These are my guidelines for your markers Guidelines for markers are in red Comments in blue represent my feedback to you Note – All students are expected to use the prescribed textbook when undertaking this assignment and all cases cited in each problem below should be taken from the textbook. Yeah...right! This instruction was a waste of time as many students have not purchased the textbook. As a result there were many Googled answers which more often than not inaccurate. These problems require you to put yourself in the shoes of a lawyer; unfortunately, without the pay! Whilst it is not mandatory, you are strongly advised to answer the problems by applying the IRCA method. MARKING CRITERIA FOR ALL PROBLEMS NB although the criteria are exactly the same as the IRCA method there was no compulsion that you apply it. But you were assessed on these criteria. Because many students ignored Blackboard there was more than the odd nightmare. You will be assessed on your ability to: • identify the legal issue/s; • state the relevant rule/s • identify relevant cases as appropriate; and • apply the above rules and cases in answering the problem Problem 1 (5 marks) This problem was done quite well by those who had bothered to study Topic 3. On 1 January 2015, Bill borrowed $5,000 from Anne, with the money to be repaid on 1 January 2016, together with interest of $500, making a total of $5,500. On 28 November 2015, Bill told Anne that he had lost his job and asked her if she would accept $4,000 on 1 January 2016 in full settlement. Anne promised that she would accept $4,000 on that date in full settlement and not sue Bill for the outstanding $1,500. On 1 January 2016 Bill paid Anne $4,000 thinking that the matter was finished. However, one week later Anne sued Bill for the balance of $1,500. Best done as below but be prepared for anything. Also, this is one rule (renegotiating a debt) that is poorly stated in the textbook. This might lead to some novel answers from non-English speaking background students. (a) Will Bill have to pay this amount to Anne? (b) Would your answer be different if they both agreed that Bill would pay the $4,000 on 12 December 2015 and Bill paid on that earlier date? Explain your answer. Issue in both a) and b) Has Bill provided any consideration for Anne's promise to accept the $4000 in full settlement of the debt? Rule for a) Part-payment of an existing debt is not sufficient consideration for the other's promise (or words to that effect) unless the arrangement has been included in a deed or involves one of exceptions. (not needed to be spelt out) Rule for b) Same as a) but should specify that consideration will be sufficient if agreed by the parties that the part-payment takes place prior to the due date. Case for a) Must be Foakes v Beer for full mark. Half only for Pinnel's case only. Case for b) Vice versa a) ie Pinnel for full mark Foakes for half mark Applying rule to facts a) As in F v B Bill, by doing less than his existing obligation, has provided no new consideration for Anne's promise to accept in full settlement. Therefore, in the absence of a deed or one of the other F v B exceptions, there is nothing binding Anne. Applying rule to facts b) Because Anne has agreed to accept part-payment on an earlier date then, based on Pinnel's case, Bill has provided sufficient consideration and Anne is bound by the agreement. Problem 2 (10 marks) This problem was a mixed bag. Some did brilliantly – nailed both issues and the rules/cases within the issues. A few students, as feared, worked out that there was an implied term in there but had no idea about the Moorcock and simply chose the first type of implied term they came across. Why would Costa Vraca or Burger King seem appropriate? Eric asks his very close friend Michael, "Would you like to buy my excellent 1998 Commodore for $2000?" Michael accepts Eric's offer because he has always wanted that particular model of car. They agree to meet at the SCU car park on Friday at 1.00 pm when Eric will hand over the car and Michael will hand over the $2000 in cash. They meet at the agreed time and place and Eric hands over the car, keys and signed registration papers to Michael. But, in his rush to get to an important meeting, Eric doesn't check the money in the envelope. Later that evening he discovers that Michael has paid him 2,000 in Hong Kong dollars which equals just 360 Australian dollars. When Eric tells Michael that he was supposed to pay 2,000 Australian dollars, Michael points out that there was no agreement about any particular national currency and all he was required to do under the contract was pay $2,000, which he had done. Eric seeks your advice as to whether or not he can sue Michael for a breach of contract, claiming that Michael was required to pay him AUD 2000, not HKD 2000 even though there had been no mention of currency at the time of the agreement. What is your advice? Another problem best split into two parts – Intention and Implied Terms. INTENTION Issue Did Michael and Eric intend their agreement to be legally binding? Rule Students were taught (in lecture) this rule – In social or domestic agreements the courts presume the parties did not intend their agreement to be contractual/legally binding. The textbook, on the other hand tends to ramble a bit so expect odd statements of the rule based on 5.3 TB They must also state either the rebuttal rule or the Ermogenous rule ie that courts will look at the circumstances surrounding the agreement 5.3 again. Cases Balfour v Balfour AND Todd v Nicol for full mark Applying rule to facts Reasoning could go anywhere but on the face of things it doesn't look strong grounds for a rebuttal. Credit sound reasoning. IMPLIED TERMS Issue Should the court imply a term that payment was to be AUD necessary to give the contract business efficacy? Rule I could write the full rule here but instead I will refer you to 7.13. Students must state the full rule to get full marks Case The Moorcock Applying rule to facts Students should explain that Michael was under an implied contractual obligation to pay Eric in AUD as it would not make business sense to do otherwise. It goes without saying that a contract negotiated in Australia would refer to AUD and not HKD. Problem 3 (5 marks) This problem was the best performer. Few missed it unless they hadn't studied. George sees a big sign in the window of the local video shop advertising a special membership offer of 100 overnight DVDs for the next three months for only $100. The sign also lists the numerous terms and conditions of the membership contract. George pays his $100 joining fee and commences to enjoy recently released movies at that cheap price. Several weeks after joining George rents an overnight DVD and, because he falls ill, does not return it for eight days. When he does return the DVD, the shop owner tells him that he must pay an extra $140, referring George to a term of the contract that states: "Hire of DVDs under this agreement is restricted to overnight hire only. Any such DVD not returned by 3pm on the following day must be paid for at the rate of $20 per day." The late fee in other video shops is normally $5 per day. Advise George. Issue Had the video shop given George reasonable notice of the existence of the unusual and onerous late fee? Rule Unsigned terms will be incorporated into a contract if reasonable notice given. In determining reasonable notice the courts will consider, among other things, the unusual or onerous nature of the term. If a term is unusual or onerous extra notice has to be given. Case Interfoto v Stilleto Applying rule to facts Read the last para in the decision in Interfoto. That's the answer. Problem 4 (10 marks) Should have been a gift – and was for many Grant sells second hand motor vehicles from his Sydney car yard. Grant enters into a contract with Eagle Eye Security whose guards are required to patrol his premises every night. One night Andy, the security guard on patrol, lights a cigarette and throws the match into what he thinks is a puddle of water but is, in fact, oil which catches fire and then causes an explosion that destroys the car yard and all the vehicles contained therein. The contract between Grant and Eagle Eye includes the following clause: Eagle Eye Security shall not be responsible, under any circumstances, for damage or injurious act caused by an employee of the company unless such act could have been foreseen and avoided by the exercise of due diligence on the part of the Company as his employer. This is probably best done as with Q1 but, again, expect anything. a) What will you advise Grant who has come to you very distressed and fully expecting to successfully sue Eagle Eye? (NB ignore any possible statute law issues) b) Ignoring any possible statute law issues, what would your advice be if the clause was different to the one above, instead stating the following? Eagle Eye Security does not accept responsibility for any loss or damage to property however such loss or damage may arise or be caused. Issue a) and b) Does the wording in the exemption clause defeat the presumption against fundamental breach? General Rule for a) and b) (for full marks) The courts try to give effect to the parties' intentions as expressed in their words. AN EC will be construed according to the natural and ordinary meaning. Specific rule for a) Students should FULLY state both ambiguity rule and presumption against a fundamental breach. Specific rule for b) Students should refer to ambiguity rule and FULLY state 4 Corners rule I also decided to accept the Negligence Rule option if students went there in Part B. So it was either about 4 Corners rule or negligence rule (White v John Warwick) Case a) Photo Production v Securicor Case b) Sydney Corp v West Applying rule to facts a) Generally speaking we should pay any attempt at applying Photo Production to the clause and suggesting that the clause was unambiguous and would be valid unless Andy's negligence could have been foreseen which it surely couldn't. b) Here the clause is very similar to West and, as such, was only intended to cover matters contemplated within the "four corners" of the contract. Therefore the clause will not protect EES from Andy's unauthorised action.