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Law101 Final Exam

Question 1 (6 marks)

James has been running a business, Jamtowel Enterprises, in Brisbane where he manufactures kitchen towels. The business has grown significantly in recent months and is now very profitable. Joginder becomes very successful but because he lives alone, he is also very lonely. He is very advanced in age.

LAW101
LAW101

 James has a niece, Mary who is an accountant working for a big firm in Perth. James writes to his niece Mary and asks her to move over to Brisbane to help him run Jamtowel Enterprises.  He promises to give Mary 50% of the business if she moves and works for him for 2 years.

Mary is in a serious relationship with John, who also works in Perth. John is not interested in moving to Brisbane and breaks off his relationship with Mary. Mary accepts her uncle’s offer, sells her recently acquired flat, quits her job and moves to Brisbane to start a new life with her uncle. Six months later, the relationship between Mary and James breaks down and James throws Mary out of his house and the business. Mary is angry as she has lost everything.

Explain the presumptions that courts would make in determining whether James and Mary intended to be legally bound by their agreement and advise Mary whether she could succeed in enforcing the agreement.

Question 2 (6 marks)

Brian and Sally are very keen to purchase a three-seat leather lounge suite. After weeks of searching for the right one, they pass a furniture shop advertising three-seat leather lounges for $2100. They immediately withdraw $2100 and return to the shop in order to purchase the suite. The sales assistant advises them that there has been a mistake and the price should have read $2900. He cannot sell the suite to them for $2100. Understandably, Brian and Sally are furious and are not willing to pay the additional money for the lounge suite. Is the sales assistant entitled to refuse to sell the lounge suite for $2100?

Question 3 (6 marks)

Bella owned a car which she wanted to sell for $5000. She advertised the car for sale by placing information brochures at the local supermarket notice board, to target potential buyers in her neighborhood.

Upon reading the advertisement on the board, George telephoned Bella and said that he would buy the car for $ 4,000. Bella said that she had changed her mind and was not sure that she would sell the car, but that if she did she would want at least $6,000. After further discussion George offered Bella $5,700 for the car. Bella refused to sell for that price but said she would keep her offer open for five days.

The next day Bella met an old friend, Molly, who said she was looking for a car. After further discussion Bella sold her car to Molly for $6,000.

Later that day George overheard Molly boasting about the car she had purchased from Bella.

George immediately rang Bella and told her that he agrees to pay $6,000 for the car. Bella replied, “I’m so sorry, George, but I have already sold the car to Molly”. The brochure made no reference to price.

Explain to George all the aspects that would be necessary to establish agreement in these circumstances.

Question 4 (6 marks)

Michelle has just reopened her business after a long closure occasioned by a compulsory lockdown. Her business is struggling financially and she approaches her bankers, Easy Credit Bank, for a loan. Easy Credit tell Michelle that they are unable to provide further loans unless she can provide additional security. Michelle remembers that her grandmother owns a large home. She tells the bank manager, Samantha Stewart, that her grandmother will provide the home as security. Michelle has not discussed this with her grandmother.

Samantha accompanies Michelle to her grandmother’s house to get her to sign the loan security documents.

Michelle’s grandmother has not had any experience in business and has never had to deal with a banker directly. She is also not able to speak English well as she moved to Australia from Sweden forty years ago and has never bothered to learn the language. She does not understand the documents that are presented to her by Michelle and Samantha. They explain that the documents are a guarantee to allow Michelle to get the loan and that everything will be fine. They assure Michelle’s grandmother that she has no need for independent legal advice. The documents are actually a standard security guarantee, which will allow the bank to foreclose if Michelle does not pay. Her grandmother signs the document and Michelle receives the loan.

Michelle’s business does not improve and within a few months she defaults on the loan. The bank attempts to foreclose on the loan and seize her grandmother’ home. 

Explain to Michelle’s grandmother the grounds under common law and statute that would allow her to void the guarantee for lack of consent on her part.

Question 5 (6 marks)

Jules entered into a contract to tutor Shresta for the first year of his university education in the field of complex mathematics. Before he could start, Jules suffered an injury that left him bedridden for six months and he is unable to perform his part without significant difficulty and expense. With the aid of case law, explain whether there are any grounds upon which the contract may be discharged.

Question 6 (6 marks)

Jemima has just started a new coffee shop business and has employed 10 members of staff. She has purchased a large dining table which she put in her staff lunchroom. Within days of putting the dining table in place, it collapsed when one of the staff members placed a microwave oven on it. She is considering taking action against the retailer that sold the table to her and wants to know whether that would be considered a consumer sale.  Explain whether Jasmine is a consumer under Australian Consumer Law.

Question 7 (6 marks)

Peter has recently had to spend $1,000 to tow his neighbour’s motorhome to a safe location. The motorhome, which was left in his care, was damaged in a recent storm while his neighbour was stranded overseas after a brief holiday. Peter was unable to contact his neighbour in any way at the time. Briefly explain whether an agency relationship has arisen and if so, what type of agency.

Question 8 (6 marks)

In January 2020, Christopher bought an electric frying pan for $200 from Cooking Appliances Pty Ltd, an electrical appliance store in Melbourne. The pan was manufactured by Solid Pans Ltd. A manufacturer’s label attached to the pan promised that the pan was fully portable. On another label attached to the pan was a statement that provided: “all warranties, conditions and guarantees are hereby excluded”.

While particularly busy one day, Christopher left the pan on and went outside for some fresh air. During this time the pan caught fire due to an electrical manufacturing fault. There was a fire which destroyed his $1000 bed and all the expensive wallpaper in his room to the value of $3,000.

Later tests revealed that the pan’s electrical fault was in fact triggered by defective internal electrical components that were designed for the non-portable version of the pan. Christopher has also suffered from inhalation of the toxic fumes and was required to be hospitalised for two days.

Christopher now wishes to take legal action against the Solid Pans Ltd for common law negligence. With the aid of case law, explain the three requirements that he will need to meet in order to establish the tort. What defences would be considered for the intended defendant?

Question 9 (6 marks)

Elsie and Ryan have seen a business opportunity and now wish to start a business together. They are considering the partnership structure. With reference to the partnership legislation, explain the difference between a general partnership and a limited partnership.

Question 10 (6 marks)

Outline the characteristics of a company that make it attractive as a business structure.

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