Master of Accounting

Week 5 Tutorial Questions

(Based on Lecture 4)

Terms, Termination & Remedies

Business and Corporations Law

Tutorial Questions and Resource
Materials

Acknowledgements
Barron, M.L. Fundamentals of Business Law, 6th Edition, McGraw-Hill, 2009
Gibson, A Commercial Law in Principle, 3rded, Lawbook Co, 2005

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Tutorial 5 Contract Law - Terms, Termination and Remedies

The final week on the law of contract is an examination of the terms of a contract, how a contract
is terminated, and the remedies available for breach of contract. Once a valid contract exists, it
may be necessary to determine what the parties rights and duties are. This requires deciding
what the terms of the contract are. A study is also made of the doctrine of privity of contract and
its exceptions and of the ways in which a contract can be terminated or discharged by
performance, agreement, a specified term of the contract, frustration, operation of law, or by
breach of the contract. You are also introduced to the general law remedies available for breach
of contract such as rescission, damages, restitution, specific performance and injunction.
Reading: Chapter 6,7 and 9 of prescribed text
Tutorial Questions
1. Susan, a talented dancer, signs a contract with Margaret. Under the terms of the contract,
Susan is to tour around Australia for 6 months and dance in a number of shows. She is
required to be in Sydney 3 weeks before her first performance for rehearsals and costume
fittings. Due to illness, she arrives only 5 days before the first performance. Is Margaret
entitled to rescind the contract on the basis that Susan has breached a condition of the
contract?
2. Gerald purchased a motor car from a licensed motor dealer for $15,000. Before purchase
the car had been inspected by an NRMA inspector who reported that the warning light on
the suspension remained on when tested and recommended that the suspension be
checked. The dealer, through its salesman, agreed with Gerald that the defect would be
fixed before completion of the sale. The car was referred to a repairer and, although there
were no further problems with the warning light, the defect was not fixed. The relevant
fuse had been removed thus disabling the warning light. The sale was completed and,
after 6 months, further serious faults developed as a result of the defect in the
suspension, which cost Gerald $3,000 to rectify. Gerald sought reimbursement of this
money from the dealer. The dealer refused and pointed out that the Purchase Order for
the car contained a special notice which read:
SPECIAL NOTICE: No promise, inducement, guarantee or arrangement
made by a salesman or any other person and not written in this agreement
is binding upon or authorized by the Company.
The arrangement between Gerald and the salesman that the defect would be fixed had
not been written in the Purchase Order for the car. The Special Notice had not been
drawn to Geralds attention. While the Purchase Order form itself provided for
Customers signature it was signed only by or on behalf of the dealer.
Advise Gerald.
3. Aidan leased his house to Michael for $1000 per month. The payment terms of the lease
agreement requires Michael to pay $700 per month to Aidan and $300 per month to
Creditco (Aidans creditor). Michael paid the rent payments for a couple of months in
accordance with the lease but then stopped making the $300 per month payments to
Creditco. Aidan is overseas and cannot be contacted. Creditco wishes to sue Michael for
the outstanding $300 per month payments. If it does, will it succeed?

4.

The plaintiff and defendant entered into a contract pursuant to which the defendant was
entitled to remove koi fish from a pond on the plaintiffs land in return for an up-front fee
paid at the time of contract. A week after the two had signed the contract and before the
date on which the defendant was permitted to commence removing fish, a new law
designed to prevent the spread of various noxious fish species came into effect. The
new law prohibited the removal of koi fish from private ponds and the sale or otherwise
dealing with koi fish. Advise the defendant.

cannot be contacted. Creditco wishes to sue Michael for the outstanding $300 per month
payments. If it does, will it succeed?
4. The plaintiff and defendant entered into a contract pursuant to which the defendant was entitled
to remove koi fish from a pond on the plaintiffs land in return for an up-front fee paid at the time of
contract. A week after the two had signed the contract and before the date on which the defendant
was permitted to commence removing fish, a new law designed to prevent the spread of various
noxious fish species came into effect. The new law prohibited the removal of koi fish from private
ponds and the sale or otherwise dealing with koi fish. Advise the defendant