JR Crompton Bros Ltd [1925] AC 445 [G106][P80]
Letters of Comfort [P80]
Banque Brussels Lambert SA v Australian National Industries Ltd (1989) 21 NSWLR 502 [P81]
Kleinwort Benson Ltd v Malaysia Mining Corporation Berhad [1989] 1 WLR 379 [P81]
Administrative arrangements
Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424 [G40][P83]
Ambiguous language
Edwards v Skyways [1964] 1 WLR 349; 1 All ER 494 [G107][P74]
3. Offer to Contract
[G39][P85] [T62]
(Week 4 of lectures)
Harvey v Facey [1893] AC 552 [G41] [footnote 1 P85]
Invitations to Treat or Invitations to Deal
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401
Fisher v Bell [1961] 1 QB 394
[ 76
[ 75]
[G43] P
[T63]
[G43] P ]
Partridge v Crittenden [1968] 2 All ER 421
[G42] [footnote 5 P87]
Grainger and Sons v Gough [1896] AC 325
[ 76]
[G42] P [T63]
Offers to the World at Large
Carlill v Carbolic Smoke Ball Co [189 ] 1 QB 256
3
[ 69]
[G48] P
[T64]
Revocation of offer [G56] [P92][T64]
Byrne v Van Tienhoven (1880) 5 CPD 344 [G58] [P111][T65]
Ramsgate Victoria Hotel Co v Montefiore (1866) LR 1 Exch 109 [G62] [P94][T67]
Routledge v Grant (1823) 4 Bing 653; 130 ER 920 [G57]
Goldsborough Mort & Co Ltd v Quinn (1910) 10 CLR 674 [G57] [footnote 36 P111][T65]
Cross offers [G53] [P89]
Tinn v Hoffman (1873) 29 LT 271 [G53] [P90]
Counter offers and Requests for information [G54] [P90]
Hyde v Wrench (1840) 3 Beav 334 [G54] [P91]
Stevenson Jacques & Co v McLean (1880) 5 QBD 346 [G54] [P91]
Death of Offeror or offeree[G65] [P94]
Reynolds v Atherton (1921) 125 LT 690 [G66]
Carter v Hyde (1923) 33 CLR 115 [G66]
Fong v Chili (1968) 11 FLR 495 [G65]
BUSINESS LAW STUDENTS MANUAL
4. Acceptance of Offer
28
(Week 4 of lectures)
[G71][P93] [T66]
Acceptance must be clear, unambiguous, unequivocal and is not complete until
communicated.
Latec Finance v Knight [1969] NSWLR 79
Acceptance must be unconditional
Masters v Cameron (1954) 91 CLR 353 [G74] [P95] [T68]
Souter v Shyamba Pty Ltd [2002] NSWSC 929 [P96]
First Church of Christ, Scientist, Brisbane as Trustee under Instrument7020202154 v Ormlie Trading Pty
[2003] QSC 351 [P97]
Teviot Downs EstatePty Ltd and Anor v MTAA Superannuation Fund Property Pty Ltd [2003] QSC 403 [P98]
Ltd
Offeror’s requirements must be met
Eliason v Henshaw (1819) 4 Wheaton 225 [G87] [P99]
Entores Ltd v Miles Far East Corporation [1955] 2 QB 327 [G91] [P100]
Leach Nominees Pty Ltd v Walter Wright Pty Ltd [1986] WAR 244 [P100]
Postal rule of acceptance [G88] [P101] [T69]
Adams v Lindsell (1818) 1 B & Ald 681; 106 ER 250 [G88] [footnote 13 P101][T69]
Henthorn v Fraser [1892] 2 Ch 27 [note G88] [footnote 16 P102][T69]
Brinkibon Ltd v StahagStahl und Stahlhandelsgesellschaft mbH [1983] 2 AC 34 [note G92] [footnote 18 P102][T67].
Section 14 Electronic Transactions Act 1999 (Cth) [P102][T322]
Section 13 Electronic Transactions Act 2000 (Vic) [P102][T322]
Acceptance in reliance upon offer [G52] [P103]
R v Clarke (1927) 40 CLR 227 [G52] [P103] [T66]
Acceptance must be communicated [G83] [P105]
Felthouse v Bindley (1862) 11 CB(NS) 869 [G84] [P105]
Implied acceptance [G85] [P106]
Brogden v Metropolitan Railway Company (1887) 2 App Cas 666 [G85] [P106]
Communication of acceptance by Agent [G83][P107]
Powell v Lee (1908) 99 LT 284 [G83] [P107]
5. Consideration
(Week 5 of lectures)
[G111- 142][P115 - 137] [T79-84]
Currie v Misa (1875) LR 10 Exch 153 at 162. [G115] [T79]
Eastwood v Kenyon (1840)11 Ad& E 438 [G115][P117]
Roscorla v Thomas (1842) 3 QB 234 [G115] [P117]
Anderson v Glass (1868) 5 WW & A'b 152 [G115] [P118] [T82]
Lampleigh v Braithwait (1615) Hob 105 [G116] [P118]
Re Casey's Patents: Stewart v Casey [1892] 1 Ch 104 [G117] [P119]
Doctrine of privity of contract [G179-195][P119] [T169]
Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847 [G182g5] [P119] [T170]
Coulls v Bagot's Executor and Trustee Co Ltd (1967) 119 CLR 460 [G183] [P120] [T170]
Beswick v Beswick [1968] AC 58 [G443] [T170]
29
BUSINESS LAW STUDENTS MANUAL
Consideration can be Nominal
Thomas v Thomas (1842) 2 QB 851 [G119] [P121p2]
Chappell & Co v Nestlé Co Ltd [1960] AC 87 [G118] [P122] [T80]
Consideration must be tangible
White v Bluett (1853) 23 LJ Ex 36 [G120] [P123]
Hamer v Sidway 124 NY 538; 27 NE 256 (1891) [G114]
Consideration must be legally sufficient
Wigan v Edwards (1973) 47 ALJR 586 [G121] [P124] [note T81]
Consideration in the context of an existing legal or contractual obligation
Collins v Godefroy (1831) 109 ER 1040 [G123] [P125] [T81]
Glasbrook Bros Ltd v Glamorgan County Council [1925] AC 270 [G124] [P126]
Stilk v Myrick (1809) 2 Camp 317 [G125] [P126]
Hartley v Ponsonby (1857) 7 El&Bl 872 [G126] [P127]
Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1; 1 All ER 512 [G127] [P127]
Consideration in the context of the variation or the discharge of an obligation
The Rule in Pinnel's Case and Exceptions to it [G127] [P129]
Pinnel's case (1602) 77 ER 237 [G132] [P129]
Foakes v Beer (1884) 9 App Cas 605 [G132] [P129] [T81]
Hirachand Punamchand v Temple [1911] 2 KB 330 [G134] [P130]
6.
Promissory Estoppel
(Week 6 of lectures)
[G135] [P131] [T84]
Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 [G135] [P132] [T84]
Combe v Combe [1951] 2 KB 215 [G141] [P133]
Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101 [note G136] [P133-134] [T85]
Legione v Hateley (1983) 57 ALJR 292 [note G136][P134]
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 [G137][P135] [T86]
Commonwealth of Australia v Verwayen (1990) 170 CLR 394 [G137] [note T87]
7. Terms of a Contract
[G199] [P139][T154]
Buckenara v Hawthorn Football Club Ltd [1988] VR 39 [note G449] [P125]
Parole Evidence Rule [G200] [P140] [T155]
L`Estrange v Graucob [1934] 2 KB 394 [G237][P159][T163]
Exceptions to the parole evidence rule
Evidence of custom or commercial usage
Hutton v Warren (1836) 1 M & W 466 [G203] [P141]
Contract not yet operational/Suspension of operation
Pym v Campbell (1856) 6 E & B 370; 119 ER 903 [G204] [P141][T157]
(Week 7 of lectures)
BUSINESS LAW STUDENTS MANUAL
Where the contract is partly in writing and partly oral
Van Den Esschert v Chappell [1960] WAR 114 [G202] [P141][T156]
Analysis of Statements [G206] [P142][T156]
Oscar Chess Ltd v Williams [1957] 1 WLR 370; [1957] 1 All ER 325 [G209] [P143] [T156]
Collateral Contracts [G211] [P144] [T157]
De Lasalle v Guildford [1911] 2 KB 215 [G212] [P145] [T157]
Hoyt's Pty Ltd v Spencer (1919) 27 CLR 133 [G125] [P146] [T157]
J Evans and Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 2 All ER 930 [G214] [P146]
JJ Savage & Son Pty Ltd v Blakney (1979) 119 CLR 435 [G212] [P147] [T158]
Meaning of Terms
CNW Oil (Australasia) Pty Ltd v Australian Occidental Pty Ltd (1984) 55 ALR 599 [P148]
G Scammel and Nephew Ltd v HC and JG Ouston [1941] AC 251 [G79] [P148]
Fitzgerald v Masters (1956) 95 CLR 420 [G82] [P149]
Conditions, Warranties and Intermediate Terms [G216] [P150] [T158]
Bettini v Gye (1876) 1 QBD 183 [G217] [P151] [T159]
Poussard v Spiers & Pond (1876) 1 QBD 410 [G217] [P151]
Associated Newspapers Ltd v Bancks (1951) 83 CLR 322 [P151] [T159]
Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at 641-2 [T184]
Intermediate (or Innominate) terms [G218] [P152] [T159]
Consequences test
Hong Kong Fir Shipping Co v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 [G218] [P152] [T185]
Conditions Precedent and Subsequent [G220] [P152] [T180]
Head v Tattersall (1871) LR 7 Exch 7 [G388] [P153]
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 [G388] [T180]
Exclusion Clauses
The Signature Rule
L’Estrange v Graucob Ltd [1934] 2KB 394 [G237] [P159 [T163]
Curtis v Chemical Cleaning & Dyeing Co Ltd [1951] 1KB 805 [G238] [P159] [T166]
Gallie v Lee [1971] AC 1004 [P161]
Unsigned Documents (Ticket cases).
Adler v Dickson [1955] 1 QB 158; [1954] 3 All ER 21 [note G185]
Thompson v London Midland & Scottish Railway [1930] 1 KB 31; [1930] 1 KB 41 [G234] [P168] [T259]
Chapleton v Barry Urban District Council [1940] 1 KB 532 [G232]] [P164]
Causer v Browne [1952] VLR 1 [G231] [P163] [T166
J Spurling Ltd v Bradshaw [1956] 1 WLR 461; 2 All ER 121
Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 [G235] [P169] [T165]
Olley v Marlborough Court Ltd [1949] 1 KB 532 [G236] [P171] [T165]
Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 545 [note G236]
Previous Dealings
Balmain New Ferry Co Ltd v Robertson (1906) 4 CLR 379 [G234] [P171] [note T813]
Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 [G80] [P181]
Hollier v Rambler Motors (AMC) [1972] 1 WLR 399 [P172]
Walter H Wright Pty Ltd v DJ Hill & Co Pty Ltd [1971] VR 749 [G238] [P165]
30
31
BUSINESS LAW STUDENTS MANUAL
Contra proferentem
White v John Warwick & Co Ltd [1953] 1 WLR 1285 [P173] [ Note T167]
Council of the City of Sydney v West (1965) 114 CLR 481; [1966] ALR 538 [note G248] [P176] [T167]
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 [G250] [P174]
Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Aust) Pty Ltd (1966) 115 CLR 353 [note G248]
[P176] [ T499]
Interfoto Picture Library Ltd v Stilleto Visual Programmes Ltd [1988] 1 QB 433; 2 WLR 615 [G335]
Le Mans Grand Prix Circuits Pty Ltd v Iliadis [1998] 4 VR 649 [G238] [P166]
Doctrine of fundamental breach
Suisse Atlantique Societe D'armenent Maritime SA v NV Rotterdamsche Kolen Centrale [1967] 1 AC 361 [P175]
[T167]
Photo Production Ltd v Securicor Transport Pty Ltd [1980] 2 WLR 283; [1980] 1 All ER 556 [G247] [P175] [T167]
8. Implied Terms
(Week 8 of lectures)
[G220] [P 181] [T160]
Terms implied under the common law.
Industry Convention
British Crane Hire Corporation v Ipswich Plant Hire Ltd [1974] 2 WLR 856
Summers v Commonwealth of Australia (1918) 25 CLR 144
1
]
[P 82
]
[G222] [P183
Past Dealings
Hillas & Co Ltd v Arcos (1932) 147 LT 503 [G80] [P171]
Balmain New Ferry Co Ltd v Robertson (1906) 4 CLR 379 [G234] [P171]
Hollier v Rambler Motors (AMC) [1972] 1 WLR 399 [P172]
Business Efficacy
“The Moorcock” (1889) 14 PD 64; [1886-1890] All ER 530 [G223] [P184]
Codelpha Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; 56 ALJR 459
[G397] [P185]
M'Alister (Donoghue) v Stevenson [1932] AC 530
.
[P6] [T791]
T
erms implied by operation of statute [G222][P185]
Goods Act 1958 (Vic)
Trade Practices Act
1974 (Cth) [G222][P189]
Carpet Call Pty Ltd v Chan (1987) ATPR 46-025 [P191]
Part 2A Fair Trading Act 1999 (Vic), formerly Part IV Goods Act 1958 (Vic). [P192]
9. Capacity to Contract
[G147-175] [P199 – 205] [T91 – 99]
Mentally ill
O'Connor v Hart [1985] 1 NZLR 159
; [1985] 1 AC 1000 [G168]
York Glass Co Ltd v Jubb [1925] All ER 285; (1925) 134 LT 36 [P172]
Gibbons v Wright (1954) 91 CLR 423 [G169]
(Week 8 of lectures)
BUSINESS LAW STUDENTS MANUAL
Intoxication
Blom ey v Ryan (1956) 99 CLR 362
l
172]
[G168] [P
Contracts with Minors [Infants]
(a) for necessaries [necessary goods and services]; or
(b) beneficial contracts of service
Chapple v Cooper (1844) 153 ER 105 at 107
Nash v Inman [1908] 2 KB 1
]
]
[G150] [P203
[G152] [P204
Ryder v Wombwell (1868) 4 LR Exch 32
]
[G151] [P203
Scarborough v Sturzaker (1905) 1 Tas LR 117 [G152]
Beneficial contracts of service
McLaughlin v Darcy (1918) 18 SR (NSW) 585
[G153]
Doyle v White City Stadium Ltd [1935] 1 KB 110 [G156]
Convicts [171g5] [167g4] [182p4]
Dugan v Mirror Newspapers Ltd (1979) 53 ALJR 166 [G171]
Bankrupts [s.133 Bankruptcy Act 1966 (Cth)] [G173] - s.269 Bankruptcy Act 1966 (Cth) [G173]
(Week 9 of lectures)
10 . Mistake
[G253] [P187]
There are 3 categories of mistake
1.
Common Mistake
Scott v Coulson [1903] 2 Ch 249 [ 182]
P
McRae v Commonwealth Disposals Commission (1951) 84 CLR 377
Leaf v International Galleries [1950] 2 KB 86
]
[G258] [P209]
[G300] [P209
[note G260] [P210]
Bell v Lever Brothers Ltd [1932] AC 161
[note G259] [P210]
Svanosio v McNamara (1956) 96 CLR 186
Common Mistake in Equity
Solle v Butcher [1950] 1 KB 671
[G265] [P211]
2. Mutual Mistake
Raffles v Wichelhaus (1864) 2 H&C 906
1
]
; 1569 ER 375 [G265] [P 92
3. Unilateral Mistake
Cundy v Lindsay (1878) 3 App Cas 459
]
[G270] [P213
]
[G271] [P214
Ingram v Little [1961] 1 QB 31
]
[G272] [P215
[1972] 1 QB 198; [1971] 3 All ER 907
]
Lewis v Averay
[G272] [P216
Hartog v Colin & Shields [1939] 3 All ER 566
]
[G268] [P217
Gallie v Lee [1971] AC 1004 [P161]
Petelin v Cullin (1975) 49 ALJR 239
[G240] [P161]
Taylor v Johnson (1983) 57 ALJR 197
]
[G269] [P217
Phillips v Brooks Ltd [1919] 2 KB 243
32
33
BUSINESS LAW STUDENTS MANUAL
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
[G253]
11. Misrepresentation
(Week 9 of lectures)
[G279-310] [P221-240] [T112]
Offending Statement must be one of fact not law
Eaglesfield v Marquis of Londonderry (1876) 5 Ch D 693 [P228]
Solle v Butcher [1950] 1 KB 671 [G260] [P207]
Offending Statement must be one of fact not opinion
Bisset v Wilkinson [1927] AC 177 [G285] [P229]
Smith v Land & House Property Corporation (1884) 28 ChD 7 [note G280] [P229]
A “half truth” can be treated as a misrepresentation.
R v Kylsant [1932] 1 KB 442 [P231p2]
Correcting positive distortions
Krakowski v Eurolynx Properties Ltd (1994-5) 183 CLR 563 [G281]
Lockhart v Osman [1981] VR 57 [G282]
Jones v Dumbrell [1981] VR 199 [P231]
Inducement to Contract
Attwood v Small (1838) 6 Cl&Fin 232; 7 ER 684 [G291] [P232]
Redgrave v Hurd (1881) 20 Ch D 1 [G290g5] [P232]
Remedies for Misrepresentation - Rescission
Newbiggin v Adam (1886) 34 Ch D 582 [P232]
Bars to rescission
Bona fide purchaser for value without notice
Leason Pty Ltd v Princes Farm Pty Ltd [1983] 2 NSWLR 381 [P300] [P235]
Negligent Misrepresentation
Hedley Byrne & Co Ltd v Heller & Partner Ltd [1965] AC 465 [note G297] [P236]
Mutual Life and Citizens Assurance Co Ltd v Evatt (1968) 122 CLR 556 [note G297] [P235]
L Shaddock & Associates Pty Ltd v City of Parramatta (1981) 150 CLR 225: 55 ALJR 713 [note G297] [P235]
Esso Petroleum Company Ltd v Mardon [1976] 1 QB 801 [G372] [P238]
Money v Westpac Banking Corporation Ltd
Ward v Premier Ice Skating Rink Pty Ltd
12. Duress, Undue Influence & Unconscionable Conduct
(Week 10 of lectures)
D
uress
[G313] [P241 - 254]
Barton v Armstrong [1976] AC 104 (PC)
2
]
[note G315] [P 41 [T125]
Economic Duress
Universe Tankships of Monrovia v International transport Workers Federation [1983] 1 AC 366 [P243]
North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] 1 QB 705
; [1978] 3 All ER 1170 [G323] [T126]
Smith v William Cha lick Ltd (1924) 34 CLR 38
2 ]
r
[G314] [P 38
Crescendo Management Pty Ltd v Westpac Banking Corporation
(1988) 19 NSWLR 40 at 46
[ 2 ]
Ltd
[G323] P 37 [T126]
Pao On v Lau Yiu Long [1979] 3 WLR 435; [1980] AC 614 (PC)
[note G117] [T82]
34
BUSINESS LAW STUDENTS MANUAL
News Ltd v Australian Rugby League Ltd (1996) 58 FCR 447 [G325]
U
ndue Influence
Johnson v Buttress (1936) 56 CLR 113
[G329] [T127]
Mutual Finance Ltd v John Wetton & Sons Ltd [1937] 2 KB 389
21 ]
[P 9
2 ]
Lloyds Bank Limited v Bundy [1975] QB 326
[note G336] [P 45 [T1284]
Westmelton (Vic) Pty Ltd v Archer and Schulman [1982] VR 305 2 ]
[P 45
Tate v Williamson (1866) 2 Ch App 55
[ 2 ]
[G327] P 46
Inche Noriah v Shaik Allie Bin Omar [1929] AC 127
[G329] [T127]
Yerkey v Jones (1939) 63 CLR 649 [P246]
Bank of Victoria v Mueller [1925] VLR 642 [P247]
Barclays Bank Plc v O’Brien [1994] AC 180 [P247]
Garcia v National Australia Bank Ltd 1998 155 ALR 614 [P248]
Royal Bank of Scotland v Etridge [2001] 4 All ER 449 [P248]
Fiduciary Relationships
Hospital Products International Pty Ltd v United States Surgical Corporation (1984) 156 CLR 41
James v ANZ (1986) 62 CLR 339; 64 ALR 347
[note G207] [T315]
[T129]
U
nconscionable conduct
South Australian Railways Commissioner v Egan (1973) 130 CLR 506 [G335]
Blom ey v Ryan (1956) 99 CLR 362
l
[G168] [P196][T132]
Hart O'Connor [1985] 1
v
AC 1000 [G168]
2 ]
Clifford Davis Management v WEA Records Ltd [1975] 1 WLR 61
[noteG 336] [P 50
Commercial Bank of Australia v Amadio (1983) 151 CLR 447
[ 2 ]
[G337] P 50 [T131]
Nolan v Westpac Banking Corporation (1989) 98 FLR 226 [ 2
P 51]
Louth v Diprose (1992) 175 CLR 621; 110 ALR 1 [G338][T132]
Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102 [G340] [T482]
13.Discharge of contract.
Discharge by Performance
Sumpter v Hedges [1898] 1 QB 673 [G455] [P266]
Planche v Colburn (1831) 8 Bing 14; 131 ER 305 [G454] [T211]
Hoenig v Isaacs [1952] 2 All ER 176 [G382] [P267]
Cutter v Powell (1795) 6 TR 320 [G380] [P265]
Re Moore & Co v Landauer [1921] 2 KB 519 [P260]
Discharge by Agreement
Pearl Mill Co v Ivy Tannery Co [1919] 1 KB 78 [G391]
Discharge by a Term in the Contract
Head v Tattersall (1871) LR 7 Exch 7 [G388] [P153]
Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537 [G388]
Discharge by Operation of Law [G412] [P269]
Discharge by Breach of the Contract [G407] [P269]
Discharge by Acceptance of Breach [G409] [P270]
Anticipatory breach [G409] [P270].
(Week 12 of lectures)
BUSINESS LAW STUDENTS MANUAL
35
Avery v Bowden (1855) 119 ER 647 [G412]
White & Carter (Councils) Ltd v McGregor [1962] AC 413 [G412]
Discharge by Frustration [G394] [P270]
Paradine v Jane (1647) Aleyn 26 [G394] [P270]
Taylor v Caldwell (1863) III B and S 826: 122 ER 309 [G395] [P271]
Esposito v Bowden (1857) 119 ER 1430; 7 EB 763 [P273]
Horlock v Beal [1916] 1 AC 486 [P273]
Krell v Henry [1903] 2 KB 740 [G400] [P273]
Metropolitan Water Board v Dick Kerr & Co [1918] AC 119 [G399] [P273]
Wong Lai Ying v Chinachem Investment Co Ltd (1979) 13 Building LR 86 [P274]
Bank Line Ltd v Capel & Co [1919] AC 435 [P274]
Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 93 [G401] ][P274]
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; 56 ALJR 459
[G397g5] [P274]
Frustrated Contracts Act 1959 (Vic) [G406] [P275]
14. Remedies for breach of contract
(Week 12 of lectures)
Specific Performance
Beswick v Beswick [1968] AC 58 [T170]
Specific performance is not appropriate if it requires constant supervision
Ryan v Mutual Tontine Westminster Chambers Assoc [1893] 1 Ch 116 [G445] [T204]
JC Williamson Ltd v Lukey (1931) 45 CLR 282 [G446]
Injunction
[G447] [P278] [T205]
Page One Records Ltd v Britton [1968] 1 WLR 157
[G449] [T205]
Damages
Liesbosch Dredger v SS Edison [1933] AC 449 [ 2
P 80]
Hadley v Baxendale (1854) 9 Exch 341
[G423] [P280] [T197]
Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528
Koufos v Czarnikou Ltd (The Herron II) [1969] 1 AC 350
Measure of Damage
[G424] [P281] [T198]
2 3]
[note G423] [P 8
[P284]
Bellgrove v Eldridge (1954) 90 CLR 613
Commonwealth of Australia v Amann Aviation Pty Ltd
Mitigation of Damages
(1991) 174 CLR 64 [G425] [P285]
[T199] [G436][P286]
White & Carter (Councils) Ltd v McGregor [1962] AC 413
[G411]
Damages for Injured Feelings
[G430] [P286] [T200]
Addis v Gramophone Co Ltd [1909] AC 488 [G431] [P287]
Stedman v Swan Tours
Ltd (1951) 95 SJ 727 [note G432]
Jarvis v Swan Tours Ltd [1973] QB 233
[note G432] [T201][P287]
36
BUSINESS LAW STUDENTS MANUAL
Jackson v Horizon Holidays [1975] 3 All ER 92
[ 2 ]
[note G432] P 87 [T201T24]
Baltic Shipping Co v Dillon [The Mikhail Lermontov ] (1993) 176 CLR 344
“
”
[G432][P288] [T200]
Liquidated Damages and Penalties
Dunlop v New Garage and Motor Co Ltd [1915] AC 79
[note G440] [T202]
Esanda Fi ance Corp Ltd v Plessnig (1988) 166 CLR 131; 84 ALR 99
n
15.
[note G400] [P289] [T204]
Vienna Convention for the International Sale of Goods
(Week 11 of lectures)
[T299-315 ] [See table at Tpp.317-8]
Art.1(1)(a) or (b)
Viva Import Corporation v Farnese Vini S.r.l. 2000 Us Dist LEXIS 12347 at Ì4 (ED Pa 2000) [fn12 T301]
[http://cisgw3.law.pace.edu/cases/000829u1.html]
Art 4
Roder Zelt-Und Hallenkonstruktionen GmbH v Rosedown Park Pty Ltd (1995) 57 FCR 216 at 222-3 [T310]
Asante Technolgies Inc v PMC Sierra Inc 164 F Supp 2d 11142 at 1150 (ND Cal 2001) [fn14 T320]
Art 7(1)
Formation of Contract Art 23
Mitchell Aircraft Spares Inc v European Aircraft Service AB 23 F supp 2d 915 at 918 (ND Ill 1998)
Art15(1) [T303]
Art 18 [T303]
Filanto SpA v Chilewich International Corp 789 F Supp 1229 at 1240 (SD NY 1992) [fn21 T303].
Art 19
Art 20(1) [T304]
Art 23
Art 11 [T305]
Parole evidence – Art 8 [T304]
Art 29(1) [T305]
Graves Import Co Ltd v Chilewich International Corp 1994 US Dist LEXIS 13393 at Ì13 (SD NY 1994) [fn25
T305]
Art 9
Art 35(1) [T305]
Art 36
Art 37
Art 50 [T306]
Art 39(1)
Art 53. [T307]
Art 54 [T307]
Downs Investments Pty Ltd v Perwaja Steel Sdn Bhd [2000] QSC 421 [T307]
Delivery of goods [T308] Art 30 [T308]
Art 31 [T308]
Art 33 [T308]
Passing of Risk in goods[T308] Art 66
Art 67(1)
Art 68.
Preserving the Goods [T309] Art 85
Art 86
BUSINESS LAW STUDENTS MANUAL
37
Art 87
Art 88
Extension of time for delivery of goods [Nachfrist] [T309] Art 47
Art 48
Fundamemtal breach of contract [T310] Art 25
Roder Zelt-Und Hallenkonstruktionen GmbH v Rosedown Park Pty Ltd (1995) 57 FCR 216; (1995) 13 ACLC
776; (1995) 17 ACSR 153 [T310]
Remedies for breach of contract [T311] Art 46
Avoidance of contract [T311]
ICC case No 8574 of 1996 CISG W3 database [fn44 T311]
Art 81(1)
Art 83.
Damages for breach of contract [T313] Art 74
Specific Performance of contract for supply of goods [T314] Art 28
Restitution [T314] Art 81
Art 82
Private international law [T315]
Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418 [T316-7]
BUSINESS LAW STUDENTS MANUAL
38
Tutorial Program
Notes to Students
These materials comprise a tutorial program that is designed to incorporate into the original
Business Law Tutorial Program the language and learning program developed by Helen
Murphy from Teaching and Learning Services at VU. Her program assists students in the
unique requirements of law subjects, providing strategies and approaches for them to enhance
their success in law studies.
Students are directed to a web-site created for this subject at http://webct.vu.edu.au
(this address may change, so students should confirm the correct address with their tutors).
See also http://ceds.vu.edu.au/buslaw, a website that contains much useful information
about Business Law. This site is maintained by Helen Murphy from the Student
Learning Services Unit, which is in turn part of Teaching and Learning Services. Apart
from containing important information for students about the subject, this site also
contains practical exercises and strategies for understanding cases, writing assignments
and preparing for examinations. Up-to-date information concerning the subject will
also be posted on the site during the semester.
CONSEQUENTLY, STUDENTS ARE ENCOURAGED TO REGULARLY VISIT
THE SITE, PREFERABLY ON A WEEKLY BASIS.
Introductory Notes
Historical background
In 1901, the colonies of Australia (namely Victoria, New South Wales, Tasmania, South
Australia, Queensland and Western Australia) united to form a new nation, the
Commonwealth of Australia. This event is what is referred to as ‘federation’. It was decided
then that the States (formerly the colonies) would continue on and keep some of their
legislative (law-making) powers, and would hand over or share some of their other powers
with the newly created Commonwealth (federal) government.
Presently, the Commonwealth government has a handful of powers granted exclusively to
them (Exclusive Powers), for example, posts, telegraphs and telephones, defence,
immigration, currency control, customs and excise and bankruptcy. The powers that are
shared are called Concurrent Powers and these involve services such as education and
health. If there is a conflict between legislation passed by a State government and the
Commonwealth government in the area of the Concurrent Powers, the Commonwealth
government legislation overrides the State’s legislation. State governments retain exclusive
BUSINESS LAW STUDENTS MANUAL
39
control or power to legislate (called residual powers) over many areas including their police,
land ownership and roads. Therefore, as Australian citizens we are affected by two sets of
laws, State laws and Federal laws.
The Australian legal system follows the English system of common law, which contrasts with
the civil law system that operates in mainland Europe and other countries following the
European tradition.
A detailed overview of the Australian legal system can be found on the webct
website under the heading “Introductory Module”. All students are expected to be
familiar with this information. Students who have not studied law subjects before will
find this information particularly helpful. The website also contains a Glossary where
students will find definitions of legal words and phrases.
What is a Case?
When two people have a dispute and one of them takes legal action, the dispute may end up
being heard and decided by a court of law. The dispute is now called a “case” and the hearing
of the case by the court is called a “trial”. Because it is a dispute between two ordinary
people (or corporations), it is called a civil action (as opposed to a criminal action). The two
people in dispute are called the “parties”; the party who commenced the legal action (ie. the
one “suing”) being the “plaintiff” and the other party in the dispute (ie. the one being sued)
being the “defendant”. In lower courts, like the Magistrates’ Court, the word “trial” is
usually replaced by another more general word such as “hearing”, and the plaintiff is called
the “complainant”.
At this trial or hearing the parties concentrate most of their efforts on trying to prove facts
helpful to their own cases. Some time will be spent on establishing what rules of law should
apply given the particular area of dispute between the parties (eg. what are the legal rules
about what constitutes a “contract” and what legal rights does a contract give to the parties?).
It is the judge who decides what rules of law apply and tells (“directs”) the jury (if there is
one) as to what they are.
At the end of the trial, the jury (or the judge if the case does not involve a jury, because, in
some cases, the parties can choose not to have a jury) will look at all the evidence. They will
decide which facts to believe and then decide which party wins and what type of recompense
(or “remedy”), if any, the winner is entitled to receive from the loser. Either of the parties
may not be prepared to accept all or part of this decision and may request a higher court (eg.
Supreme Court of Victoria) to hear the case and make a different decision. This is called an
“appeal”.
There are usually two reasons (or “grounds”) on which the unhappy party, now called the
“appellant” (the other party now being the “respondent”), can base an appeal. First, the
appellant can claim that the jury (or judge) made a mistake in deciding which of the facts
presented by the parties to believe. This is a very hard argument to win because appeal courts
usually take the attitude that because the trial jury (or judge) saw and heard the evidence
BUSINESS LAW STUDENTS MANUAL
40
being given, it is in a much better position to decide which parts of the evidence to believe in
and to rely upon. It must be kept in mind that at most appeals the witnesses are not called to
give evidence again and there is no jury. The judges just read the written record (or
“transcript”) of what was presented at the trial and listen to arguments put forward by the
lawyers for each party. There are few cases appealed on this ground that the jury made a
mistake about the facts.
The second (and most common) ground for appeal is that the trial judge made a mistake in
applying the law, by using a wrong rule, misinterpreting the meaning of the appropriate legal
rules or applying a correct rule in an inappropriate manner. In this type of appeal there is no
dispute about the facts as decided at the original hearing and the court accepts those facts as
being true. The argument is centred on what the correct rules of law are and how they should
be applied to the agreed facts of the case.
It is this type of appeal case that is important in setting out what the law is. They are often
collected and published in law reports and referred to in law books, articles in law journals
etc. They are the cases that students learn about in law subjects. Therefore in the cases
referred to in classes, students need not be concerned about whether the facts as stated are
true. Students, like professional lawyers, should concentrate on how these cases explain the
law with respect to the particular area of dispute between the parties. Students should do this
because they are required to use these rules of law to decide the outcome of new similar
disputes. This is exactly what lawyers do.
Further reading:
Parker and Box Chapters 1-3; Crosling and Murphy Chapter 1; Turner Chapter 1; Latimer
Chapter 1.
For full details of these books, and others mentioned in these materials, students are
referred to pages 5 & 6 of this Manual.
BUSINESS LAW STUDENTS MANUAL
41
Tutorial One - Reading and Understanding Cases
The purpose of this tutorial is to introduce the concept of a “case” and to learn:
- how to use cases in the study of law.
- how to read cases and elicit the necessary information, to be able to apply it to other
fact situations (ie. to decide new cases).
- how to practically apply the principle of precedent.
In Business Law, most of the cases you will be expected to read and understand will be
summaries of the cases rather than the full court judgment that is recorded in law reports
(please note that the cases reported in the law reports are primary sources, whereas, the case
summaries are secondary sources). In your assessment tasks, you will be required to discuss
the details of cases to illustrate the application of legal principles and to cite them as an
authority for these principles in your legal arguments when you are answering problem
questions.
In legal argument, whenever you state a legal principle you are expected to also state (ie. cite)
your authority for that principle. Such authority usually is a case or a piece of legislation
(laws made by parliament). As has been outlined in the introductory notes, cases explain the
law as it has been interpreted and applied in disputes between parties. Students need to study
the important elements of cases because they are required to apply the rules of law that have
been used in these cases to decide the outcome of new similar disputes given in problem
questions.
Reading a Case Study
The following exercise contains a case summary from which students are required to
extract important information. Students may find the language used difficult to
understand. Students should attempt the tasks, after which the tutor will go through the
exercise and give assistance with respect to the language used and the requirements of
the tasks.
In De Jong v Carpenter (1982) 2 BPR 9524, the Supreme Court of New South Wales was
asked to determine whether a contract existed between the parties in the following
circumstances:
The plaintiff wished to purchase certain land from the defendant. To this end, the
defendant’s solicitor prepared a contract which provided that the sale was subject to the
purchaser obtaining finance from a particular source within 28 days. He retained a copy of
this agreement and sent a counterpart to the purchaser’s solicitor. The defendant later
instructed his solicitor to insert a further condition in the contract which rendered completion
BUSINESS LAW STUDENTS MANUAL
42
by a certain date “of the essence of the contract”. This amendment was duly inserted by the
defendant’s solicitor in his copy of the contract, but the purchaser’s solicitor was not notified
of this alteration. Accordingly, it was not recorded in the purchaser’s copy. Subsequently,
both solicitors agreed to change the period of time referred to in the finance clause from 28
days to 14 days. No evidence was presented to show that the purchaser had agreed to such a
change. Signed contracts were exchanged in due course, but before completion the defendant
purported to rescind the contract. The purchaser sought specific performance. It was held
that there was no contract between the parties because they had in effect failed to reach
agreement on two terms which were material to the contract: first, the time of the essence
clause had been inserted by the defendant’s solicitor without the knowledge or permission of
the purchaser or his solicitor; secondly, the consent of the purchaser’s solicitor to reducing
the period of time from 28 days to 14 days was not supported by any evidence that his client
had authorised such a change. In the absence of such evidence, no assumption could be made
that the purchaser had agreed to such an alteration and therefore no binding contract existed
between the parties.
The key information you are required to extract from cases is:
•
•
•
•
•
•
the name of the case
the type of dispute/legal issue
the facts
the court’s decision about who won the case
the legal principles upon which the decision was based
the facts that the court identified as being important in applying these legal principles
The words and phrases we have put in bold in the case summary are called linking words or
signalling words. These words and phrases link ideas together and are important tools in
assisting effective communication of these ideas. They also assist the reader in understanding
the meaning of the information provided in the case. In addition, they are used to indicate the
beginning of each of the important pieces of information which make up the case summary.
Hence, by identifying these words and phrases, it will help you to locate the key information
you are required to extract from the case ( a list of linking/ signalling words is given in
Crosling and Murphy, “How to Study Business Law”, 3rd edition, pp.25-27).
Exercise 1.1
In this case of De Jong v Carpenter, locate and write down
•
•
•
•
•
the name of the case;
the area of dispute/legal issue;
the facts;
the court’s decision and the legal principles upon which the decision was based; and
the facts that the court decided were important in arriving at its conclusion.
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For more information about cases and their role in law subjects, refer to the website under
the heading cases . Then go to “exercises” on the website and attempt exercises 1 – 4. Also
refer to Chapters 4 and 5 in Crosling and Murphy, How to Study Business Law, 3rd edition
Exercise 1.2
Belinda, a 19 year old student, decides that she wants to buy a car. She visits “Lora’s Tough
Cars” and spots a second hand car of the make and model she likes. Belinda discusses buying
the car with Lora and stipulates that the car must have done only 50,000 kilometres (the
odometer shows the car has done 47,000 kilometres). They discuss how Belinda can pay half
the price in cash and that credit arrangements will be provided for the balance. Lora prepares
a written agreement and Belinda signs it even though certain details regarding the engine
number have yet to be filled in. Lora keeps it so that these details can be added later.
Arrangements are made for Belinda to attend the next Wednesday to pay the cash portion of
the purchase price and pick up the car.
After Belinda leaves, Lora starts to worry about Belinda buying on credit (she thinks Belinda
might not be able to make the regular payments) and she inserts into the contract a provision
stating that Belinda’s parents have to act as guarantors for the amount provided by credit.
She rings Belinda but she is not at home and Lora speaks to Belinda’s elder sister. Lora
explains the amendment she has made to the agreement and Belinda’s sister says that Belinda
will probably not mind because she has said how much she likes the car. Belinda’s sister
forgets to tell her about the telephone conversation.
In addition, while Lora is preparing the car for delivery she discovers that the odometer has
been wound back by a previous owner and the 47,000 kilometre reading considerably
understates the actual distance the car has travelled. She inserts another clause into the
contract stating that the odometer reading is incorrect and that the true reading is
considerably more. She does not tell Belinda about this amendment.
Three days before the Wednesday, Belinda decides that she cannot afford the car and wants
to get out of the arrangement to buy it. Can she do so or can Lora legally force her to comply
with the terms of the final version of the written agreement?
Give reasons for your decision using the reasons given for the decision in De Jong v
Carpenter as guidance.
Additional Reading
Students are reminded that helpful information on the Australian legal system is referred to in
the Introductory Notes at the start of the tutorial program, as well as in Module 1 of the
WebCt program. (Visit http://webct.vu.edu.au. Log in by using “s1234567” where 1234567
is your VU student ID number, and using your password that you use to access student email.
If you have not changed your password, the default password is your birth date in
dd/mm/yyyy format, click on BLO1105 and select Module 1).
BUSINESS LAW STUDENTS MANUAL
Tutorial Two
44
Interpreting Legislation
The purpose of this tutorial is:
-
to gain an understanding of the two sources of the law, and, in particular
to complete an exercise in the use of legislation in solving a problem
In the first tutorial, the exercises required students to examine a case, identify the legal
principles applied in it by the judge and apply them to a new fact situation. This is applying
judge-made law, which is one of the primary sources of the law.
The other primary source of the law is legislation, or laws made by parliament. For instance,
the road traffic rules are created by legislation. Judges are often called upon to interpret
legislation and decide how the words of the legislation might apply to a particular fact
situation.
Generally the words in statutes are to be given their natural meaning according to the
intention of parliament when the statute was made (“enacted”). Occasionally when there are
disagreements the different methods of interpretation come into play.
The purposive approach to statutory interpretation must be adopted if there is any dispute or
disagreement as to the true intention of parliament. Section 15AA of the Acts Interpretation
Act 1901 was inserted in the Act by an amendment to it in 1984. It provides as follows: “In the interpretation of a provision of an Act, a construction that would promote the purpose or
object underlying the Act (whether that purpose or object is expressly stated in the act or not) shall
be preferred to a construction that would not promote that purpose or object.”
Given that the Acts Interpretation Act is a Commonwealth Act, it applies to the interpretation
of all Commonwealth statutes. The Victorian Parliament passed the Interpretation of
Legislation Act 1984, section 35 of which is effectively the same as s.15AA of the
Commonwealth Act. The Victorian act applies in the interpretation of all Victorian legislation.
Both acts also provide that if a court is unable to ascertain the purpose or object of the Act
from the words of the Act itself (which is inherently unlikely), it may refer to extrinsic
(outside) evidence, such as Hansard Reports, to assist in that process.
Prior to 1984, Australian courts adopted the “common law rules of statutory interpretation”,
which were the “literal rule”, the “golden rule” and the “mischief rule”.
The literal rule was the dominant rule, and was applied in all cases of statutory interpretation
unless it produced an absurd or clearly unintended outcome. Under the literal rule, the
meaning of the words is “found by an examination of the language used in the statute as a
whole” (per Higgins J in Amalgamated Society of Engineers v Adelaide Steamship Co Ltd
(1920) 28 CLR 129 at 161.
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The question posed under this rule is “what does the language mean”? We then establish
what the language means in its ordinary (literal) sense. The golden rule was (sparingly) used
by the courts to allow some flexibility, but only in cases where the literal rule was obviously
inappropriate, as in Bedford’s case (Re Sigsworth; Bedford v Bedford [1935] Ch 39). An
alternative to the golden rule was the mischief rule which was also used only if the literal rule
was not appropriate. This involved an examination of the problem (mischief) that the act was
intended to remove from society, and then interpreting the act in such a way as to facilitate
the removal of that problem or mischief. It is very similar to the purposive approach in
practical terms.
By amending and passing their respective statutes in 1984, the Australian Parliament and the
Victorian Parliament exercised their undeniable right to dictate to the courts how their
legislation should be interpreted by the courts in future. Thus the “statutory rules of
interpretation of statutes” now prevail over the “common law rules of interpretation of
statutes”.
Exercise 2.1
Statutory Interpretation
In this exercise, you are required to interpret and apply fictional legislation to the facts
provided.
While driving his car, Lee does not see a pedestrian on the road. The pedestrian takes
avoiding action and Lee sees the pedestrian at the last moment. Consequently, Lee narrowly
avoids hitting the pedestrian but the pedestrian falls to the ground. Lee continues on for some
distance and then decides to stop his car. He puts his head out the driver’s window and looks
back at the pedestrian. He sees that several people have come to the aid of the pedestrian who
is sitting up on the roadway and appears all right. He then drives off without speaking to
anyone. These events take only a few seconds. But he has been recognised and when the
police call on him, he admits the truth of the above facts.
He is charged with breaches of both parts of the following (fictional) road traffic regulation:
“Where a motor vehicle is involved in an accident in which a person is injured or
property is damaged, then the driver of the motor vehicle must: a) stop the motor vehicle; and
b) immediately render such assistance as is necessary.”
The question is whether Lee is guilty of either of the offences.
To answer this question the meanings of some key words in the regulation have to be
determined. What are those words?
What are their ordinary meanings?
Do you think that they should be given a different or special interpretation when used in this
regulation? If so, what interpretation should they be given?
_
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Exercise 2.2
What are the rules judges in courts use for deciding the meaning of laws made by parliament?
Try to explain these rules in your own words.
Is there any difference in meaning between the following: statute, legislation, act of parliament?
Tutorial Three
Intention to Create Legal Relations
The purpose of this tutorial is:
- to consolidate the concept of what a contract is, its status and effect on the
parties.
- to understand that no contract exists unless the parties intend that there be a
contract.
- to learn that in contract law the issue of intention of the parties is decided
“objectively”; to examine what this means, and how it is different from deciding a
question “subjectively”.
Exercise 3.1
Enzo is a sheet metal worker, excellent soccer player and owns his own Monaro. He is lonely
and whilst out exchanging information about the best available exhaust pipes for his Monaro
car he meets Shazza, a young lady. Enzo is interested in the forthcoming cinematic attraction
“American Pie 2” and writes on a table napkin “Would youse like to go ta Amerikin Pie Too
on Thursday 2 January 2006? I’ll pay. Give me ya number if its OK”. Shazza signs the
napkin with her name and telephone number. On Thursday 2 January Enzo appears outside
the Greater union cinema in Russell Street, Melbourne looking resplendent in his Delmonti
suit, new haircut and bunch of flowers. Unfortunately Shazza does not show up and now
Enzo (humiliated) wants to know if he can sue Shazza for breach of contract. Advise Enzo.
Exercise 3.2
Mamushka Babushka arrives in Australia from the former Soviet Union. She has travelled
12,000 kilometers to stay in her son-in-law’s house in Broadacre Meadows (“Broadie”) based
BUSINESS LAW STUDENTS MANUAL
47
on his promise contained in a letter written to Mamushka earlier that year that she can stay
there as long as she likes. After her chain smoking and authoritarian attitude (especially
towards the children) is revealed, the family gets together to decide whether to evict
Mamushka despite the promise made to her that she could stay as long as she liked. As you
are the only person in the family with any legal training, the other members of the family
seek your legal advice as to whether they may legally force Mamushka to leave. Examine
whether there is a legally binding agreement between Mamushka and her son-in-law,
concentrating on the component of intention to create legal relations.
To answer these questions successfully, you may find it beneficial to read through the
following material on intention and to study the information on the role of cases in
supporting your reasons for your decision. Cases which contain similar problems to these
questions can be found in Chapter 4 of Graw, An Introduction to the Law of Contract.
In order to determine whether parties intend to be legally bound by an agreement, the courts
have developed two presumptions.
(1) If the agreement has social or domestic elements, then it is presumed that it is not legally
binding.
(2) If the agreement has commercial elements, then it is presumed that it is legally binding.
When applying these presumptions, the courts look at the surrounding circumstances and the
behaviour of the parties to decide whether they intend to enter a legally binding agreement.
They apply an objective test to determine the intentions of the parties involved as at the time
they entered into the contract (and not at some later date when a dispute may have arisen).
They ask the question: Would a reasonable person, taking into account all the surrounding
circumstances, decide that the parties to the agreement intended it to be legally binding?
When looking at the facts to resolve this question, the courts would look for indicators, such
as the effect that the agreement may have on the parties. For example, how serious would it
be if one of the parties defaulted on the agreement? Did the parties act as though they were
bound to the agreement? How important was the agreement to each of the parties to the
agreement? The court would obviously also take into consideration what the parties said or
wrote and how they did these things. The court tries to ascertain the intentions of both parties.
The courts apply both subjective and objective tests in their judgments. Objective tests are
applied to civil cases, while subjective tests are applied to most criminal cases.
In applying the subjective test, the court has to ascertain the actual personal intention of the
alleged perpetrator when she/he committed the acts of the alleged crime. The objective test
only takes into consideration the external things that appear to indicate what the parties
intended. These two tests are different, but they can often yield the same result when
attempting to decide the intention of the parties.
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As noted above, the courts take the view that the presumptions will prevail and apply unless
the objective test indicates that the parties intended something different. If the courts decide
that the parties intended something different, then the presumptions can be rebutted (ie. they
are no longer applicable and are therefore overturned).
Exercise 3.3
This exercise is designed to give you practice in legal writing. This will assist you in your
writing of the research assignment.
Read the case of Wakeling v Ripley on page 103 in Graw or page 75 in Parker & Box. You
are required to write a short essay on this case. Your essay should include an outline of the
facts of the case, followed by a discussion about the legal issue which the court had to decide.
Identify the facts that you think were important to the court in reaching its decision. Finally,
give your own opinion about the outcome of this case, making sure that you give reasons for
your opinion. When undertaking this task, do not copy whole sentences from the text or use
point form. You should try to use your own words.
Exercise 3.4
What is the distinction between a subjective test and an objective test? Which method of
testing does a court use when deciding whether there is intention to be legally bound or not?
BUSINESS LAW STUDENTS MANUAL
Tutorial Four
49
Invitation to Treat/ Offer/Acceptance
The purpose of this tutorial is:
-to understand that an offer is the first step in the formation of a contract.
-to distinguish between an invitation to treat (no contractual significance) and an
offer (which must be promissory, that is, it must contain promises).
-to understand that an objective testis applied to determine the intention of the parties.
-to understand the basic rules of offer.
- to reinforce skills on tackling cases/ how cases are used/extracting key principles.
Exercise 4.1
Case: Carlill v Carbolic Smoke Ball Company (1893) 1 QB 256
The following are extracts from the judgment of Bowen LJ in the case of Carlill v Carbolic
Smoke Ball Company (1893) 1 QB 256:
‘… It is also contended by the defendants that the advertisement is rather in the nature of a
puff or a proclamation rather than a promise or offer intended to mature into a contract when
accepted. But the main point seems to be that the vagueness of the document shows that no
contract whatever was intended. It seems to me that in order to arrive at a right conclusion,
we must read this advertisement in its plain meaning, as the public would understand it. It
was intended to be issued to the public and read by the public. How would an ordinary
person reading this document construe it?…
Was it intended that the 100 Pounds should, if the conditions were fulfilled, be paid? The
advertisement says that One Thousand Pounds is lodged at the Bank for the purpose.
Therefore, it cannot be said that the statement that 100 Pounds would be paid was intended to
be a mere puff. I think it was intended to be understood by the public as an offer which was
to be acted upon. But it was said that there was no check on the part of the persons who
issued the advertisement, and that it would be an insensate thing to promise 100 Pounds to a
person who used the smoke ball unless you could check or superintend his manner of using
it. The answer to that argument seems to me to be that if a person chooses to make
extravagant promises of this kind he probably does so because it pays him to make them, and,
if he has made them, the extravagance of the promises is no reason in law why he should not
be bound by them.
It was also said that the contract is made with all the world - that is, with everybody; and that
you cannot contract with everybody. It is not a contract made with all the world. There is the
fallacy of the argument. It is an offer made to all the world; and why should not an offer be
BUSINESS LAW STUDENTS MANUAL
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made to all the world which is to ripen into a contract with anybody who comes forward and
performs the condition? It is an offer to become liable to anyone who, before it is retracted,
performs the conditions and, although the offer is made to the world, the contract is made
with that limited portion of the public who come forward and perform the conditions on the
faith of the advertisement. It is not like cases in which you offer to negotiate, or you issue
advertisements that you have got a stock of books to sell, or houses to let, in which case there
is no offer to be bound by any contract. Such advertisements are offers to negotiate - offers to
receive offers. If this is an offer to be bound, then it is a contract the moment the person
fulfils the condition’.
Questions
1. What arguments were used by the Carbolic Smoke Ball Company to try to establish that
there was no offer?
2. Upon what grounds did the court find that the advertisement constituted an offer?
3. To whom was the offer made? Who could accept it, and how? How could the offer have
been properly withdrawn? Why was the advertisement not an invitation to treat?
4. What is the distinction between a subjective test and an objective test? In establishing
the proper meaning or construction to be attributed to the advertisement, did the court
apply a subjective or objective test? Explain.
Reading and understanding decisions in cases
As has already been mentioned, the most important information that you need to extract in
your reading of cases is the court’s decision and its reasons for this decision. This is the key
information you will use as authority for the law when framing your legal arguments in
response to problem questions, and when you are using cases to illustrate the application and
development of legal principles in your research essay. Such information is supported by the
relevant facts of the case.
The above extracts from Carlill v Carbolic Smoke Ball contain the “ratio decidendi” or the
reason for deciding. It is the actual rule of law stated in the process of making the decision,
which will be binding on future courts. The ratio decidendi is the outcome of the material
facts of the case and the decision which has been made, drawing on those facts to support the
decision. Thus, it is necessary for you to be able to determine which are the most relevant
facts in a case. The material facts are in bold in the extracts and they are only referred to
briefly. In this instance, most of the discussion focuses on establishing important legal
principles from the reasoning which is applied to the facts.
Identifying the facts
Not all the facts are given in these two extracts, so extra information about the facts is given
in brackets.
The key facts in Carlill v Carbolic Smoke Ball are:
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1. an advertisement was issued to the public, (advertising a smoke ball to cure influenza);
2. 100 pounds was to be paid if the conditions of the advertisement were fulfilled (ie. if a
person used the smoke ball according to the directions and he/she contracted influenza,
then 100 pounds would be paid as a reward).
3. One thousand pounds was lodged at the Bank for this purpose.
Locating the judge’s decision (this is in italics)
The advertisement was an offer made to the world, and if people performed conditions of the
advertisement, then a contract was made.
Identifying legal reasons given by the judge for the decision (this is underlined and
comprises the bulk of the discussion in the extracts)
It is important to understand how an ordinary person would construe the advertisement. The
plain meaning of the advertisement indicates that, because one thousand pounds was lodged
at the bank for the purpose of drawing from it to pay someone from the public the amount of
one hundred pounds if the person fulfils the conditions of the advertisement, then it was not
intended to be a mere puff, but as an offer which was to be acted upon. It is argued that even
if the promise was extravagant it can still be binding. It is not a contract made with all the
world, but rather an offer made to the world which will ripen into a contract when someone
performs the conditions of the advertisement. It is not an advertisement to negotiate an offer,
but rather it is an offer which will become a binding contract the moment a person fulfils the
conditions.
Notice in the extracts how the facts are interwoven with legal reasoning to mount arguments
to support the decision.
Summary of Carlill v Carbolic Smoke Ball
It is necessary for you to summarise the court’s decision, its reasons for the decision and the
key facts in the various cases you are studying in the subject, in preparation for your research
essay and for the problem questions in the exam. Furthermore, it is useful to make summaries
of cases as you come across them in your studies because they will assist you in your
understanding of legal principles; these summaries can then be used in your notes for revision,
in readiness for your open book exam. You will need to practise writing summaries for these
purposes. For further information on writing summaries of cases, refer to Chapter 5 in
Crosling and Murphy, How to Study Business Law, 3rd edition.
Following is a summary of Carlill v Carbolic Smoke Ball, drawing on all the key information
outlined above, which has been elicited from the extracts of the original judgment. The hard
work has been done in that the relevant information has already been elicited from the
extracts in the steps above. It is just a case of putting this information together in a cohesive
and flowing manner. Notice the effective use of linking and signalling words and phrases to
assist this process.
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In Carlill v Carbolic Smoke Ball (1893) 1 QB 256, an advertisement was issued to the public,
advertising a smoke ball to cure influenza. One hundred pounds was to be paid as a reward
to any people who fulfilled the conditions of the advertisement, using the smoke ball
according to the directions and then contracted influenza. One thousand pounds was lodged
at the Bank for this purpose. It was held that the advertisement was an offer made to the
world, and that if people performed conditions of the advertisement, then a contract was
made. It was argued that it was important to understand how an ordinary person would
construe the advertisement. The plain meaning of the advertisement indicated that, because
one thousand pounds was lodged at the bank for the purpose of drawing from it to pay
someone from the public the amount of one hundred pounds if the person fulfilled the
conditions of the advertisement, then it was not intended to be a mere puff, but as an offer
which was to be acted upon. It was further argued that if such extravagant promise was
made then it could still be binding. Moreover, it was not a contract made with all the world,
but rather an offer made to the world which would ripen into a contract when someone
performed the conditions of the advertisement. In the final analysis, it was not an
advertisement to negotiate an offer, but rather it was an offer which would become a binding
contract the moment a person fulfilled the conditions.
Exercise 4.2
While browsing in a second hand shop, Jane notices two apparently identical chests of
drawers. One chest of drawers is a genuine antique and the other is a reproduction or
imitation. The price tags ($4,000 and $200 respectively) have been accidentally swapped so
that Jane believes that she can buy the antique (normally $4,000) for $200. She tells the shop
owner (Tarzan) that she will buy the antique for $200 and produces the money for her
purchase. Tarzan realises that a mistake has ben made and insists that the price should be
$4,000. He therefore refuses to sell the antique to Jane. Jane seeks your advice as to her rights.
Advise Jane whether a contract exists between her and Tarzan, using case references to
illustrate your view.
Exercise 4.3
In the window of your local convenience store Johnno and Tuan see a note offering to pay a
reward of $200 for the safe return of “a three-legged, castrated dog, blind in one eye who
answers to the name Lucky”. While practising golf in the local park, Johnno and Tuan see a
dog that matches that description and rescue it from being attacked by another dog. The two
boys return the dog to its owner, but he refuses to pay the reward of $200. He says that he
knows the law and that there is no contract for two reasons. First, he did not mean the offer to
be taken seriously. He made the offer merely to placate his family who were distressed about
the dog being lost. Secondly, the boys had not communicated their acceptance of his “offer”.
How would you persuade the dog’s owner that Johnno and Tuan are legally entitled to be
paid the reward?
Exercise 4.4
Dill is a car dealer in Essendon who offers to sell a new car (A Daihatsu Sirion) to Bill for
$16,500 on Sunday 30 December, 2005 stating that the offer will remain open for five days.
BUSINESS LAW STUDENTS MANUAL
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Three days later, on Wednesday 2 January, 2006, Bill rings Dill and says ‘My friend wants
to buy a Sirion as well. If we buy two Sirions will you sell them to us for $32,000?’ Dill
replies that he cannot sell Sirions under the list price of $16,500 and that he cannot therefore
sell them two Sirions for $16,000. The next day, 3rd January 2006, Bill arrives at Dill’s
showroom with a bank cheque for $16,500 and wants to take delivery of his new car. Dill
tells Bill that unfortunately due to a devaluation of the Australian Dollar, the price of the car
(which is fully imported) is now $18,500. Advise Bill whether he can insist on delivery of a
new Sirion for $16,500.
Exercise 4.5
Paraphrase the “Postal Rule of acceptance”.
BUSINESS LAW STUDENTS MANUAL
Tutorial Five
54
Consideration
The purpose of this tutorial is:
-to elicit the key legal rules of consideration.
-to use the history of the development of the principles of promissory
estoppel as an example of judge-made law.
-to introduce the concept of equity.
Students are required to study the rules of consideration from their lecture notes and text
book prior to this tutorial.
Exercise 5.1
Kim buys a used car from Huyen for $5,500. Kim pays Huyen the $5.500 but as she is about
to get the car keys from Huyen she asks Huyen if the car has been serviced regularly. Huyen
replies “Of course the car has been regularly serviced just like the manufacturer
recommended”. Three days later Kim discovered that the car has not been serviced for more
than 2 years, during which time it has been driven more than 40,000 kilometers. Advise kim
whether she can successfully sue Huyen for damages for breach of contract.
Exercise 5.2
Terry contracts with Dave to paint Dave’s house for $4,500. When the job is less than half
finished, Terry gets a great job offer in Adelaide and tells Dave ‘I’m sorry I can’t finish your
job as I am off to Adelaide for a big job”. Dave is very worried about being able to move into
his house on time and begs Terry “Please I’ll pay you an extra $1,000 if you can finish the
house before you go to Adelaide.” Terry agrees to this proposal and finishes Dave’s house as
promised. Dave pays him only $4,000 and refuses to pay the other $1,000. Advise terry as to
his rights.
Exercise 5.3
This tutorial will now concentrate on a particular problem caused by one of the fundamental
rules of consideration and on how the courts have devised a solution to the problem by
creating new law.
Introduction
One of the fundamental principles of consideration is that there must always be an exchange
of consideration for there to be a contract. Furthermore, this exchange of consideration must
be an exchange of present or future (executory) consideration but never past consideration.
This means that for each new promise to be binding and enforceable, it must be “bought” by
a new promise from the other party, which cannot be something already owed or promised by
that other party.
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The problem
Minh borrows $1000.00 from Sam. It is agreed that Minh will repay all the money on a
specified date. On the specified date Minh tells Sam that he cannot repay all the money but
that he thinks he could raise $800.00. He asks Sam whether he would accept $800.00 in full
settlement of the whole debt. Sam agrees to accept the $800.00 in full settlement of the debt.
On the basis of Sam’s promise, Minh manages to round up the $800.00 and pays it to Sam.
Next day Sam sees Minh and demands the $200.00 balance of the loan. Sam argues that
Minh has given him no new consideration for his (Sam’s) promise to let Minh off $200.00 of
the debt and so his promise is not binding and cannot be enforced by Minh.
Pinnel’s case and Foakes v Beer were both decided in a way which indicated that Sam’s
argument reflected the rules of consideration and was a winning one. But how could business
properly operate if people could just go back on a promise in these types of circumstances?
Most people would agree that the result is not fair and that somehow the rules of law must be
changed to provide a more just result. In these circumstances, the area of law known as
equity is often called upon to provide a solution.
Equity
(For brief descriptions of the origins of equity see Parker & Box pages 29-31).
Equity is an area of law that can be called upon to supplement the rules of common law (like
the rules of consideration now being discussed), or to find a way around those rules. It can be
called upon in some circumstances when the implementation of common law rules would
result in an unjust or unfair outcome. In this way equity is used to arrive at a fair or just result.
Read the case of Central London Property Trust Ltd v High Trees House Ltd (often referred
to as the High Trees House case) and the discussion in Graw paragraph 5.6.1 onwards.
(Parker & Box pages 120 – 125)
What was the problem in this case that involved the rules of consideration (discussed above)?
Write down the factors that the judge said had to be established for the new defence of
promissory estoppel to be used?
Development of the principles of promissory estoppel in subsequent cases
The High Trees House case was only the start of the development of promissory estoppel.
Parties in subsequent cases attempted to argue that their cases were similar enough to High
Trees House for the principles of promissory estoppel to apply to their cases. Courts had to
decide to amend, restrict or to extend promissory estoppel when considering the different
facts presented by these new cases.
Exercise 5.4
Read the case of Combe v Combe. What were the facts of this case? What effect did this case
have on the use of promissory estoppel by parties in a legal action? Have subsequent cases
changed the effect that this case initially had?
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Read the following cases and note any effect each case has had on the original elements of
promissory estoppel. (Note: The first two cases below are not covered in any detail in Graw,
therefore students will have to consult other texts referred to on page 6 of this manual)
• Je Maintiendrai P/L v Quaglia
• Legione v Hateley
• Waltons Stores (Interstate) Ltd v Maher
• Commonwealth of Australia v Verwayen
Read Graw paragraphs 5.6.4 and 5.6.5 and write down in your own words the elements of
promissory estoppel as they exist today. Describe what you think is meant by detriment in
promissory estoppel?
Summary of acceptable and unacceptable consideration
“Good (acceptable)consideration”
Services rendered after earlier promise to pay. See Lampleigh v Braithwait and also see Re
Casey’s Patents; Stewart v Casey.
Doing more than is required under an already existing legal or contractual obligation. See
Hartley v Ponsonby and also see Glasbrook Bros v Glamorgan County Council.
Prepayment of part of a debt. See Pinnel’s Case
Substitution of a chattel for cash as a method of payment.
Something that is trivial, but still of tangible value. See Chappell & Co v Nestle Co Ltd.
Paying a debt owed by another. See Hirachand Punamchand v Temple.
“Bad (unacceptable) consideration”
Past consideration. See Roscorla v Thomas and also see Eastwood v Kenyon.
Doing no more than is required under an already existing legal or contractual obligation. See
Collins v Godefroy and also see Stilk v Myrick. But note Williams v Roffey Bros and Nichols
(Contractors) and also see Musumici v Winadell Pty Ltd. for recent developments in this
context.
Payment of a lesser sum than is owed. See Pinnel’s case and also see Foakes v Beer.
Intangibles, such as “natural love and affection”, handshakes, kisses, cessation of harassment.
See White v Bluett.
BUSINESS LAW STUDENTS MANUAL
Tutorial Six
57
Contents of Contract
The purpose of this tutorial is:
- to understand the rules that determine how a court decides which promises or
statements are included in the contract as terms and those that are not.
- to examine the different ways a verbal promise can be treated.
- to explain the different categories of terms of a contract and their different effects.
- to understand what exclusion clauses are, their purpose and the rules concerning
the use of exclusion clauses.
- to provide strategies to cope with specialised vocabulary.
Exercise 6.1
Explain the Parol Evidence Rule in your own words. Do you think there are good reasons for
the existence of the rule, and if so, what are the reasons? What are the exceptions to the rule?
Exercise 6.2
Marcel wants to buy a used car. He knows the make, model and colour of the car he wants to
buy. He visits several car dealers who can supply the type of car he wants. In discussions
with one dealer, Yvonne, Marcel is told by her that if he chooses to buy the car from her, she
would fit the car out with high quality new tyres. Marcel decides to buy the car from Yvonne
but the written agreement he signs with Yvonne makes no mention of this promise. A month
after the purchase is completed Marcel is advised by his motor mechanic that the tyres on the
car are of inferior quality. Marcel wants to make a claim against Yvonne.
List the various ways Yvonne’s promise might be categorised and what Marcel would have
to prove to establish successful claims in each of these categories (students should
concentrate on whether Yvonne’s promise is a term of the contract or, alternatively, a
collateral contract)
Also, set out what Marcel would be entitled to if he was successful in each of these categories.
Exercise 6.3
You are a cartage contractor transporting a variety of goods around Victoria for a number of
different customers. You do not want to be responsible for any damage that occurs to your
customers’ goods while they are in your care.
Draw up an exclusion clause that would relieve you of legal responsibility for any such
damage.
BUSINESS LAW STUDENTS MANUAL
Indicate the steps that you would now take to ensure that you would receive the protection
that you wish to obtain by including the exclusion clause in all of your contracts with
customers.
Coping with specialised vocabulary
Law has its own specialised language/vocabulary. You need to be familiar with this
specialised vocabulary in Business Law. Your familiarity with this specialised
vocabulary will assist your understanding of lectures and texts. By listening carefully in
your lectures, you can become acquainted with important terms and concepts. Also, it is
useful for you to keep a glossary of words and phrases that are new to you. First, check
the meanings of these words and phrases in a legal dictionary and then write the
meaning of them in your own words in your glossary. This glossary will become part of
your ongoing revision of the subject.
In any of the texts you read, you will come across words and phrases which you are not
familiar with. By reading and thinking carefully about them, you can usually work out
their meanings. Becoming familiar with this specialised vocabulary is one strategy you
can use. Other strategies you can use to assist you are gaining meaning from the context,
‘decoding’ word parts (ie. examining the ‘base’ of the word/the prefix of the word) and
making intelligent guesses (Crosling and Murphy, How to Study Business Law,
Chapter 2, discusses strategies for tackling specialised vocabulary in detail).
Exclusion clauses
Study the following passages taken from Khoury and Yamouni (p.150) closely. These
passages explain what exclusion clauses are and discuss the courts’ view of them. Some
of the concepts and language in the passages are quite complex. The strategies outlined
above are used to work out the meanings of the specialised language and terms in the
first passage. It is your task to employ these same strategies to tackle the specialised
language and terms in the second passage.
(Note: specialised language and terms are underlined)
Passage 1
Generally speaking, the courts look upon [exclusion] clauses with considerable
disfavour, especially where the parties to the contract are not of equal bargaining
power . In such cases, the clause is usually contained in a standard form contract and is
presented as a fait accompli with the weaker party unable to negotiate for its removal.
Where the parties are of equal bargaining power, as is often the case in commercial
contracts, the courts are less hostile to exclusion clauses .
1. Think about the word ‘exclusion’. The prefix ‘ex’ means ‘out of’. It is used as a
noun in this context, which means it is giving a ‘name’ to these types of clauses.
The verb form of the word is ‘exclude’, indicating that it is an ‘action’ word. If
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2.
3.
4.
5.
6.
someone is excluded from doing something he/she is not allowed to do it. If people
exclude themselves from responsibility for something, they are stating that they are
not responsible for it and do not want to be involved.
You may not be familiar with the negative form of the word ‘favour’, indicated by
the prefix ‘dis’. Hence, exclusion clauses are not treated favourably by the courts.
‘Parties’, as you would already know from the introductory notes, refers to the two
people who are involved in a legal transaction. ‘Contract’ refers to a legally
enforceable agreement and you would be very familiar with this term because it
forms the basis of your studies in Business Law. Hence, this phrase is focusing on
the two people who are engaged in a legally enforceable (binding) agreement.
The phrase ‘equal bargaining power’ refers to the power balance in the relationship
between the two parties involved in the contract. You can work out the meaning of
this phrase from the context. Obviously, the courts are concerned about this power
balance and is reluctant to enforce exclusion clauses if one party is in a weaker
bargaining or negotiating position.
Once again, you can work out the meaning of ‘standard form contract’ from the
context and your understanding of the meaning of the passage to date. Parties in an
unequal bargaining position are usually involved in ‘standard form contract(s)’
which refers to normal, everyday contracts such as entering a carpark, leaving
articles for dry cleaning, buying goods and boarding aircraft, tram, train etc.
Exclusion clauses are commonplace in these contracts and we enter these contracts
as we go about our daily business without even realising it. The car park owner will
seek to exclude himself/herself from responsibility or liability for damages to the
cars in the carpark, the dry cleaner for damage to clothing and the airline for loss of
baggage. As consumers, we are in the weaker bargaining position because we have
to enter these contracts for the services they provide. The courts know this, so they
aim to support vulnerable consumers.
‘fait accompli’ is a French phrase which we have adopted in English. It has become
part of our language. You can work out the meaning of this phrase from the context
as well. If the weaker party has the exclusion clause presented to them as a ‘fait
accompli’ then this implies that they have no choice but to accept it. They cannot
have it removed.
Passage 2
It often happens that a party to a contract will seek to limit or exclude the liability which
normally be incurred should he or she breach the contract. This is done by incorporating
into the contract an exclusion clause (sometimes referred to as ‘exemption clauses’).
Exercise 6.4
After having worked out the meanings of the underlined words and phrases, explain
what exclusion clauses are.
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60
Examples of Exclusion Clauses
When you park in a carpark, you may read a sign which states:
Patrons using this facility do so at their own risk. The management takes no
responsibility for damage to vehicles or to contents of vehicles or loss of contents of
vehicles whilst in the carpark.
When you read your docket after delivering your suit to be cleaned it may state the following:
The Management will take the utmost care when cleaning items, but it cannot be
responsible for damage to fabrics which are susceptible to chemicals and heavy duty
cleaning.
Other organisations, for example, gymnasiums, will not take responsibility for items and
valuables which are left in changing rooms by patrons. Their notice in the changing room
may read as follows:
Patrons who leave valuables and clothing in this changing room do so at their own
risk. The management will not take responsibility for stolen or lost items.
Exercise 6.5
Read Chapter 9, of Graw and find the answers to the following questions:
a) What is meant by the requirement of notice and why is notice important?
b) What are non-contractual documents? Give some examples.
c) What are contractual documents? Give some examples.
d) How do you tell the difference between non-contractual and contractual documents? Why
is it the difference important in respect of the rules relating to giving notice of the
exclusion clause? Find some case examples.
e) What is constructive notice? What do the cases say about how you decide whether
constructive notice has been given?
f) What does Balmain New Ferry Co v Robertson say about the use of signs to give notice
of an exclusion clause?
g) What did Olley v Marlborough Court decide about the timing of when notice of an
exclusion clause is given?
h) What is the effect of the signing of an exclusion clause? Explain how the cases D J Hill
& Co v Walter H Wright P/L and Curtis v Chemical Cleaning & Dyeing Co provide
exceptions to this rule.
I0 What is meant by “a prior course of dealing” and how does it effect whether an exclusion
clause applies.
j) What rules show the courts’ general attitude to exclusion clauses once it has been
established that proper notice has been given?
BUSINESS LAW STUDENTS MANUAL
Tutorial Seven
61
Implied Terms, Capacity, Formalities
The purpose of this tutorial is:
- to learn that terms can be included in contracts by implication:
a) to reflect the unstated but actual intentions of the parties,
b) because legislation provides that certain terms are to be included in
specified contracts.
- to understand how the common law and legislation work together.
- to appreciate that specific classes of people are protected if they attempt to enter
certain contracts.
Exercise 7.1
Think about the difference in meaning between the words “express” and “implied”. If rules
are “expressed”, they are stated, in writing or verbally. However, there are numerous
situations in our society where rules are unstated and are implied into the situation because
everyone knows they apply. Sometimes these situations are just social and have no legal
implications. On the other hand, there are certain unstated assumptions in particular contracts
in which we are involved in our everyday lives. For example, we expect that when we put our
car in to be repaired by a motor mechanic, that a proper job will be done, the parts used will
be of a certain standard and that our car will not be damaged.
Consequently, courts will sometimes decide that a term should be included in a contract even
though none of the parties have made reference to it, either verbally or in any written
document.
You attend a concert. When you arrive you discover that you are not allowed to take any
bags inside. You leave your bag in a storage room and pay a fee for doing so. How do you
expect the storage room attendant will generally treat your bag? Do you discuss your
expectations with the attendant when you hand your bag over?
If you have recently purchased materials from the same person on several occasions, do you
discuss all the details of the contract for the next similar purchase? Or do you assume,
without actually saying so, that a lot of the same terms you negotiated for in the previous
purchases will apply? How does someone else, (for example, a court,) decide whether you
have justifiably made such an assumption?
Exercise 7.2
Parliaments have thought it necessary to contribute to this list of terms implied by the
common law into contracts by providing that certain specified terms are to be implied into a
number of different types of contract. An important area where this has occurred is in
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contracts for the sale of goods and services. Legislation has been passed that has the effect of
implying certain terms into these contracts.
Task
You attend a petrol station and purchase some petrol from the unleaded petrol pump.
What do you expect in relation to:
a) your right to use the petrol? (good title)
b) the type of petrol sold? (sale by description)
c) the standard or quality of the petrol? (merchantable quality)
d) whether the petrol will be fit for use in your car? (fitness for purpose)
Do you discuss these issues with the petrol station attendant before you buy the petrol? If not,
why not?
You ask for a special mixture of fuel to operate a particular machine. The attendant gives you
one litre of a product to try. You try it and it is satisfactory and you order 1000 litres of it.
What can you expect of this bulk order? (purchase by sample)
Exercise 7.3
The terms implied into contracts for the sale of goods by the Goods Acts for each State and
the Commonwealth Trade Practices Act are very similar to each other and reflect the answers
to the above problem. When these Goods Acts were originally passed, the various
Parliaments collected together the common law rules existing at the time that applied to the
buying and selling of goods and put them into the legislation (this process is called
codification). The resulting legislation provided that these rules were automatically implied
as terms into all contracts for the sale of goods.
( Note: The “Implied Terms” Chapter (Chapter 11 pages 181 – 197) in “Business Law for
Business Students”, (Parker and Box) has good material on statutory implied terms.)
What are these terms that are implied by this legislation?
Note that the Trade Practices Act 1974 (Cth) re-instated the terms originally contained in the
Goods Acts of the various states, which had largely been rendered ineffective because it was
possible (and very common) for sellers to avoid these implied terms. This could be done by
having customers sign away their rights under the legislation when ordering goods.
The Trade Practices Act applies throughout Australia, and is very effective in restoring the
old implied terms that had been lost. Sellers of goods and suppliers of services may not avoid
the implied terms under the Trade Practices Act (see s.68 TPA), although the liability of
sellers may be limited in the case of commercial goods (see s.68A TPA).
However, the TPA has two significant limitations. First, it applies only to corporations, not
to natural persons. There are constitutional reasons for this limitation. Secondly, it applies
only to sales and supplies to consumers as defined in s.4B of the TPA. The effect of this
limitation is that the buyer must be buying the goods (or services) for his own use, not for
resale or for use in manufacture. All goods are covered at prices up to $40,000 but if the price
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exceeds $40,000 the goods must be of a kind ordinarily acquired for “personal, domestic or
household use”. There are political reasons for this limitation.
To overcome the first of the above two limitations, the Victorian Parliament introduced
almost identical legislation in the “Goods (Sales and Leases Act)”1982, which added Part IV
to the old Goods Act 1958. These provisions were relocated (with some amendments and
additions) in the Fair Trading Act 1999 (Vic) as Part 2A of that act in 2003, where they still
remain. Part IV Goods Act 1958 has now been repealed, although Part I of the Goods Act
1958 continues in force and could still apply in non-consumer sales of goods.
How is “consumer” defined in s.4B of the TPA and in s.32 FTA? Why is it important to
decide whether someone is a consumer as defined in the Acts?
Summary of Statutory Implied Terms
Fair Trading Act
Trade Practices Act
Area of operation
Victoria only
Whole of australia
Identity of Seller
Corporation or person
Corporation only.#
Identity of buyer
Consumer as defined s.32
Consumer as defined s.4B
Transactions covered
Sales & leases of all
Goods and supply of all
Services within Victoria
Sales & leases of all
goods and supply of
all services within
Australia
Price of goods
All goods covered up to
$40,000. “Pdh goods”
covered at any price
All goods covered up
$40,000. “Pdh” goods
covered at any price.
Can seller exclude liability?
No. The attempt is void
No. The attempt is void
Can seller limit liability?
Yes, but only to the cost
of repairing or replacing
commercial goods
Yes, but only to the cost
of repairing or replacing
commercial goods
#. Note that, under the TPA, the seller will also be subject to the provisions of the Act if he or
she is a natural person selling goods across state borders, or selling goods within a Territory,
or where the sale involves the use of Commonwealth controlled media. Note also that sales of
commercial road vehicles are included, irrespective of price paid and the identity of the seller.
Note also that transactions falling outside the scope of the FTA and the TPA may still be
subject to the original provisions of Goods Act 1958 (Part I) which has not been repealed.
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Exercise 7.4
Capacity to make contracts
The law takes the view that some persons are incapable of fully or properly understanding
what entering into a contract means. Consequently, the law offers some sort of protection to
such people if they attempt to enter into a contract. But the law does not offer the same
protection to the other person who seeks to enter into this contract with them.
John, a 17 year old student who looks much older, orders $1,500.00 worth of food for an endof-VCE party. The food is duly delivered and consumed and John refuses to pay. What are
the legal rights of the food supplier?
BUSINESS LAW STUDENTS MANUAL
Tutorial Eight
65
Mistake, Misrepresentation
The purpose of this tutorial is:
- to understand the fundamentals of the law of mistake and the law of
misrepresentation.
- to understand the different remedies available for each of these areas of the law.
- to understand the difference between void and voidable.
- to understand that, in certain circumstances, the law has to choose between
applying the rules of mistake and the rules of misrepresentation and that
significantly different outcomes result from the choice made.
Exercise 8.1
Sometimes when a contract is formed, one of the parties (or even both parties) to the contract
may be mistaken about some important aspect of the transaction. Assuming that this can be
proved to the satisfaction of the court, what is the legal effect of such a mistake occurring in
the formation process? Can there be a valid contract? The legal effect of a mistake being
made is that there cannot be a contract at all, since the parties were not in agreement as to
what they intended to achieve. Accordingly, the court will declare the “contract” void from
the outset (“void ab initio”).
It follows, of course, that because the “contract” is declared to be a legal nullity by the court,
it (the “contract”) cannot achieve any legal outcomes, such as the transfer of ownership of an
asset from A to B.
Another possibility is that one of the parties to the contract may be the victim of a
misrepresentation of fact by the other party. This is not uncommon in contract formation
situations. For example, a person who is trying to sell a valuable asset will naturally wish to
obtain the best possible price for it. He may be tempted to say things about his asset that are
not true in order to achieve this outcome. If he deceives his buyer about the asset, he may be
sued for misrepresentation when the deception is later discovered. The legal effect of a
misrepresentation is not as drastic as the legal effect of mistake. Misrepresentation makes the
contract voidable at the option of the innocent party. That is, he can, if he chooses, avoid the
contract but he is not compelled to do so. Also, if the misrepresentation is deliberate
(fraudulent), he may recover damages for the tort of deceit. If it is negligent, he may recover
damages for the tort of negligence.
Define the words void, voidable, rescind, rescission.
Marcel wants to buy a used car. He knows the make, model and colour of the car he wants to
buy. He visits several car dealers who can supply the type of car he wants. In discussions
with one dealer, Yvonne, Marcel is told by her that if he chooses to buy the car from her, she
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would fit the car out with high quality new tyres. Marcel decides to buy the car from Yvonne
but the written agreement he signs with Yvonne makes no mention of this promise. A month
after the purchase is completed Marcel is advised by his motor mechanic that the tyres on the
car are of inferior quality. Marcel wants to make a claim against Yvonne.
Now answer the following questions:
a) Marcel wants to keep the car and just get some damages (ie. money) from
Yvonne for the inferior tyres. To which of the following categories would he try to
prove that her statement about the tyres belongs:
i) a term,
ii) a collateral contract
iii) a misrepresentation?
(ie. which of these categories provides the remedy he wants)
b) If instead, Marcel wants to return the car and get his money back, to which
of the above categories would he now try to prove that Yvonne’s statement
belonged? If he also wants damages as reimbursement for expenses he has
suffered as a result of the inferior tyres, what must he prove about Yvonne’s
state of mind when she made the statement about the tyres?
Exercise 8.2
Would the following examples qualify as misrepresentation, and if so, what type?
a) You see a car advertised for private sale in the newspaper. You ring up the seller
and ask her whether the car has ever been in a serious crash. The seller says that she
thinks it has not, but that she is not certain. You do not question this statement. You
buy the car. It had been in a serious crash.
b) As in a) except that the seller says that the car definitely has not been in a crash
and you are a used car expert and you thoroughly examine the car before purchasing it.
c) As in a) except that the seller says that the car definitely has not been in a crash
but you don’t believe her.
What is the difference between fraudulent and innocent misrepresentation? What different
remedies apply to each of them?
Exercise 8.3
Read the case of Phillips v Brooks Ltd in Graw paragraph 11.5.4, or in Parker & Box at p.213.
Keep in mind that the real issue for the parties in this type of case is who ends up owning the
goods - the original seller or the final buyer. This is because the only option open to whoever
misses out is to chase the rogue and there is usually not much point in that because s/he has
disappeared or has none of the money left and no other assets.
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a) What if the court decides that the original sale was made pursuant to (ie. made in
reliance on) a fraudulent misrepresentation (ie. the rogue lied about his identity to
the jeweller who was induced by the lie to enter the contract)? What are the rights
of the various parties? What additional information do you need before you can
decide who ends up owning the ring?
b) What if the court decides that the original sale was made under a unilateral mistake
as to the identity of the purchaser (ie, Phillips, the jeweller was mistaken as to the
true identity of the purchaser) What is the status of the contract? Who ends up
owning the ring?
c) In this type of case which classification does the court usually choose - unilateral
mistake or fraudulent misrepresentation? Why? Does the court decide differently
when contact between the rogue and the original seller is not face-to face? Why?
Note
The common law rules regarding misrepresentation have been supplemented by legislation.
Section 52 of the Trade Practices Act and section 9 of the Fair Trading Act forbid misleading
or deceptive conduct. This section, and subsequent sections of that Act which forbid specific
false representations, are now regularly used by plaintiffs claiming misrepresentation as an
alternative to, and sometimes in preference to the common law remedies. These remedies
under the legislation are sometimes referred to as “statutory misrepresentation remedies”.
BUSINESS LAW STUDENTS MANUAL
Tutorial Nine
68
Duress, Undue Influence, Unconscionable Conduct
The purpose of this tutorial is:
- to understand that the parties to a contract must have voluntarily entered into the
arrangement.
- to see how the law protects people who suffer from particular disadvantages and
who are unfairly taken advantage of when entering into a contract.
- to acquaint students with techniques for preparing for exams and providing them
with a systematic approach to answering exam questions.
Exercise 9.1
Mamushka is very old and religious. Having lived an active and full life, and being a heavy
smoker, Mamushka has been ill for some time and believes that she does not have long to
live. She decides to move into the Knights Templar Retirement home and is visited there by
Paul, her local priest, who advises Mamushka on all religious matters. Paul tells Mamushka
that it is easier for a camel to pass through the “Eye of a Needle” (a very narrow and low gate
in the Middle East) than it is for a rich person to go to heaven. Immediately after this he asks
Mamushka to donate all her wealth on her death to the Knights Templar Retirement home.
She agrees to do so. Upon the sad day of her death Mamushka’s son Rolf finds out what
happened and now wants to challenge Mamushka’s legal transfer of her property to the
knights Templar Retirement Home. Advise Rolf.
Exercise 9.2
What is meant by the term “economic duress”? Think of an example of economic duress and
write it down. Make sure that your example is not just a case of a person applying legitimate
business pressure.
Exercise 9.3
Merv wishes to purchase a particular item. He investigates the price being charged for the
item and discovers that there has been a recent price rise from $500 to $900. He then happens
to visit a shop where the price of the item is $500 and Merv realises that the shop owner is
not aware of the recent price increase. Merv buys the item knowing that the retailer has
overlooked or has not yet become aware of the price increase. Does Merv’s behaviour
constitute unconscionable conduct? To answer this question you should consider the elements
of unconscionable conduct and then decide whether they are evident in this example.
BUSINESS LAW STUDENTS MANUAL
Tutorial Ten
69
Discharge of Contract, Remedies for Breach
The purpose of this tutorial is to:
- understand that a contract can be brought to an end by a number of ways.
- understand the remedies available when one of the parties to the contract
breaches a term of the contract and
- learn that the most usual remedy for breach of contract is damages and that there
are rules regarding the calculation of those damages.
Exercise 10.1
1. What does discharge of a contract mean? There are various ways that a contract may be
discharged. List them.
2. Sometimes a contract does not specify a time limit for the performance of a party’s
obligation. In these circumstances, how long does a party have to perform their
obligations? What matters are considered in arriving at this time period?
3. What conditions must be met for a contract to be discharged due to frustration?
4. What is the primary object of granting damages for breach of a contract? What are
punitive damages and are they awarded in claims for breach of contract?
5. Read Hadley v Baxendale. What damage did the plaintiffs claim for and why were they
unsuccessful?
6.
Andrea has taken her car to a tyre dealer to have new tyres fitted. When replacing one of
the wheels, the dealer’s mechanic failed to adequately tighten the wheel nuts. Later that
day Andrea paid for the new tyres and while she was diving along the road one of the
wheels fell off her car causing the car to veer out of control and hit her neighbour’s fence.
There was also some structural damage to the wheel assembly of Andrea’s car. Advise
Andrea whether the tyre dealer is liable for these losses. Would your answer be different
if the wheel fell off while Andrea was crossing the Westgate Bridge, causing a 30 vehicle
“pile up”, serious injury to other motorists and their passengers and structural damage to
the bridge itself? The total damage bill is in excess of $5 million.
BUSINESS LAW STUDENTS MANUAL
Tutorial Eleven
70
International Sale of Goods Contracts
Introduction.
Australia is a signatory of the United Nations Convention on the International Sale of Goods,
along with 65 other countries. The Convention is often called “The Vienna Convention”, or
simply the “CISG”. Many international conventions or treaties are named after the City in
which the first meeting of delegates is held. The fact that Australia adopted the Convention
on 1 April 1989 has ramifications for Australian citizens who negotiate certain types of
contracts with citizens of other countries who are also parties to the Convention. This follows
from the fact that such contracts may be governed by the law contained in the Convention
and not by Australian domestic law or by the domestic law of the other party to the contract.
For this reason, and given that more and more contracts now involve parties in more than one
country, Business graduates need to be aware of the existence and general effect of the
provisions of the Convention.
Exercise 11.1
Tom owns ands operates an importing business in Melbourne. He discovers that motor
vehicle parts that he has been importing from the manufacturer in Japan can now be imported
from a distributor in Indonesia at a much cheaper cost. Naturally, he wishes to import the
goods from Indonesia, but the Indonesian distributor is insisting that the law of Indonesia
must be the governing law of any contract that he enters into with Tom. This is not
acceptable to Tom as he knows nothing about Indonesian law. As a compromise, the
Indonesian distributor will agree to the contract being governed by the CISG, as he frequently
uses the CISG in dealings with other customers in the region.
While Tom has a workable knowledge of Australian contract law, he knows nothing about
the CISG. He seeks your advice on the question of how the CISG differs from Australian
domestic contract law. Summarise briefly the main differences between the two in the
context of a contract for the purchase by Tom of goods from the Indonesian distributor.
[Note that the full text of the CISG may be viewed by visiting http://www.lexmercatoria.org/
and by selecting “International Trade Law”, then selecting “Sale of Goods” and then under
the heading “CISG” selecting “full text”. The CISG may also be printed by selecting a
preferred “pdf” version.]
Exercise 11.2
Explain when the CISG will apply and how it may be avoided by parties to an international
contract for the sale of goods. If the CISG does not apply to a particular transaction, what law
will be the governing law (the “proper law”) of the contract. What factors will an Australian
court consider and apply in deciding this question. See Hospital products Ltd v United States
Surgical Corp0ration Ltd and Others (1984) 156 CLR 41 by visiting the following site: http://austlii.edu.au/au/cases/cth/HCA/1984/64.html
BUSINESS LAW STUDENTS MANUAL
Tutorial Twelve
Revision and Examination Preparation
Tutors to go through some old exam questions from the rear of the Business Law Students
Manual.
(Students might note here any difficult areas of the syllabus that they would like to have
revised during this tutorial).
Exam Preparation
Business Law exam is an open-book exam.
How do you prepare for an open-book exam? It is best done by preparing a set of detailed
revision notes which include materials from lectures, tutorials and textbooks
These notes should include: • each topic of the law studied in the subject
• definitions of key concepts
• brief outline of the key principles/rules of law
• relevant cases (include key facts, decision and reasoning)
• past exam questions on each topic
• possible answers to these questions prepared by you under exam conditions
During the exam:
• read the questions carefully;
• make sure you understand what the questions are requiring you to do;
• check all marks allotted to each question and allocate your time accordingly;
• attempt to identify the issues in the questions;
• if you run out of time on a question, map out a plan of the answer.
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72
Answering Problem Questions in Exams
When answering problem questions in exams it is important to realise that you are taking the
role of judge. You have to present the relevant legal arguments for tackling the problem
question and then decide which argument(s) is likely to succeed in law. For example, you
will be given a problem fact situation involving a dispute between two parties and then asked
to advise one or both of the parties to the dispute of the likelihood of his or her success in
taking legal action. The focus is not so much on the conclusion you reach, but rather it is on
how well you argue the relevant law.
The following step-by-step approach to answering problem questions was developed by
Brendan Sweeney and Glenda Crosling, lecturers at Monash University. It is a systematic
approach to tackling exam questions which will enable you to present a well-argued and
comprehensive answer. Study each of the steps carefully and read through the final answer,
to see how to present well-reasoned legal arguments.
(For more detailed information on this approach to answering problem questions, refer to
Crosling and Murphy, Chapter 9, How to Study Business Law).
It is helpful to apply the following format (or a similar strategy) when answering a problem
question:
(a) decide what the issues are (that is, the matters over which there is or may be some
dispute);
(b) decide what rules of law are applicable to those issues;
(c) cite the authority for the rule (that is, a case or statute);
(d) apply the rule to the facts;
(e) come to a conclusion;
(f) state the remedy.
A sample exam question:
On 15 September, Arthur offers to sell his antique desk to Harry for $5,000. Harry
subsequently inspects the desk and says to Arthur ‘The desk is in excellent condition and
I’d like to have it. There’s no doubt that I could afford to buy this desk if I could pay for
it in three instalments’. Nothing further is said concerning the desk. On 18 September,
Harry sends a letter to Arthur in which he accepts Arthur’s original offer. On 19
September, Harry learns that Arthur has sold the desk to Richard for $6,000. On 20
September, Arthur receives Harry’s letter of acceptance.
Advise Harry whether he has an action against Arthur for breach of contract. Give
detailed reasons for your answer.
BUSINESS LAW STUDENTS MANUAL
73
To get a clear picture of related events, it is useful to draw a diagram:
A
1.
A offer
H
H
2.
A
3.
18 September H accepts offer
4.
19 September H learns A sold
desk to R
5.
H will buy if can
pay in instalments
20 September A receives
H’s acceptance
Next step:
• isolate areas of dispute which may occur
•
these are the issues
• an issue is a fact of a situation that could have more than one legal interpretation. That is,
more than one law could apply to it.
•
The statement: ‘I’d like to have it …’ (one fact) could be interpreted in more than one
way legally. It could be:
* an acceptance of the offer
* a request for more information
* a counter offer
• A questioning attitude is important
The issues are indicated by circles/ovals in the following diagram:
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BUSINESS LAW STUDENTS MANUAL
Areas of possible dispute
A
H
1.
A offer
H
2.
Counter offer?
Request for more
information?
A
H will buy if can
pay in instalments
3.
18 September - H
accepts offer
4.
Revocation of
offer?
19 September H learns
A sold desk to R
5.
20 September A receives
H’s acceptance
Which occurred first
- acceptance or
revocation?
Plan of Answer
A offered H desk ($5000)
H’s reply
Counter offer?
(Hyde v Wrench)
Request for more
information?
(Stevenson, Jaques v
McLean)
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BUSINESS LAW STUDENTS MANUAL
H rejected A’s offer
(H intended to add
new terms)
Therefore no contract/no breach
A’s offer still open,
could be accepted
Acceptance occurred when?
Postal rule apply?
Yes
acceptance before
revocation
No
acceptance after
revocation
contract exists/
breach
no contract/
therefore no breach
Answer
An offer has clearly been made by Arthur to sell his antique desk to Harry for $5000. The
first question is whether Harry’s reply was a counter offer or a request for further information.
If it was a counter offer then, as was held in Hyde v Wrench, it amounted to a rejection of
Arthur’s offer. Arthur’s offer would therefore have terminated, and hence could not be
accepted, and there would have been no contract. If it was a request for further information,
as in Stevenson, Jacques v McLean, the offer was still open and could have been accepted.
To be an offer (whether an original offer or a counter offer), a statement must contain a
promise or promises and not just a fact or information, as was indicated in Harvey v Facey.
So the question becomes did Harry intend his statement to be a promise to buy the desk on
condition that he could pay for it in three instalments? If he did, then it was a counter offer
and he could not sue for breach of contract.
Alternatively, Harry could just have been commenting on his own ability to pay thereby
seeking further information from Arthur about what method of payment would be acceptable
to him. In my opinion, Harry’s statement contained no promises. He did not promise to buy
it on condition he could pay by instalments. He merely stated a fact about his financial
circumstances and the method of payment he could manage. He was talking around the offer,
perhaps seeking a response from Arthur, before deciding how to respond to Arthur’s offer.
Therefore Harry made no counter offer and Arthur’s offer remained open.
It is now necessary to determine if and when Harry accepted the offer. If the Postal Rule
applied then acceptance occurred on the 18th (that is at the time of posting – Nunin Holdings
Pty Ltd v Tullamarine Estates Pty Ltd). There is probably not sufficient evidence to decide
the issue absolutely. It is not disclosed how Arthur’s offer was made. Whether the Postal
Rule applies depends on whether the offeror has contemplated and expressly or impliedly
approved the post as a mode of acceptance. If the offer was made verbally, then probably the
BUSINESS LAW STUDENTS MANUAL
th
76
Postal Rule did not apply. Therefore acceptance did not occur until the 20 , when Arthur
received the letter. If the offer was made by post then acceptance would probably have
occurred on the 18th (that is when Harry posted the letter). If the latter applies then Harry has
an action for breach of contract. If the former applies then the result depends on whether
Arthur revoked his offer prior to the 20th.
By selling the desk to Richard, Arthur clearly intended to revoke his offer. However, as
decided in Byrne v Van Tienhoven, the revocation must be communicated to the offeree.
However the revocation does not have to be communicated by the offeror in person. It may
be made by any other person provided it is reasonable in the circumstances for the offeree to
rely upon that other person. In Dickinson v Dodds the court decided that revocation is
effective if it is communicated to the offeree by a reasonably reliable source. It seems clear
that this has happened in this case, and hence, Harry cannot accept Arthur’s offer because it
no longer exists.
In my opinion Harry has little chance of success because either:
1. there was a counter offer, or
2. the Postal Rule does not apply and revocation occurred prior to acceptance.
For further information on exam strategies, refer to Lyall Phillips’ chapter
‘How to Pass Law Examinations’ in Crosling and Murphy, How to Study Business Law.
This next approach to tackling exam questions was developed by Gerry Box, lecturer in law,
at VU. It is a very similar approach to the one outlined above, but it does not go into the
detail of each of the steps involved in answering questions. However, it does emphasise the
importance of planning your answer and applying a format to answering questions. The
format suggested is essentially the same as the one described in Example 1. Also, it is useful
to see how a bare pass answer compares with an answer which would gain full marks.
“Florence is a trained nurse, working and living in New York. She is employed there on most
favourable terms because of her specialised knowledge and she also owns her own apartment
in Manhattan. She receives a letter from her parents, pleading with her to return to Melbourne
as they are both ill, asking her to return and care for them in their old age. They assure her
that they will leave to her in their respective wills, their beach house at Portsea in
appreciation of her services. She sells her Manhattan property, relinquishes her job and
returns to Melbourne to look after them. After their deaths five years later, she discovers that
the Portsea house has been left in her parents’ will to the Lost Dogs Home, their favourite
charity. Can she claim the Portsea house from their Estates?”
This question is worth 5 marks. This would justify a 15 minute answer.
The question could be answered to a bare pass standard in the following way:‘Florence can sue the estates in contract if she can prove all of the elements of a contract.
They are offer, acceptance, intention and consideration. They all appear to exist, the only
suspect one being intention. The facts are remarkably similar to the case of Todd v Nicol,
where the Court decided that although there was a domestic relationship between the parties,
there was intention to create a legal obligation, and therefore, there was a binding contract
BUSINESS LAW STUDENTS MANUAL
77
between the parties. By using that case as a precedent, Florence would succeed if she sued
the estates.’
This answer could be written in a few minutes, and would attract a mark of 2 or 2.5, but it
fails to do justice to the student.
A plan for the answer, using a 6 step procedure, would be as follows:Issue - Intention
Law and cases - Intention is component of every legal contract
- Proof of intention?
- Presumptions - commercial (Edwards v Skyways Ltd)
- rebuttal (Rose & Frank v Crompton)
- domestic (Balfour v Balfour)
- rebuttal (Merritt v Merritt)
Application - Elements of both social and commercial (Todd v Nicol)
Conclusion - She probably wins.
Consequences - Can successfully sue the estates for the house.
A plan of this nature can be prepared in 5 minutes, leaving 10 minutes to write the answer. A
‘planned’ answer is much quicker to write than an unplanned one, follows a more logical
sequence, and covers all the relevant points. Realistically, the answer would have to be
limited to about a page, given the time restrictions. An answer which would attract 5 marks
would be as follows: “The issue raised by this question is whether or not the parties intended to be legally bound
by their agreement. The law of contract requires that, in order for a binding contract to exist,
there must be such intention, together with offer, acceptance and consideration. The existence
of intention is tested by using two established presumptions. First, if the agreement is
commercial in nature, there is a presumption that they intended to be legally bound. (Edwards
v Skyways Ltd.) This presumption can be rebutted by clear evidence of an opposite intention.
(Rose & Frank v Crompton) Conversely, with social or domestic agreements, the
presumption is that no intention to be legally bound attaches to the arrangement (Balfour v
Balfour). Again, this presumption can be rebutted by clear contrary evidence (Merritt v
Merritt). By applying the law to the facts, we see that the agreement has both commercial and
domestic elements, so that the presumptions do not really provide us with an answer.
However, this dilemma arose in the case of Todd v Nicol, when the court considered similar
facts. Despite the fact that the parties were related, thus suggesting a domestic or social
agreement, the fact that they relinquished property interests and jobs in Scotland was
evidence that they intended to be legally bound. This question is assessed using an objective
approach to the facts. The conclusion, therefore, is that, by relying on Todd v Nicol, Florence
can prove all the elements of a contract and can sue the estates of her parents to enforce those
rights as against the Lost Dogs Home. Such an action would have excellent prospects of
success.”
If the same problem arose as the sole issue in a question worth 10 marks instead of 5, a more
detailed answer would be justified. This could be achieved in the planning stage by going
into detail about the cases referred to in the answer, rather than simply citing them as
authorities.
BUSINESS LAW STUDENTS MANUAL
78
Remember that the majority of marks are achieved for a detailed and sensible analysis of the
relevant law. Your decision is not critical - it is often a matter of opinion anyway, and you
will not lose marks for having an opinion which differs from the examiners. You gain the
majority of marks for legal knowledge, not for making judgements.
Write your answer as if you were speaking politely to someone who is completely ignorant of
the law, and you are trying to explain to them the law which is relevant, in order to lead to a
logical conclusion.
BUSINESS LAW STUDENTS MANUAL
79
Tutorial Program
Endnotes
Tutorial One
Model Answer to Belinda’s Problem
As in the case of De Jong v Carpenter, the question is whether or not there is a legally
enforceable (or binding) agreement (ie. a contract) between the two parties. Lora can only
force Belinda to complete the purchase (or pay her money for not doing so) if there is a
legally enforceable agreement between them.
In De Jong v Carpenter the court said that there was no contract because the parties had not
reached agreement on two terms (points) that were material (important) to the contract. In
other words, for there to be a contract the parties must have agreed upon the same important
points of the agreement.
Belinda had not agreed to the insertion of the clause regarding the odometer reading into the
contract because Lora had put it in without Belinda’s knowledge. This was clearly an
important (ie, material) matter because Belinda had clearly specified that she would only buy
the car if it had done under 50,000 kilometres. This is similar to De Jong v Carpenter where
the court held that the insertion of an important clause by one party without the ‘knowledge
or permission’ of the other party indicated that there had been no agreement reached between
the parties on that point.
In addition, Belinda’s sister had no authorisation from Belinda to agree to any changes or
additions to the agreement. Therefore Belinda had not authorised her to agree to the insertion
of the guarantee clause involving her parents. Again, this is a very important matter since it
means that Belinda could not complete the purchase without her parents’ involvement in a
serious financial commitment. In De Jong v Carpenter, the facts were that the solicitor had no
authority from the client to agree to the reduction in time allowed to obtain finance. In view
of this, the court decided that the client could not be said to have agreed to this important
change. Similarly, Belinda cannot be said to have agreed to the insertion into the contract of
the guarantee clause.
Therefore, Belinda has not agreed to two terms that were material to the contract. In De Jong
v Carpenter it was held that where there has not been agreement on a number of important
terms there is no binding (ie, legally enforceable) contract between the parties. On that basis,
it is clear that because Belinda has not agreed to two important terms in the agreement, there
is no binding contract between the parties and, consequently, Belinda is not legally bound to
buy the car.
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BUSINESS LAW STUDENTS MANUAL
SCHOOL OF LAW
Business Law
BLO1105
UNIT OF STUDY GUIDE
2009
PREPARED BY: Andy
Schmulow
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BUSINESS LAW STUDENTS MANUAL
82
Business Law Unit of Study Guide
UNIT OF STUDY TITLE
:
Business Law
UNIT OF STUDY CODE
:
BLO1105
PRE-REQUISITES
:
None
RATIONALE
:
The unit of Study is designed to give students an overview of
the Australian legal system. Particular emphasis is placed on
Contract Law. However, the unit also allows for and enhances the
possibilities of a cross-disciplinary approach thereby developing
further important knowledge and skills in the continuing Business
Law area.
UNIT OF STUDY AIMS:
This Unit of Study has the aims of:
a)
Providing students with a working knowledge and overview of the legal
system. Students will understand and be able to speak, write and read comprehensively in
the language and terminology of Business Law.
b)
Providing students with an appreciation of contract
and business law issues. Students in their working life should
be able to avoid problem situations, and possibly be more
aware of the need for reform in particular areas.
c)
Students will learn the techniques of finding the
appropriate law when they wish to apply law to a contract
problem.
UNIT OF STUDY OBJECTIVES:
On completion of the Unit of Study, students should be able to:
c)
a)
Identify the legal issues in a business situation. Students should be
able to set out the rights, duties and responsibilities of different
parties in a business context;
b)
Directly extract the appropriate law from particular statutes and case
law;
Have a working knowledge of the law relating to contract issues.
TOPIC DETAILS:
1.
An introduction to the law, an examination of the litigation process, onus of proof, the sources
of law in Australia, precedent, the court system and tribunals in Victoria, criminal law and the law of
tort as they relate to business, delegated legislation.
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BUSINESS LAW STUDENTS MANUAL
2.
The definition of a contract and the formation of contractual situations examining the rules of
offer and acceptance, termination of offers, rules of consideration, revocation of offer and acceptance,
intention to be legally bound, certainty and terms of contract.
3.
A study of breach of contract or of non-fulfilment of particular terms in the contract, an
examination of the different remedies available under the law, the interaction of tort law with contract.
4.
Discharge of contract by different occurrences such as frustration, mutual agreement,
illegality and mistake.
5.
The remedies for breach of contract.
6.
An examination of the Vienna Convention on the International Sale of Goods which has
potential operation in contracts between Australian citizens and citizens of other countries which are
signatories to the Convention.
TEACHING METHOD:
Students are required to attend 2 hours of lectures and a 1-hour tutorial each work. Lecture streams
and tutorial grouping will be allocated to individual students.
UNIT OF STUDY ASSESSMENT CRITERIA
The assessment criteria for the Unit of Study are: • A plan for the assignment, which is due in Week 8 of Semester, must be lodged with
your tutor at your scheduled tutorial in Week 4 of Semester
5 marks
•
Tutorial attendance and participation. A record of each student’s attendance at
and participation in the tutorial program will be maintained, and students will be
awarded a mark out of a possible 10 marks for this component of assessment.
10 marks
•
•
Assignment. Students are required to complete an assignment of 2,000 to 2,500
words. A total mark of 25 marks for this component is broken down into two separate
components. At the scheduled tutorial in week 4 of semester, students must submit a
500 word plan of their assignment, for which a mark out of a possible 5 marks will be
allocated. At the scheduled tutorial in Week 8 of semester, the completed assignment
must be submitted, and a mark out of a possible 20 marks will be allocated. Further
details relating to assignment preparation and submission are attached to the
assignment topic, which is included in the Business Law Students Manual obtainable
from the University Bookshop.
25 marks
Final Examination. At the conclusion of the semester, students are required to
complete a three-hour examination, preceded by 15 minutes reading time, for which a
mark out of a possible 60 marks will be allocated. This examination is an “open book”
examination, the effect of which is that students may take into the examination venue
and access during the examination period any written or printed materials including
lecture notes, dictionaries, Business Law Student Manual and Text Books. The only
exception to allowable materials is any text-book borrowed from any library of Victoria
University.
60 marks
BUSINESS LAW STUDENTS MANUAL
84
GENERAL INFORMATION
TEACHING METHODS
Lectures The lecture will cover theoretical aspects of the topic and should be treated as a general
guide to the reading for that topic.
Tutorials In tutorials, individual students will be expected to present and discuss the set reading, as
well as any extra reading or relevant journal articles. Your tutors will assume that you have read the
set material and prepared answers to the designated discussion questions. Various exercises and
case studies will also be used in tutorials.
You are expected to spend at least four hours per week outside class time on this subject.
Your study should include:
™ review of lecture material
™ reading of set readings as well as additional reading where possible
™ preparation of answers to guide questions
™ revision of material from previous weeks
™ Regular reading of the business, finance and management sections of newspapers (eg The Age
and Australian), business journals, especially journals such as Business Review Weekly, and web
sites will be necessary.
UNIT OF STUDY REQUIREMENTS
1
Attendance
1.1 You are required to attend all scheduled lectures and tutorials. Tutors will maintain a register
of tutorial attendance, preparation and participation. Up to 10% of your overall assessment
may be deducted for poor attendance, preparation, and participation.
1.2 If you miss more than two lectures or two tutorials and are unable to show that there are
extenuating circumstances for your absences, then the lecturer-in-charge may require you to
submit additional work, or to meet any other conditions that are considered to be warranted.
You may also be excluded from the course.
2
Assessment
2.1 Students must complete each component of assessment to the satisfaction of the unit of
study coordinator and submit each component of assessment by the prescribed due dates to
gain a pass in the subject (assignment due dates and minimum standards are described in
the assessment details section of this unit of study guide). Supplementary assessment will be
available in accordance with the University policy.
NOTE: Students must pass the final exam to pass the subject
2.2 Permission to make a late submission of work must be obtained from your lecturer (or tutor).
The reasons for requesting an extension of time must be given in writing and must be
received before the due date. Forms are available at the Faculty office. Having ‘work in
other subjects’ will not be accepted as reasonable grounds for granting an extension. Having
work commitments in your part-time or full-time employment outside of university will not be
accepted as reasonable grounds for granting an extension except at the discretion of the unit
of study coordinator.
2.3 Excuses involving the malfunctioning of computers or printers will not be accepted as valid
reasons for late submission. It is your responsibility to organise projects so that work is typed,
printed and submitted by the due date.
BUSINESS LAW STUDENTS MANUAL
85
2.4 Where your work is accepted after the due date, and compassionate or other grounds cannot
be established, there will be a penalty of 10% of the total mark for each day the submission is
overdue.
2.5 Students may be required to re-submit any assessment task that fails to meet the minimum
standards described in the assessment details section of this unit of study guide. Work that is
re-submitted will only be assessed to no higher than a pass grade.
3
Written submissions
3.1 Written work must follow the guidelines set out in Summers and Smith (2006).
3.2 You must keep a duplicate copy of all work you submit.
3.3 Written submissions must be presented with a completed Faculty of Business and Law Cover
Sheet for Assignments. Cover sheets are available from the Faculty office and the unit of
study WebCT page in printed or electronic format.
3.4 Assignment and project work that is worth 20% or above of the overall assessment in a unit of
study may be retained for review by the appropriate accrediting body.
Plagiarism.
If the unit of study coordinator is satisfied that any submitted work is wholly or partially plagiarised,
you will receive a nil result for the assessment component. In addition, the circumstances will be
formally reported in accordance with University Statutes 4.1 and 2.7 and may result in your failure in
the subject and suspension from your course. If the unit of study coordinator is satisfied that two or
more students have engaged in unauthorised collusion, those involved will be subject to the same
penalties as those applied in individual cases.
4
Oral presentations
4.1 Refer to Summers and Smith (2006).
5
Special consideration
5.1 When your work is seriously affected because of special cause (e.g. illness, family upset) you
may apply for special consideration.
5.2 Applications for Special Consideration must be lodged with the Faculty Executive Officer no
later than three days after the assessment was due.
•
Applications for Special Consideration must be in writing on the authorised form, the form can
be downloaded from
http://www.vu.edu.au/library/scripts/objectifyMedia.aspx?file=pdf/541/54.pdf&siteID=4&str_titl
e=Special Consideration A23.pdf
•
Medical Certificates will not be accepted to support an application for special consideration.
You must supply a CERTIFICATION OF HEALTH PROFESSIONAL OR Non VU
COUNSELLOR, in support of your application for special consideration. This is part of the file
that can be downloaded from the web address above.
5.3 The following fees may be payable: special examination of $60.00. Where there are
mitigating circumstances, these fees may be waived at the discretion of the examinations
branch of student admin. If a student is not formally enrolled in a unit of study at the time of
exams a single subject enrolment fee of $1583.00 will be charged
6
General
6.1 At enrolment students are assigned to lecture streams and tutorial groups. Students MAY
NOT change tutorial times without the authorisation of the unit of study coordinator. Changes
to tutorial times will GENERALLY NOT be made; they will only be considered if spaces are
available and students can present a compelling reason to the unit of study coordinator for
such change.
BUSINESS LAW STUDENTS MANUAL
86
6.2 Staff absence: If a staff member is absent, you are advised to seek advice from the staff of
the School Office, which is in Room A336 at Footscray Park Campus or, if you are studying
on a Campus where there is no School of Law Office, from the staff of the faculty of Business
and Law Office, about alternative arrangements.
6.3 Change of enrolment: The last day for changing your Semester 1 subject enrolment without a
st
st
result being recorded is the 31 March and in Semester 2 the 31 August. Subject
withdrawals after this date may incur the HECS liability.
THE FORMS THAT YOU MAY NEED DURING THE SEMESTER CAN BE FOUND BY
CLICKING ON
http://www.vu.edu.au/Students/Student_Administration/Commonly_Used_Forms/index.aspx#Exa
mination
7
Other Issues
7.1 If you have any concerns regarding any teaching aspects of the unit of study please discuss
them with your tutor, lecturer or the unit of study coordinator Gerry Box by emailing him at
gerry.box@vu.edu.au without delay. Voicing any questions or expressing any concerns that
you may have will not count against you in any way; the academic staff of this unit of study
are intent on resolving any problems that may arise and improving the student experience.
7.2 Results for the Unit of Study cannot be provided to students prior to the results being officially
released by the University.
7.3 A further component of assessment may be administered by the examiners in any unit of
study at short notice and before the publication of results. Students should therefore ensure
that they can be easily contacted until the publication of results.
BUSINESS LAW STUDENTS MANUAL
87
Past Examination Papers
In the remaining pages of this Business Law Students Manual, Examination
Papers for the last several Semesters are set out in full for the information of
students.
The best preparation for the Final Examination in Business Law is to
answer questions from past examination papers. By so doing, students will
become familiar with the type and range of questions commonly asked in
examinations, and they will also develop a strategy for addressing and
answering such questions.
Many students are uncertain how to approach legal problem questions, and
often ask "How much should I write?", "How should I use cases?" and
similar questions. The best approach is to practise answering actual
questions - even restricting yourself to the time available in the examination
context - and the answer to the above questions will become clear. You
should write as much relevant material as you can in the time available.
While there is no "set strategy" for answering problem questions, many
students find it useful to follow the steps set out below. By doing so, you will
identify the relevant issue, and then address it and arrive at a reasoned
conclusion.
The steps are: 1. Identify the legal issue raised by the question.
2. State the law which is relevant to that issue.
3. Supplement your summary of the law by reference to decided cases.
4. Apply the law as set out in steps 3 and 4 to the problem.
5. State the conclusion resulting from that procedure.
6. Set out briefly the consequences of that conclusion (eg, remedies).
You are welcome to use this strategy, or to develop an approach of your
own. You will find that the process of isolating the problem raised by the
question and then following steps 2 - 6 will inevitably lead to a satisfactory
analysis and discussion of the problem.
Remember that law is not an exact science, and students should not be
obsessed with the accuracy of their conclusions when answering problem
questions. It is good to come to the conclusion preferred by the examiners,
but it is not necessarily fatal if you do not. The examiners are more
concerned with steps 1, 2, 3 and 4 than with steps 5 and 6.