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Royal Melbourne Institute of Technology *
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2480
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Law
Date
May 16, 2024
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4
Uploaded by ProfessorOstrich283
LAW2480 Business and Corporations Law TUTORIAL 3 (Week 3) Elements of a Contract Dr. Lydia Thiagarajah lydia.shalani.cecil.thiagarajah@rmit.edu.au Virtual ‘drop in’ consultations on Collaborate Ultra Fridays 12.30pm –
1.30pm Objectives ✓
Explain the key features and purpose of contract law ✓
Describe the different types of contract and distinguish between a unilateral and bilateral contract ✓
Describe the different elements of contract formation and explain the impact on contract validity where an element is not satisfied ✓
Identify an offer from a non-offer and explain the rules of acceptance ✓
Understand the postal acceptance rule and identify when it applies ✓
Describe the concept and rules of consideration and its application to contract formation ✓
Describe and apply the doctrine of promissory estoppel ❖
Attempt all questions prior to class. Note down in advance of tutorials, difficulties arising from lecture or reference materials and take advantage of tutorials to ensure that you clarify those difficulties. ❖
Assessment Task 1
: Available from Friday 4
th
August 3pm to Tuesday 8
th
August 11.59pm. Worth 10% (10 marks) of your total mark out of 100. Comprises 20 multiple choice questions, each have 5 possible answers. You will have 60 minutes to complete this in one sitting (no breaks).
Question 1 What is the purpose of contract law? Do you agree with Kirby P in Biotechnology Australia Pty Ltd v Pace
(1988) 15 NSWLR 130 at 132 when his Honour said that: “the law of contract …..underpins the economy”?
Question 2 What are the elements that make up a legally enforceable agreement? What if an element is not satisfied? What is the difference between a unilateral and a bilateral contract? Question 3 Explain how the postal rule works compared to the electronic means of making offers and acceptances, and the formation of a contract. Has the introduction of electronic communications law changed the historical basis of the postal acceptance rule? Question 4 Ming runs a hair salon called Australian Hairlines (Hairlines). Ming decides to promote the business by advertising a ‘special offer’ in the local paper. The advertisement he places in the local newspaper states that on the production by the customer of the advertisement, ‘Hairlines’ w
ill give that customer a haircut at the low price of $10. The day after the advertisement is published, some 50 people arrive at the salon asking for the special haircut at $10. Ming is overwhelmed by the response and realises that the salon will lose a lot of money if this promotion continues. Ming decides to put up a sign in the salon’s window that states: ‘THE OFFER OF HAIRCUTS AS ADVERTISED HAS NOW FINISHED’. Required: Advise the following persons and cite authorities to support your answer: a)
Forty customers produce the advertisement before the notice goes up in the window. Are these customers able to enforce any legal agreement? b)
Ten customers do not have the advertisement with them, but still want to participate in the promotion. Are these particular customers able to enforce any agreement? c)
Ming believes he has now withdrawn the promotion and has no further obligation to provide cut price haircuts. Advise Ming if this is correct?
Question 5 Gus wants to buy a car he has seen for sale outside a neighbour’s property. The car has a sign on it stating ‘For Sale. Price is $3,000 ONO. Talk to Dave on the attached mobile phone number’. Gus rings the number on the sign and leaves a message stating that he is offering to buy the car outside the neighbour’s property for $2,800. Gus leaves his phone number and asks Dave to ring him back. Dave does not ring back straight away; he is busy. He checks his phone that evening. Dave rings Gus and leaves a message stating that $2,800 is a bit too low and Gus can have the car for $2,900. However, during the evening a passer-
by stops outside of Dave’s house, knocks on the door and pulls out a wad of cash amounting to $3,000 and takes the car from Dave (having signed the papers). Gus gets up the next day and sees the car has gone. He checks his messages and notes that Dave had left a message offering to sell the car at $2,900. Gus rings Dave immediately and states very clearly that he accepts the offer made by Gus. Gus believes he has now accepted the offer and that there is a contract between them. When Gus finds the car has gone to someone else, he is very upset. As far as he was concerned, he had accepted the offer and Dave had no right to sell the car to anyone else. Required: Advise Gus if he has a contract and whether Dave is bound to sell the car to him. Cite authorities to support your answer. Question 6 A university is seeking to conduct research on livestock so as to develop a new vaccine which will prevent a particular disease in sheep. A farmer offers to lease four acres of land for a period of five years to the university for the holding of sheep, who will be livestock on which the new drugs can be tested. The farmer agrees to sign a contract prepared by the university lawyers. The contract gives exclusive use of the four designated acres of land to the university, who in turn promises to use the land only for university purposes and not for profit-making purposes. The university will pay $1 per year to the farmer for the right to use the land over the five years. One year into the contract, prices for wool and meat have risen dramatically. The farmer would like to end the contract and take the land back. The farmer believes there was not really a contract between himself and the university, since the rent was only $1 per year, which indicates a simple friendly arrangement rather than a binding contract. Required: Advise the farmer if he can claim that there is no contract as the consideration was $1? Explain to the farmer what the principle that consideration must be sufficient but need not be adequate mean? When is a consideration sufficient but not adequate; or neither sufficient nor adequate. Cite authorities to support your answer.
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Question 7 Bo is interested in leasing an outlet near South Dock to run a fast-food noodle shop. The dock area is thriving, there are lots of other businesses and a huge block of apartments nearby. The rent is high, about $1,800 per week, with various penalties in the contract for breaking the lease earlier than the contracted period. Bo signs a contract with a two-year lease. For six months everything is fine, Bo is making money and he is paying all the bills. Then, after one year, the Dock outside the shop (the main thoroughfare for customers entering the shopping area) is declared to be faulty and unsafe. Customers cannot use the walkways, and there is restricted access to Bo’s shop; indeed, many of the surrounding shops are now empty giving the area an eerie feeling. Bo informs the landlord that he is leaving and cannot pay any more rent. The landlord pleads with Bo to stay and promises he will be charged only $500 a week, which he can cover with his takeaway activities. However, at the end of the lease Bo decides he will now leave. The outraged landlord threatens Bo with a legal action for the original rent he should have paid. Required: Advise Bo if he can avoid paying the original rent? Cite authorities to support your answer. Final question Share any media news (whether print, broadcast or internet) that relate to the current topic. Acknowledgements: Some of the questions may have been taken from your prescribed text/related publications and/or have been adapted.