ISC - DUBAI C I

MBS502 M 2 Law for Bu usiness s

Unit Informa t ation and Learnin Guide d ng e Dubai Trimeste 2 2011 er 1

Unit Coordi inator (Pert Australia th, a) John Murp phy Murdoch Business Sch hool urphy@murdoch.edu.au Email: j.mu Director for Business - MUISCD Academic D Amanda M McStay, BSc MBA c, Telephone: +971 4 4355700 : E-mail: ama tay@murdo ochdubai.a ac.ae anda.mcst Lecturer ishnakuma LLM ar, Saritha Kri Telephone: +971 4 4355700 : E-mail: sar ritha.kumar r@murdochdubai.ac.ae

 Published by Murdoch University, Perth, Western Australia, 2010. John Murphy This publication is copyright. Except as permitted by the Copyright Act no part of it may in any form or by any electronic, mechanical, photocopying, recording or any other means be reproduced, stored in a retrieval system or be broadcast or transmitted without the prior written permission of the publisher.

CONTENTS
UNIT INFORMATION
ONE TWO THREE Introduction Resources for the Unit Assessment 3 6 7

LEARNING GUIDE
INTRODUCTION ONE The Australian Legal System Part 1 TWO The Australian Legal System Part 2 Agency Law THREE FOUR Partnership Law FIVE Contract Law Formation of Contract SIX Contract Law Offer and Acceptance SEVEN Contract Law Consideration and Legal Capacity EIGHT Contract Law Legality of Object and Genuine Consent NINE Contract Law Contents of a Contract TEN Contract Law Discharge of Contract ELEVEN Contract Law Remedies and Damages 12 13 15 16 18 20 22 24 25 26 28 29

LAW FOR BUSINESS

MBS502

Unit Information

ONE
Introduction
Unit Overview
Welcome to MBS 502 Law for Business. This is an introductory course for postgraduate students who have not previously studied law. The aim of this course is to provide postgraduate students with the essential general grounding in the Australian legal system and some particular areas of substantive law. This unit will focus on the Australian legal system, fundamental principles of contract law and some particular applications of it to business operations.

Prerequisites
There are no prerequisites for this unit.

Aims and Objectives

Unit Aims
The broad aim of this unit is to acquaint postgraduate students with some general legal principles applicable to business in Australia. This involves introducing postgraduate students to The Australian legal system, contract law and its particular application to some aspects of Contracts of Employment. The objectives of the course are: 1. To give participants wishing to develop management and business skills the basic legal knowledge they need to conduct day to day business affairs and in particular, to identify when they need to seek legal advice. 2. To enable postgraduate students to acquire a sufficient understanding of the law, its institutions and the manner of their operation in reaching resolution of legal disputes. 3. To develop postgraduate students critical thinking skills in the legal context.

Learning Objectives
On successful completion of the unit you should be able to: 1. Examine legal aspects of business relationships 2. Identify and manage fundamental legal issues in an objective manner 3. Communicate with legal advisors in an intelligent and informed manner

Graduate Attributes
This unit will contribute to the development of the following Graduate Attributes: 1. 2. 3. 4. Communication Critical and Creative Thinking Social interaction Independent and Lifelong Learning 3

Unit Coordinator and Local Lecturer

Unit Coordinator
Your unit coordinator in Murdoch University Perth for Law for Business is John Murphy.

Contact Details
Email: j.murphy@murdoch.edu.au Phone: +61 8 93607515

Local Lecturer
Your local lecturer and tutor for Law for Business in Dubai is Ms Saritha Krishnakumar.

Contact Details
Email: saritha.kumar@murdochdubai.ac.ae Phone: +971 4 4355700

Administrative Contact
Kristina Rowena Estero Email: kristina.estero@murdochdubai.ac.ae Phone: +971 4 4355700

Technical Help
For technical difficulties contact the IT Help Desk: it.helpdesk@murdochdubai.ac.ae or phone Mr Janeesh Karammal (IT Support) at +971 4 4355700

How to Study this Unit

Learning Activities
The teaching program consists of a weekly seminar held in Lecture Theatre on Mondays and Tuesdays from 6pm to 9pm. .

Attendance
Attendance and participation at all sessions is encouraged.

Study Schedule
Date (week commencing)
09 Jan 2011

Lecture
One

Description
Introduction to the Unit; and The Australian Legal System Its origins and development

Reading
Text Chapter 1 and other ECMS material Text Chapter 1 and other ECMS material

16 Jan 2011

Two

The Australian Legal System Hierarchy of Courts, Doctrine of precedent and Statutory Interpretation

23 Jan 2011

Three

Agency law an introduction to the application of Common Law principles

Text Chapter 10 and other case materials Text Chapter 11 and other case materials

30 Jan 2011

Four

Partnership Law an introduction to the application of legislation and its interpretation

06 Feb 2011 13 Feb 2011 Five

Individual Study Week Contract Law Formation of contract: Intention to create legal relations,

Text Chapters 4 & 5 and other case materials

20% Test will be held on 17th Feb (Thursday) at 7 pm for both Monday and Tuesday Classes

20 Feb 2011 27 Feb 2011

Six Seven

Contract Law Formation of contract: Offer & Acceptance Contract Law - Formation of contract: Consideration; Legal Capacity

Text Chapters 4 & 5 and other case materials Text Chapter 4 & 5 and other case materials Text Chapter 4 & 5 and other case materials Text Chapter 6 & 7 and other case materials Individual Report (2000 words max) 30%

06 Mar 2011

Eight

Contract Law - Formation of contract: Legality of Object: Genuine Consent

13 Mar 2011

Nine

Contract Law - Contents of contract: Representation, terms & warranties, exclusion clauses

20 Mar 2011

Ten

Contract Law - Discharge of contract: Breach & Frustration;

Text Ch 9 and other case materials Text Ch 9 and other case materials

27 Mar 2011 03 Apr 2011 10 Apr 2011

Eleven Study Break Assessment

Contract Law - Remedies & Damages

TWO
Resources for the Unit
Unit Materials
To undertake study in this unit, you will need: Essential Textbook Text: Sweeney, B. & OReilly, J., Law in Commerce, 3rd Edition, LexisNexis and Reader Butterworths, Australia, 2007 Other References Latimer P, Australian Business Law, 28th Edition, CCH Australia Ltd, 2009. Gibson & Fraser, Business Law, 4th Ed, Prentice Hall, 2009 Vermeesch & Lindgren, Business Law of Australia, 11th Ed, LexisNexis, 2005

Online Resources

Butterworths Business and Law Dictionary, Lexis Nexis, 2nd Ed, 2005 The unit welcome page and LMS online unit materials are available. There are also other materials available from the Library. Electronic Course Material & Reserve info http://prospero.murdoch.edu.au/search~S1/ Past exam paper http://wwwlib.murdoch.edu.au/exams/

THREE
Assessment
Assessment Components
You will be assessed on the basis of: Assignment Test (Internal students only) Description Multiple choice & short answer test Value 20 % Due Week 6 (17th February 2011 Thursday 7 pm) Week 9 (8th of March 2011) Assessment period

Assignment Final exam

Individual paper Extended response

30% 50%

Individual Paper must be handed before 6 pm.

Assessment Details
Test
A test will be held in the Week 6 session. Students will be allowed 50 minutes to complete 20 multiple choice questions and 5 short answer questions. The questions will be based on topics up to and including the session 4 topic. The test will be marked out of 20 and is worth 20% of the final unit grade. The test is closed book.

Assignment
The assignment question will be distributed to students in session 4 and will be posted on LMS following that session. The assignment will be no more than 2,000 words. Students must use a 12 size font, double spacing and default Microsoft Word margins. This assignment is marked out of 30 and is worth 30% of the final unit grade. Submit this assignment using the assignment tool in LMS. The due date for submission of this research paper is 6.00pm 8th March 2011. Please see below for details of extension to this deadline. The mark for your assignment will be determined by reference to the quality of its analysis, its clarity and organisation, and its presentation, including its freedom from distracting stylistic errors (grammatical, spelling, punctuation and typographical). This is a legal problem solving exercise. Most of the references are expected to be to the source laws that are statute and/or case law.

The Library provides a citation guide at http://wwwlib.murdoch.edu.au/find/citation/.

Assignment Marking Guide

Identification of relevant issues Examination & analysis of information Presentation Referencing TOTAL

6 14 4 6 30

Due date extension for the assignment will be granted only in an exceptional circumstance. If something exceptional arises that requires an extension you should contact the unit coordinator before the due date. Only the unit coordinator can grant extensions. Late submissions which have no agreed due date extension will have 10% of the marks deducted per day of delay. Reasons which are insufficient to warrant an extension include computer failures, car failures or other transportation difficulties, work conflicts and other study commitments

Final Exam
The final examination will be of 3 hours duration and held in the assessment period. It will be an extended response exam and based on lecture material and readings provided in the course of the unit. The examination is open book. It will be marked out of 50 and is worth 50% of the final unit grade. The final exam will consist of a number of short legal problem solving exercises similar to those covered in the tutorial exercise covered during the semester.

Deferred Assessment
The availability of deferred assessment is not determined by the Unit Coordinator. A central administration procedure must be followed

Determination of the Final Grade

The assignments and the exam will be marked on the performance achieved in each of the respective areas of assessment. The final grade will be the accumulation of the pro rata score for each assessment.

Final Grades for Units which Award Grades

Notation HD D C P N DNS Percentage Range 80 100 70 79 60 69 50 59 Below 50 Did not participate in any assessments after HECS census date S Supplementary Assessment 45 49* *The award of the grade S shall be at the discretion of the Unit Coordinator. The grade descriptors are provided in the Murdoch University Handbook and Calendar and at http://www.murdoch.edu.au/admin/policies/assessment.html#11 Grade High Distinction Distinction Credit Pass Fail Fail

Interim Grades:
NA or NS Q S Not Available or Not Submitted Deferred Assessment Supplementary Assessment

University Policy on Assessment

Assessment for this unit is in accordance with the provisions of Degree regulations 40-48. Check these in the current Murdoch University Handbook and Calendar or http://www.murdoch.edu.au/admin/legsln/regs/bachelor.html#assessment

Assessment Roles and Responsibilities

Please refer to the University Policy on Rights and Responsibilities of Students and Staff http://www.murdoch.edu.aadmin/policies/assessment.html#8

Academic Integrity
Murdoch University encourages its students and staff to pursue the highest standards of integrity in all academic activity. Academic integrity involves behaving ethically and honestly in scholarship and relies on respect for others' ideas through proper acknowledgement and referencing of publications. Lack of academic integrity, including the examples listed below, can lead to serious penalties. Find out more about how to reference http://www.murdoch.edu.au/teach/plagiarism properly and avoid plagiarism at:

Plagiarism

Inappropriate or inadequate acknowledgement of original work including: Material copied word for word without any acknowledgement of its source Material paraphrased without appropriate acknowledgement of its source Images, designs, experimental results, computer code etc. used or adapted without acknowledgement of the source An assignment written by a third party and represented by a student as her or his own work. Material copied from another student's assignment with her or his knowledge. Material copied from another student's assignment or work without that person's knowledge.

Ghost Writing

Collusion

Purloining

Adapted from Section 9.3 of the Assessment Policy, Plagiarism and Collusion http://www.murdoch.edu.au/admin/policies/assessmentlinks.html#9

Plagiarism-checking Software
The University uses software called Turnitin which checks for plagiarism.

Non-discriminatory Language
Please refer to: http://www.murdoch.edu.au/teach/studyat/non_disc.html

Student Appeals and Grievances Handling Processes

Please refer to: http://www.oss.murdoch.edu.au/grievances/

Conscientious Objection in Teaching and Assessment

(This relates to an objection based on an individual's deep moral conviction of what is right and wrong) For guidelines on conscientious objection, see http://www.murdoch.edu.au/vco/secretariat/admin/gdelines/consciobj.html

10

Law for Business

MBS502

Learning Guide

11

INTRODUCTION
How to Use this Learning Guide
This Learning guide contains topic by information including: List of required readings Key Concepts Case Studies

This information is designed to help you move through the unit in a way which will lead to thorough, critical and reflective learning. Although the focus questions are optional, they will help you consolidate your learning and assist you in becoming an independent learner.

12

LECTURE ONE
Introduction to Australian Legal System
Essential Reading
1. Sweeney & OReilly Chapter 1

Key Concepts
1. 2. 3. 4. 5. 6. Law Rule of Law Ethics and the Law Types of Law English system of Law Commonwealth Constitution

Case Study
Terry, who lives in Brisbane, decides to open a coffee shop in Fremantle. Rather than operate as a sole trader, she registers a private company as the owner of the business. As the managing director of the company, Terry leases premises, employs waiters, gets a loan from the bank and purchases equipment. She agrees to purchase all her coffee supplies from Sam for a year. Terry gets permission from the local council to put chairs, tables and umbrellas on the pavement outside the coffee shop. When she opens for business the following things happen: Terry does not properly secure one of the umbrellas and a customer is injured when it blows over in a gust of wind. Terry finds an alternative supplier of coffee who offers lower prices. Terry wants to cancel her agreement with Sam. The owner of the neighbouring shop complains that Terrys tables encroach on his space, and pushes them away from his store. Terrys waiters complain that they are being forced to work too many hours each day. A health inspector says that Terrys kitchen is dirty and fines the company $1000.00.

13

Discuss these events. In particular, do the following: (a) Identify aspects of this case that relate to the following areas of law: - Criminal law - Tort law - Contract law - Property law - Administrative law - Corporations law (b) Find examples in the case-study of how the law does the following things: Allows people to organise and plan with reasonable certainty. Lays down the rights, duties and powers of members of different classes and groups. Permits, encourages, forbids or discourages particular activities. Controls the use of force and forbids unauthorised violence. Creates rights and duties that can be enforced and provides remedies. when rights are interfered with or duties are not discharged. (c) Why is it important to know the law? Are persons expected to know the law? Where do you look to find the law? In what different forms does the law exist?

14

LECTURE TWO
Introduction to Australian Legal System
Essential Reading
1. Sweeney & OReilly Chapter 1

Key Concepts
1. 2. 3. 4. 5. 6. 7. Court Hierarchy State and Federal Courts Case Law and Precedent Ratio decidendi and obiter dicta Statute Law Delegated Legislation Statutory interpretation

Case Study
EXAMPLE OF STATUTORY INTERPRETATION (taken from J Carvan, Understanding the Australian Legal System, 2005, Lawbook Co, ch 6) In the second reading speech for the Ellenbrook National Park (Restriction of Entry) Bill, the relevant Commonwealth Minister says: We have been concerned for some time that the Ellenbrook National Park which is on Commonwealth land, enjoyed each year by thousands of bush walkers, cyclists, and family picknickers is being ruined by heavy traffic. This legislation will restrict vehicular access to the Park so that the present users of the Park will continue to enjoy it in the years to come. The Bill passes. The new Act carries the short title: An Act to restrict traffic into the Ellenbrook National Park. Section 5 of the Act reads: No vehicle shall be permitted entry to the Ellenbrook National Park. Mary, who has been cycling through the Park every weekend for the past 20 years, is refused entry with her bicycle by a Park Ranger the weekend after the Act commences. Discuss whether the Ranger is entitled to restrict Marys entry to the Park

15

LECTURE THREE
Agency Law
Essential Reading
1. Sweeney & OReilly Chapter 10

Key Concepts
1. 2. 3. 4. 5. 6. Principal and Agent; types of agency relationships Authority of the agent; actual, implied and apparent Duties of the agent to the principal Liabilities of agent and principal Termination of the agency 6. Introduction to IRAC

Case Study
1. Anne is a Fremantle based sailmaker. She is interested in selling into the growing North West market. She meets a Broome boat dealer, Murray, at a conference and, after much talk, but with nothing in writing, they come to the following business arrangement: (a) Anne is to supply Murray with a range of her most popular sails, but the sails are to remain her property and will be displayed as such; and (b) Murray is to sell the sails to customers and pay Anne 85% of the proceeds. What is the legal nature of Anne and Murrays arrangement? Would it be different if Anne were to simply sell the sails to Murray? Terry runs a chain of retail nurseries in Perths southern suburbs. Rex is a friend who owns a yard where Terry stores plants before delivery to her nurseries. During the summer Terry goes on holiday for a month of trekking and mountain climbing in Nepal. After a week Rex receives at his yard a huge delivery of plants which Terry had ordered from wholesalers. The nurseries cannot take many of these plants, a large number of which are susceptible to sun and heat damage. They will die if they stay in the yard. They need to move to somewhere with shade and a sprinkler system. Nobody in authority is available. Advise Rex. Natalie owns a computer shop. She employs several salespeople plus a couple of people to assemble and repair computers. Her senior salesperson is Reece who is tempted to leave and work for his brother-in-law in a higher status job. To try to keep him working at her shop, Natalie gives Reece a pay rise and the title manager, although his job remains essentially selling to customers and he has no authority to make other business decisions. Natalie introduces Reece to dealers and customers as manager, and has him wearing a badge saying as such. Joseph, a computer components wholesaler, visits the shop one day when Natalie is out supervising the installation of a computer network. Joseph persuades Reece to sign an order for a large quantity of components for the shop. Advise Natalie whether the order binds her.

2.

16

Heather is a real estate agent. She is selling a block of home units off the plan for Prestige Developments. Heather becomes aware that a competing development has run into problems with council approval and is not likely to proceed. This will mean that the Prestige Development units will be worth much more than planned. Seeing a commercial opportunity Heather does two things: (a) She helps finance a friend to buy several of the units to on sell later at a big profit which they will split; and (b) In return for a cash payment she tells several buyers of the likely increase in value of the units. After all the units have been sold, it becomes clear to Prestige Developments what has happened. Advise them.

17

LECTURE FOUR
Partnership Law
Essential Reading
1. Sweeney & OReilly Chapter 11

Key Concepts
1. 2. 3. 4. 5. 6. Essential elements of a partnership Authority of partners Liability of partners Partnership by estoppel Rights and duties of partners Dissolution of the partnership

Case Study
1. Fred and Barney saw an opportunity to make some money for their local surf club by selling cold drinks and ice creams to people on the beach from a small four wheel drive refrigerated van. They used their own money and a loan Fred obtained from the local bank to buy the necessary equipment and get the necessary council permission and permits. They planned to recoup their outlay from initial profits and then pay the balance into the surf club trust account. However, the business venture did not go as planned owing to a particularly cool and wet summer. While some sales were achieved, and prospects looked good, Fred was unable to repay the loan when it fell due because sales were poorer than anticipated. Explain whether Barney is liable for the debt? 2. Wilma and Betty are partners in a small suburban accounting firm. During the course of doing the books for the practice Wilma discovered that profits had dropped noticeably in the last financial year. Upon investigation she discovered that Betty had not been paying into the partnership accounts money that she had received from clients. 3. Quincey is a partner in a very successful medical practice. Without the authority of the practice he goes to a pharmaceutical company with whom the firm has had regular dealings and ordered a supply of a revolutionary new drug worth over $100,000 on the firms account which showed great promise in treating cancer patients. The firm had been discussing the purchase of the drugs for some time in partners meetings but felt they could not justify the expense at the moment. Discuss the liability of the firm for Quinceys purchase. 4. Groucho, Harpo and Chico are partners in a small stage and screen investment business that they established a short time after leaving university in 2001. The firm was quite successful and in January 2005 they decided to take on an extra partner, Zeppo. During the course of an audit for partnership purposes for his admission, the auditor discovered irregularities in some of the accounts. Further investigations showed that Groucho had been

18

systematically stealing from the firms trust accounts since 2003 and that some $2,000,000 in clients money was missing. Advise the partners. 5. Natalie and Terry orally formed a partnership for a one-year term. As part of their capital contributions Natalie transferred 1,000 shares of X Corporation valued at $4,000, and Terry transferred 1,000 shares of Y Corporation valued at $8,000, to the partnership. The shares were put into the partnership name in order to facilitate their use by the firm as collateral security for business loans and an overdraft facility. None of the shares were sold. The one-year term has come to an end. Natalies contributed shares in X Corporation have increased five times in value, and Terrys contributed shares in Y Corporation have declined by seventy-five percent (75%). Natalie wants to take her shares back but Terry wants all shares to be sold and the proceeds divided equally. Assume this matter was never mentioned when they made their oral partnership agreement. How should the matter be resolved?

19

LECTURE FIVE
Contract Law
Essential Reading
1. Sweeney & OReilly Chapters 4 and 5

Key Concepts
1. Definition of a contract 2. Elements of a simple contract 3. ntention to create legal relations

Case Study
1. In order to induce his estranged wife to return home, Tom promised his wife that he would transfer the matrimonial home to her name. The parties saw a solicitor and had a formal agreement prepared and signed. His wife returned home over a year ago, but Tom has to date refused to transfer title in the home to her. On the basis of contract law principles only, advise Toms wife. 2. Five workmates at the Murdoch University Business School made an agreement to operate a lottery syndicate, based on the rule that any winnings are to be shared in proportion to the monies contributed toward any winning ticket. The agreement was not written down, however past winnings were always shared in accordance with the agreement. Last week a ticket purchased by a member on behalf of the syndicate won first prize of $3,000,000. (Each member of the syndicate contributed equally to the purchase price of the ticket). That person now claims that, since he physically purchased the ticket, and personally selected the numbers, the money technically belongs to him and that no other member of the syndicate has any legal rights to appropriate any of the winnings. Advise the other members of the syndicate. 3. An aging grandfather promised to transfer a $100,000 term deposit into his granddaughters name if she took a 12 month break from her university studies to care for him full time so that he did not have to hire a nurse. The grandfather wrote down the promise but never altered his will. The grandfather died 12 months and one day from when the granddaughter came to care for him. Is the granddaughter entitled to the term deposit? 4. A Fremantle cabaret artiste, Englebrech Schumaker entered into an agreement with the manger of one of Perths biggest retirement villages that he would put on a two hour show every Wednesday afternoon (at $150 per performance) at the village for 6 months. The agreement was put in writing and had a statement that the parties had not entered a legally binding agreement. Instead, they merely had a mutually satisfying arrangement of mutual respect and friendly cooperation. Englebrecht had only performed 5 of the shows when he was offered an engagement on a large international cruise ship 20

operating out of Singapore for 12 months. Without giving any notice to the retirement village he stopped doing the shows. The retirement village manager has been forced to hire another cabaret artiste that costs $350 per performance. Would the retirement village succeed if it sued Englebrech for breach of contract?

21

LECT E SIX L TURE X

Co ontrac Law ct w
Essentia Readin al ng
1. Sweeney & OReilly Chapters 4 and 5

Key Con ncepts

1. Rules of Of and Acc ffer ceptance

Case Stu udy

1. CMOT Dib bbler Ltd, a large department store, pub blishes a catalogue in which it c mistakenly prices a television at $ $100 instea of $1,000 Seeing t ad 0. this exceptionally good d e e ves to OT and asks for price in the catalogue Carrot driv down t the CMO Dibbler Ltd store a one of the televisions in the adve ertisement. The sales assistant e explains tha there was at s gue and that the price is in fact $1,000. Carrot dema e ands that he e an error in the catalog elevision fo $100 or he will sue the store demanding a remedy of Specific or e g y c have the te Performanc of the co ce ontract. Usin only the common law of contract, advise th store. ng he 2. Oprah misp placed her laptop com mputer while at work a e and posted a reward o the office on e noticeboard stating sh would pay $50 to anyone who returned the comp d he p d puter to her undamaged Basil, the office juni noticed that the computer had carelessly been left in d. e ior, d y n the lift one night after work and, noting the name tag o the insid cover, re on de eturned it to o Oprah on his next shift. He had not seen the reward notice. Ca Basil cla the $50 h d d an aim 0 reward? 3. Wayne Curry was the proud owner of a pa e ainting by A Aboriginal a artist Nike W Winmar tha at depicted a famous pla that is a once a sa ace at acred groun a battleground and a watering nd, d g hole and si imply called The MCG On Jun 1 he plac an advertisement in the Wes d G. ne ced st Australian putting the painting up for sale a $250,000 On June 2 Peta M p at 0. e Matera came e over to his house to ha a look. She said t him: I lik the paint ave to ke ting but not the frame it is in. What would you say to rem t u moving it an reducing the price o the painti nd of ing? Curry y said that he would hav a think about it. On June 5, Curry wrote t Matera. In the letter e ve a n to he said: I am afraid I cannot cha ange the frame or red duce the price. I want to know by y hether you w want it at th original p he price of $25 50,000. Ple ease reply b post. At by A June 15 wh the same time that Cu posted his letter Ma urry atera also posted a let to him. In the letter p tter hat d ond thoughts about th painting and decide that she he ed e she said th she had had seco would take the paint e ting, frame and all f e for $250,00 00. Both parties rec ceived their respective letters on J June 8. No response to these l e letters is re ecorded. O June 10 On 0, Matera atte ended an a opening During t art g. the course of the eve ening, she spoke to a famous art dealer, Bre Heady, who advise Matera t ett ed that the pre evious even ning he had d ed e CG ne or 0. negotiated and finalise the sale of The MC on behalf of Wayn Curry fo $250,000 On hearing this Mater immedia g ra ately returne home an sent ano ed nd other letter to Curry in n which she insisted tha she had legally boug the pain at ght nting for $25 50,000 as s stated in her 22 2

letter to Curry dated June 5. Matera reconfirmed that she was indeed buying the painting as stated in her letter to Matera dated June 5. Trace the legal consequences of ALL communications and advise Matera of her contractual position with Curry. Would your answer be different if Brett Heady was not an art dealer but just a stranger that Matera met at the art opening?

23

LECTURE SEVEN
Contract Law
Essential Reading
1. Sweeney & OReilly Chapters 4 and 5

Key Concepts
1. Consideration 2. Legal Capacity

Case Study
1. Bart Singhson operated a fuel service station and in January 2009 made a contract with Seagull Petroleum to sell only petrol supplied by them for the next three years. In January 2010, owing to some massive road works nearby, part of the normal traffic going past his service station was to be diverted for almost a year. Bart Singhson, who was facing financial ruin, immediately contacted Seagull Petroleum to lower the base rate at which the petrol was being supplied to him. Seagull Petroleum agreed to lower the rate by 10% while the traffic remained diverted due to the road works. In reliance of this promise by Seagull Petroleum, Bart Singhson hired a manager for the 12 months to January 2011. In June 2010 new management took over Seagull Petroleum and one of their first acts was to cancel this arrangement with Bart Singhson. Seagull Petroleum demanded that the base price of the petrol revert to the original rate and that Bart Singhson make payment, within two weeks, of all arrears calculated from the original base rate contained in the 2009 agreement. Discuss if Bart Singhson can enforce the promise to lower the base rate by 10% while the traffic remained diverted and also refuse to pay the arrears demanded. 2. Julies shop has been robbed and she says to Clive, a police officer, If you find the thief who did this, I will give you $500. Clive finds the thief and arrests him. Clive informs Julie that he has arrested the thief and now wants the $500. Julie changes her mind and refuses to give Clive the $500. Does Clive have any legal rights in relation to the reward?

24

LECTURE EIGHT
Contract Law
Essential Reading
1. Sweeney & OReilly Chapters 4 and 5

Key Concepts
1. Legality of Object

Case Study
1. Fred is retiring from his legal practice and, while attending a BBQ at his home on Monday 26 January, he makes an offer to sell his office equipment to his neighbour Wilma for $10,000. Wilma accepts Freds offer and pays him a deposit of $1,000. It was agreed that Wilma would collect the office equipment on Friday, 30th January, and at the time of collection, Wilma will pay the balance owing. Unfortunately, a robbery had occurred at Freds office some time at the weekend before the 26th January and all the office equipment has been taken. Neither Fred nor Wilma was aware of this until Tuesday, 27th January. What effect does this robbery have on the contract between Fred and Wilma? 2. Mr Magoo, an optician, was negotiating with Westpaddock Enterprises Ltd, a large Perth Shopping centre developer, to lease a shop front in the City Gardens shopping megaplex. On April 1st Magoo informed Westpaddock Enterprises that he needed customised equipment to be installed in the premises which would need to be ordered by 30th April. On April 25th Magoo couriered a signed lease agreement to Westpaddock Enterprises solicitors, who phoned and informed him that the lease was acceptable and would be signed by Westpaddock Enterprises within the next couple of days. Magoo then ordered, and 2 weeks later took delivery of, the customised equipment manufactured to the dimensions of the shop front. In fact Westpaddock Enterprises were, unknown to Magoo, negotiating with another potential tenant for the same shop front; and therefore deliberately chose to delay the signing of the lease documents. They have just informed Magoo that they will not be signing the lease and they will be giving it to another tenant instead. What can Magoo do?

25

LECTURE NINE
Contract Law
Essential Reading
1. Sweeney & OReilly Chapters 6 and 7

Key Concepts
1. Representations Terms Warranties 2. Exclusion Clauses

Case Study
1. Terri took her husbands dinner jacket and her green silk dress to Anne Cleaners drycleaners, a firm her family used whenever they had cleaning to be done. As in the past, she was handed a docket and, as usual, she placed it in her purse without reading it. When she called to collect the clothing she found the dinner jacket missing and her dress badly stained. One of the assistants recalled handing the dinner jacket to a customer who had apparently lost his docket but who was able to identify the jacket when allowed to sort through the rack. No explanation was forthcoming about the stain. When Terri demanded compensation she was referred to a clause on the docket which read: "We will not be liable for any loss of or damage to clothing left for cleaning howsoever such loss or damage may be caused." The manager also pointed out that the same words were printed on a large sign at the entrance of the shop. The sign had obviously been there for some time. Terri protested that she had never read either the docket or the sign. Terri wants to sue for the loss of the jacket and the damage caused to her dress. Advise her. i. ii. Would your answer be different if there was no large sign at the entrance of the shop? What if Terri had never been to Anne Cleaners before and there was no large sign at the entrance of the shop?

2. Yvonne decided to leave a bag and a notebook computer at the Western Rail cloakroom. She paid $5.00 and received a ticket at the counter. Above the counter was a sign that read: See back of ticket for conditions. On the face of the ticket was written a number, the date, opening and closing times and the words, See Back. On the back of the ticket were several clauses, including one that said: Western Rail will not be responsible for any package exceeding the value of $50.00. When Yvonne returned and presented her ticket, her bag could not be found. She contends that the notebook computer is valued at $2,500.00 and the bag contained other valuables worth $500.00. i. Would Yvonne be successful in claiming the full loss of $3,000.00?

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ii. iii.

Would your answer be different if Western Rail had allowed a third-party to claim Yvonnes bag and computer without producing a ticket for it? What if there had been no sign above the counter or the face of the ticket that directed her attention to the conditions on the back of the ticket?

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LECTURE TEN
Contract Law
Essential Reading
1. Sweeney & OReilly Chapter 9

Key Concepts
1. Discharge of Contract 2. Breach 3. Frustration

Case Study
1. Melinda owned a resort hotel, The Gorringe, at Rockingham. During the summer she contracted with George, an air-conditioning and heating contractor, to enlarge the airconditioning and heating system of the hotel. The proposed work required moving the existing systems, adding to the present network of ducts and providing additional air outlets in various specified rooms. The total price of the work and parts required was $30,000 and the method of payment was stated as $5,000 to be paid upon signing of the contract with the balance due on completion of the work. By January 15, Georges employees had proceeded to the point where much of the relocation work had been done and the main trunk line of ducts installed. The work remaining to be done comprised about one-third of the total agreed job. On January 16, there was a thunderstorm and the building was struck by lightning. The entire hotel building and contents were destroyed. George brought an action against Melinda for $15,000, representing the value of services and parts supplied up to the time of the fire. Would George be able to succeed in his claim? Give reasons for your answers. Would your answer (in contract law) be different if the fire was caused not by lightning but by Melindas own negligence? Also consider the above facts where there is no fire and George has completed the job but Melinda discovers that the air outlets have not been installed according to the plans. The cost of rectification work is estimated to be $5,000. Can Melinda refuse to pay George for the job and argue that it was a lump sum contract where she is only obliged to pay the full amount upon due completion of the work?

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LECTURE ELEVEN
Contract Law
Essential Reading
1. Sweeney & OReilly Chapter 9

Key Concepts
1. Remedies 2. Damages

Case Study
1. Bill Late had a contract to install new computers at the Microhard Trade Centre (MTC) in Fremantle by the end of February this year. As a result of delays, primarily due to Bill Late's own lack of efficiency, the installation project was not completed until the end of April. Unknown to Bill Late, Microhard Trade Centre had also been awarded a contract to host an international conference in March on global GIS systems and satellite imagery that would have netted the company an additional $100,000 profit over and above its normal monthly profit of $10,000. The conference was cancelled, as Microhard Trade Centre was unable to provide any computer services. Microhard Trade Centre was also unable to carry out any business activity during the extra two months that it took Bill Late to complete the work. Microhard Trade Centre now claims business losses as follows: Normal business losses for 2 months at $10,000 profit/month Salaries paid to secretarial and computer staff for 2 months Loss of additional profits due to cancellation of conference Total $ 20,000 $ 10,000 $100,000 $130,000

Advise Bill Late if he is liable for all or any of the losses being claimed by Microhard Trade Centre.

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