INTRODUCTION TO BUSINESS LAW (200184), SPRING SEMESTER 2017
PROBLEM SOLVING ASSIGNMENT (Assessment 2)
This document consists of three (3) pages including this page.
There are three (3) questions and all questions must be answered. This assessment task contributes 30% of your final grade. The questions are not equally weighted. This assessment task is based upon the content covered in Weeks 4 and 5 (Contract law).
Word limit: The word limit for the entire assignment is 1500 words. There is no 10% margin of error on the word limit and you may not use footnotes to get around the word limit (eg, such as by placing extra text in the footnotes – footnotes should be used for the reference only as a general rule, not for added descriptions).
Referencing style: Assignments must be referenced adopting an appropriate business referencing style.
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Dorothy, a widow, felt the family home was now too large for her to manage. She told her adult children that she was selling the home called ‘Gum Leaves’. Brian, Dorothy’s son’s closest friend, had always loved Gum Leaves and offered to buy it from Dorothy. Dorothy thought about Brian’s offer and sent him a letter which stated in part:
“I would be happy to sell you my family home ‘Gum Leaves’ for a price of $2,000,000.”
Brian responded that he would only be able to pay $1,500,000, payable in four equal instalments over a two year period.
Dorothy wrote back to Brian, indicating that she was prepared to accept $1,500,000, and asking whether he would pay cash in one lump sum on settlement. .Brian then replied:
“I am delighted that we have reached agreement about the sale of “Gum Leaves”. I will need to pay you in four instalments as previously advised.”
Meanwhile, Dorothy received a letter from Lionel, a property developer, which advised:
“I would be happy to pay $1,750,000 in cash for your fine family home. Please advise by phoning 9788 2XXX if this is acceptable to you.”
After she received the reply from Brian advising he would still be paying in instalments, Dorothy phoned Lionel and said that she was happy to accept his offer, subject only to a contract being drawn up in a form which was acceptable to her family solicitors.
Dorothy phones her son David, telling him that she has sold the house to Lionel and asks him to let Brian know. When David phones Brian, Brian says “It’s too late – we already have a contract.”
Lionel changes his mind and tells Dorothy he is not proceeding with the purchase.
Advise Dorothy whether she has a binding contract for the sale of Gum Leaves with either/neither or both of Lionel and Brian. 15 MARKS
2. Rachael successfully breeds dogs. She sells some of the puppies (young dogs), which are highly prized. Emily agrees to buy one of the young dogs, called Fang. for $3,000, to be paid in two instalments of $1,500 each. She pays the first instalment and takes the dog away. Emily later calls Rachael and says “Can you promise me that Fang is even tempered?” Rachael says that he is and Emily promises to pay the final instalment of the purchase price. She transfers the money the following day.
Fang bites Emily in a fit of bad temper, hurting her hand. Emily commences proceedings against Rachael for breach of contract. Rachael denies that Fang’s temper was ever a term of the contract.
Advise Rachael. 5 MARKS
Phillip takes his family to Kangaroo Island for the day. Arriving at the ferry, which he has used before, he is given a ticket on paying the fare. On the reverse side is written:
“All vehicles and passengers use this ferry at their own risk”
He does not read these words nor does he see the notice on the ferry itself that has identical wording. Due to negligent navigation by its captain the ferry collides with an underwater obstruction marked by a warning buoy. The ferry sinks slowly enough for all the passengers and crew to be rescued but the ferry and vehicles on it are lost.
Can Phillip sue the ferry company for the loss of his car? Explain your answer.
15 + 5 + 10 = 30 MARKS
END OF QUESTIONS.