s kept in the back of his shop. He brings this  watch out from the storeroom and shows it to Ken. The watch is a ‘Rolexx’ brand and it’s  glittering with small diamonds and gold frame and wrist band. The shopkeeper explains to Ken that this is a one of

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter6: Business Expenses
Section: Chapter Questions
Problem 23P
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Ken wants to impress his girlfriend by buying her a gold Rolex watch. He goes to a jewellery 
shop and looks at all the different types of ladies’ gold watches and notices that the price 
range is from $50,000 to $500,000! Ken doesn’t feel well at seeing the prices for these 
watches being very expensive! 
The shop keeper hearing what Ken had told him and why he wants to buy a ladies’ gold Rolex 
watch, says that he has one watch which he has kept in the back of his shop. He brings this 
watch out from the storeroom and shows it to Ken. The watch is a ‘Rolexx’ brand and it’s 
glittering with small diamonds and gold frame and wrist band.
The shopkeeper explains to Ken that this is a one of a kind “Rolex”. The extra letter ‘x’ is to 
indicate that it’s extra special. Ken is excited but at the same time worries how much this will 
cost?!
“Ken, just for you I will sell this watch for $500.00!”
“WOW! Really?! Cool! I will take it!” replies Ken excitedly
Ken gives the $500.00 to the shop keeper and he hands to Ken the Rolexx ladies watch.
Later that evening at a restaurant, Ken surprises his girlfriend with the present. She’s very 
happy but then she notices that the watch is not working! And she looks at it closely and sees 
the brand name ‘Rolexx’.
Ken’s girlfriend looks very angrily at him. “Rolexx???!!!” she asks in a deep angry tone which 
Ken doesn’t notice.
“Oh yes darling! This is a very special Rolex X watch which is the only one of its kind! Hey! I 
got an idea; do you want to go and see the X men movie?” replies Ken who doesn’t seem to 
notice that his girlfriend is breathing heavily and looking very menacingly at him.
“There’s no such thing as a Rolex X watch!!!!!! This is a cheap watch! It’s a FAKE!” she shouts 
angrily at Ken and is infuriated at him and slams the watch on the dinner table and the small 
diamond clusters fall out. “You got ripped off! And no, I am not watching a movie with you… 
EVER!” she says angrily. 

Ken then replies: “Are you still my girlfriend?” His girlfriend angrily and menacingly looks at 
Ken and screams: “AAARRRGGGHHHH!” and then storms out from the restaurant leaving 
Ken with the now broken ‘Rolexx’ watch and also with the bill to pay for the meal.
Ken now wants to know if he has any right of action against the shop keeper that sold him 
the watch. If he has any rights, then what action can Ken take?
 work through the elements of a contract and identify 
them and apply them to the facts in this question.

focus only on Contract Law. 
No focus on Australian Consumer Law – 

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