QUESTION
Part A
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BUSINESS LAW 100
ASSIGNMENT TWO (30%)
2 x Four step process
Part B
Short answer question
25 marks
5 marks
30 marks
Curtin Business School
School of Business Law and Taxation
Part A – Four step process
The case study which students are required to resolve using the four step process is set out below.
Students are required to apply the relevant legal concepts and principles to analyse and solve the
legal issues arising in the case study by explaining and applying their knowledge of the legal
principles and rules arising in Australian legal system: topic four to five inclusive.
Please note also that the information contained in the course materials (the Source Book, computer
based tutorials and seminar materials) are sufficient when completing your assignment. It is not
necessary to research beyond these materials for the purpose of completing assignments.
NOTE:
The fact scenario used in this assignment is fictitious.
Students are to focus on answering the questions in Part A with reference to the relevant
issues raised by the question as they arise from topics 4 and 5. Students do not need to (and
should not) undertake any additional research. The level of detail and information contained in
the course materials is sufficient to answer the assignment.
Note the four step process requires students to refer to case law or legislation as authority for
the rules of law explained in step two. Where appropriate you will need to refer to any
applicable legislation or case authorities contained in the materials for topics 4 and 5. You may
also want to review the materials on referencing that were provided for the first assignment.
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Marking rubric
The case study is made up of two (2) questions (1) and (2). Each is worth ten (10) marks. A further
five (5) marks are allocated to how well the student has followed the four step process.
STEP ONE
Identify the legal issue
STEP TWO
Explain the rule(s) of law with reference to
relevant authority.
STEP THREE
The rules of law explained must be specifically
applied to the facts so a solution can be found.
STEP FOUR
A logical conclusion should flow from the above
steps
OVERALL USE OF THE FOUR STEP
PROCESS AND STRUCTURE OF ANSWER
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No marks specifically (as this is usually stated in
the question)
6 marks available
4 marks available
No marks specifically available
5 marks available
In relation to the marks allocated for the overall use of the four step process and structure of the
answer, regard will be had to not just whether the answer is “set out” in the four steps. Consideration
will be given to the clarity of the explanation of the law with regard to applicable authority where
relevant. Students will be rewarded here for a detailed application of the facts to the law explained.
For example, a very good use of the four step process would be the application of the facts
specifically to every principle of law explained.
Consideration will also be given to the logical presentation, coherency and consistency of the
explanation of the law, application of facts and subsequent conclusion. Consequently this will include
a consideration of matters such as presentation, formatting, expression, sentence structure, grammar
and the like.
As a general guide, a student who has used the four step process correctly for each question(has
identified the relevant principle(s) of law, explained the rule(s), applied the facts and come to a logical
conclusion), but the explanation of the law or application of the facts is not as detailed as it could be,
or the conclusion is not a logical progression of what has gone before, would be awarded a pass
mark for this part of the assignment (2.5 – 3 marks).
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Part B – Short answer question
One short answer question, worth 5 marks. This question will not necessarily relate to the case study.
Part B will examine topic 3 and is set out below.
Referencing and appropriate acknowledgement of sources
Most often errors in referencing are incidental or clearly inadvertent. In the event of a level one
incident of plagiarism occurring, a student may be contacted by the University and required to
undertake further training or remedial work in relation to referencing. Where the lack of correct
referencing appears to contravene the University policy on plagiarism, the student’s paper will be
referred to the Unit Coordinator and dealt with according to University policy. This may amount to
academic misconduct.
An important aspect of the University Plagiarism Policy is recognition that not all plagiarism is
intentional or involves cheating. If students are not learning as expected, they will be made aware of
their difficulties and helped to improve. Those who deliberately choose to cheat by way of plagiarism,
however, will be identified and dealt with accordingly.
Students are strongly advised to understand their responsibilities in relation to correct
referencing and should consult the Unit Outline, the presentation on referencing in BL100 (including
the vodcast) and Blackboard for more information.
Format of assignments
Assignments cannot be handwritten and must comply with the foll owing format requirements. Those
assignments, which do not conform to these requirements without prior agreement of the unit
coordinator, will either be returned to the student unmarked or will have marks deducted:
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Document type: Word or pdf (pdf preferred)
Font: Arial or similar font – no smaller than 12 point in size
Pages: Numbered in top or bottom margin
Spacing: Appropriate line spacing and paragraph spacing
Margins: At least 2.5 cm top, left, right & bottom
Presentation
Cover sheet (located on Blackboard under the ‘Assessment’ folder) must be attached to the
assignment
Introduction to answers, content of body and concluding comments
Appropriate sentence structure
Correct grammar, spelling and punctuation
Paragraph size and breaks appropriate
Consistent format
Appropriate use of headings and sub-headings
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Within acceptable word limit
Appropriate referencing and acknowledgment of sources
Word Limit
The total assignment (meaning Part A and Part B) should be a minimum of 1,000 words and not
exceed 2,500 words.
Please provide a word count on your cover sheet. A penalty of 10% will be imposed on assignments
that exceed the word limit. Markers have discretion as to whether to apply the penalty for an
additional 100 words, provided the discussion remains relevant. The assignment will not be assessed
if it exceeds 3,500 words and will result in a ZERO mark.
Please note that this is inconsistent with what was specified in the Unit Outline. The word limit has
been increased to assist students. With the increase in word limit, students can focus their attention
on addressing the question, instead of concerning themselves with ensuring they write within the
specified word limit.
The word count does not include the following:
cover sheet
in-text referencing
referencing list
headings
Submission
Please read the submission process carefully. Students should understand that compliance with
instructions in relation to an assessment task is critical. Students MUST be aware that noncompliance
with
submission
instructions
can
result
in
a
mark
of
ZERO.
All
assignments
must
be
submitted
by
4PM
(Western
Standard
Time
(WST))
on
the
Thursday
of
the
week the assignment is due, i.e. Assignment two is due Thursday, 26 April 2012 by 4PM (WST).
Students are required to submit their assignment to Blackboard through a link provided in the
‘Assessment’ folder titled ‘Assignment two’. The assignment will automatically be submitted to the
plagiarism detection programme, Turnitin.
Students are given the option to submit a draft assignment into Turnitin (via Blackboard) to retrieve
an originality report of their assignment. To submit a draft assignment, students must upload their
draft assignment to Blackboard through a link provided in the ‘Assessment’ folder titled ‘Assignment
two: Revision 1’.
For more information about the submission process or Turnitin, please refer to the detailed
submission instructions on Blackboard within the ‘Assessment’ folder.
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CRICOS Provider Code 00301J (WA), 02637B (NSW)
Feedback on assignments
All of the teaching staff are available to assist you with your learning in this unit. You should contact
your allocated teaching assistant in the first instance if you need help understanding the course
material or issues arising in the assignment. There is also a staffed discussion board available for
students. It is often helpful to share ideas and problems with other students using this forum. You can
also contact the Unit Coordinator if you are still unable to get the answer you are seeking. Please
allow 48 hours (working days) for a response to your query.
Unfortunately it is just not possible for teaching assistants to review draft assignments for comment
before submission (in effect double marking). If you require help with your assignment, either narrow
the question or section of work to specific questions. If you have questions relating to your writing
style (grammar etc) we suggest that you make use of the resources available at the CBS
Communications Skills Centre. Their contact details are available under “The Learning Hub” tab on
Blackboard.
Teaching assistants will mark and return assignments within ten days of their submission. Students
will be provided with an answer guide and individual comments on what a student had done well and
suggestions for improvement in the future. This will include specific feedback on the use of the four
step process.
Assessment submitted early will not be marked before the due date.
Your assessment will be returned to you via grade centre. In general your marker will provide
feedback to you by way of an audio mp3 file, which is approximately 1MB in size.
Please refer to the Unit Outline for the full procedure in relation to penalties for late submission and
requests for an extension.
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PART A – Four step process (25 marks)
Peter has just completed his final year of high school and did very well in his university entrance
examinations. He has been offered a place in a Bachelor of Commerce degree. He needs to find a
part-time job to help pay for his studies and secures a job as a courier in the city. Peter requires a
bicycle for his new job. Owning a bicycle will also mean that he has transportation to university when
his classes begin. Peter has $5,000 in savings and intends to use this to purchase a state of the art
bicycle, and his textbooks.
Peter searches the internet for online bicycle stores as he has heard you can get good deals for
second hand bikes online. Peter finds a very good selection on tourbikes.com.au (“tourbikes”). The
bicycle that he likes is described as follows:
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“This is one of the most sought after bicycles we currently have in stock. It is the same
model that was used by Cadel Evans when he won the Tour de France, a Cadel Evans
‘GF’. This model is in short supply on the second hand market, and presents a rare
opportunity for purchasers. This bicycle has been completely restored and refurbished.
There are new tyres and a new chain. The seat is extremely comfortable and comes in
a dashing green colour. This bike is a joy to ride. $6,000. Payment is due upon
delivery.”
Peter really wants to purchase this bike but does not have sufficient funds for the bike and his text
books. Peter wants to know a little more about the bicycle, so he telephones the owner and sole
proprietor of tourbikes, Sally. Peter asks what it means in the advertisement when it says the bike
has been “restored and refurbished”. Sally responds:
“That means we have ensured the frame of the bicycle is sound and it has been
repainted. It also includes the refurbishment of the gears and replacement of any
damaged spokes.”
Peter thanks Sally for the additional information and immediately emails tourbikes the following:
“I would like to purchase the Cadell Evans ‘GF’ bike that is advertised for sale on your
website. I believe that a second hand model is only worth $4,000 at best. Please advise
if you are willing to sell me the bike (as described) for this amount by email by close of
business tomorrow. I would also need you to arrange immediate delivery.”
Meanwhile Burt, a middle age cycling enthusiast, has also seen the bike advertised for sale on the
tourbikes website. He is a Cadel Evans fan and also emails the tourbikes website at the exact same
time Peter does:
“Hi. I want to buy the Cadel Evans ‘GF’ bike you have listed for sale. I will pay you
$5,000.”
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Sally reads the emails as soon as they enter her inbox. She only replies to Burt:
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“Thank you for your interest in our product, the Cadel Evans restored bicycle. I cannot
sell such an amazing bike for so little. I will however accept $5,500.”
Burt does not respond until 4pm the following day:
“Thank you for your response but I do not think the bike is worth that much. I am no
longer interested.”
Sally really needs to sell this bike. She has outstanding accounts with her creditors and needs to
make a payment of $4,000 within the next few days otherwise she runs the risk of the bank
foreclosing on her mortgage. Sally checks the time and it is 4.30pm. She notes she still has 30
minutes before 5pm and the close of business (COB). She emails Peter:
“Thank you for your interest in our product, the Cadel Evans restored bicycle. I will sell
the bike to you for $4,000. I have organised immediate delivery. Payment of the $4,000
is due upon delivery as specified.”
The email enters Peter’s inbox at 4.45 pm (15 minutes before COB). Meanwhile Peter is on
orientation camp for university and does not have access to his emails for three days. When Peter
returns home he checks his emails and sees the email from Sally. Peter emails Sally saying he is
sorry but he is no longer interested in buying the bike. He no longer wants to buy such a good bike
for his job as a courier, as he has heard from friends it will just get wrecked. Just after he sends the
email to Sally there is a knock on Peter’s door. It is the Cadel Evans ‘GF’ bicycle being delivered.
The tourbikes employee is demanding $4,000. He tells the tourbikes employee he won’t accept the
bike and he should take it back to Sally.
Sally is furious that these customers keep changing their minds. Sally really needs to sell this bike
and asks for advice.
Question (1) 10 Marks
Assume that the elements of intention and consideration required for the formation of a
contract exist. Using the four-step process, discuss whether the element of agreement
required for the formation of a contract can be established. Can Sally claim that her business
has an enforceable contract with either Peter or Burt?
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Peter has another change of heart and decides that he does want to purchase the bike after all. He
signs the purchase agreement and pays $4,000 for the bicycle. The document states the bicycle is a
Cadel Evans model “GF”, restored and refurbished with new tyres and a new chain.
At the bottom of the document, but before the signing clause, there is also the following additional
clause:
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The Seller is not liable for any defect, malfunction or fault in the bicycle and the Buyer
accepts all responsibility. Any guarantee given in relation to the goods is limited to the
first thirty days after purchase.
Peter is very proud of his new bike, but the bike does not work out quite as he had hoped.
Once he took the bike out of its wrapping it was clear that it was not a “dashing green colour” but
more of a murky greenish brown. The delivered bicycle was indeed a Cadel Evans ‘GF’, but whilst
the bike frame and spokes had been restored and refurbished, it was clear that the gears had not
been. After only six weeks the bike became unusable because the gears would no longer function.
The seat was tremendously uncomfortable, and the tyres were in fact re-treads, although the chain
was new. The bike was not a joy to ride! This is disastrous for Peter as not only can he not get home
from his late classes easily as the buses stop running, he cannot perform his job as a courier. He
finds out from his friends at university that there are lots of these model bikes on the second hand
market. As Peter has used his savings on buying the bike and his textbooks for first semester, he has
no way to purchase a replacement bike.
Peter calls Sally at tourbikes. She says that as 30 days has passed since purchase and delivery they
are unable to help Peter. Peter is very cross and thought he had agreed to various particulars with
tourbikes, but they obviously have a different view. Peter wants to know what the terms of the
contract are so that he can sue the seller for breach of the contract, although he is not sure he can do
this because of the express term disclaiming liability for defects.
Question (2) 10 marks
Using the four-step process, discuss what terms are expressly agreed in relation to the sale of
the bicycle. In your answer be sure to discuss whether this includes the clause at the bottom
of the document. You will also need to determine the status of any relevant terms, including
whether they are a warranty or a condition. Students are reminded that they have been instructed
to confine their answers for this assignment to topics four and five and NOT to consider the law in
relation to performance, breach of contract or remedies.
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PART B – Short answer question (5 marks)
Can judges look outside an Act of Parliament for assistance in interpreting legislation? If so,
in what circumstances? What specific material(s) can they refer to? Explain.
The above is an example of a typical of short answer question you could be given in the final
examination (albeit on a different topic). In the past we have found that students have answered the
short answer section of the final examination very poorly, even though it is worth the same amount of
marks as the four step process question. This is an opportunity for you to attempt this type of
question to receive feedback on what you did well and how you might improve next time. In this
question the marker will be looking for more than just “yes” or “no” answers. For example, to answer
this question well you will need to explain the difference between intrinsic evidence and extrinsic
evidence used by judges when applying the purposive approach and give some examples of both.
You will need to consider what else will need to be included.
SOLUTION
Question 1
Assume that the elements of intention and consideration required for the formation of a contract exist. Using the four-step process, discuss whether the element of agreement required for the formation of a contract can be established. Can Sally claim that her business has an enforceable contract with either Peter or Burt?
Principle or issue of law
The Principle or issue of law is that for a valid contact to exist there must be an agreement between the parties.
Rule(s) of law relevant to the principle/area/issue of law with reference to authority
A contract is legally enforceable if it has complied with three basic requirements and those requirements are agreement, consideration and intention.
An agreement is quintessential for a contract and it is said that every contract has an agreement but it is not necessary that every agreement has the grains to become a contract. A contract is a legally enforceable agreement. Agreement is basically meeting of minds and there has to be a promise from both the sides. For Example, when C promises to hand over his bicycle to D and in return D agree to pay a sum of $1,000, there is an agreement between C and D.
Promise is a word given by a person to do or not to do something if the opposite party also agrees on to perform or not to perform certain acts. When a proposal of one party is accepted by the other party, it is called a promise. An agreement has to fulfil certain basic essential conditions to become a contract and those conditions are outlined below:
A contract is a bundle of those promises only which are legally binding in nature and can be enforced in the court of law. There are certain basic ingredients of an agreement and we will study whether those factors were satisfied in the current case in our hands or not:
(i) Offer made by a party to another:
Offer is a word given by a person to do or abstain to do something if the opposite party also agrees on to perform or not to perform certain acts it is said to make an offer. An offer could be withdrawn before it could be accepted and it is not essential for the other party to agree to the offer and accept it. Offer can be withdrawn at any time before its acceptance. In Harris v. Nickerson (1873) L.R. 8Q.B.386, there was an advertisement by the defendant for a sale to be conducted through auction. The plaintiff reached to the address of the auction site and then realized that the auction has been cancelled. The plaintiff filed a case but it was held by the court that there was no contract between the defendant and the plaintiff and hence he is not entitled to the expenses of travel.
Quotation of the price is not an offer as was held in the case of Harvey v Facey (1893)A.C.552. In this case the plaintiff was interested in buying the Bumper Hall Pen which was name of a plot of land and sent to the defendant in a telegram asking or the lowest price of the plot and also if they are interested in selling it off. The defendant quoted the price of Bumper Hall Pen as £900 and not replied to the second part of the query as to the willingness to sell it. The defendant after this telegram write another telegram to the plaintiff expressing his desire to buy the land at £900 The defendant thought the telegram quoting lowest price of Bumper Hall as an offer and contended in the court that the contract was complete. The plaintiff was of the view that just quoting of price cannot be considered and offer. Since the offer was not accepted there was no contract.
An offer when accepted can result into a contract but for that it is important that the offer be communicated so that it can come to the knowledge of the offeree. When a person acts in accordance with the terms of the offer after he has acquired knowledge of those terms it can be considered as an acceptance.
When two parties make the same type of an offer at the same time containing the same bargaining points and these offers cross each other in post then these are called cross offers. Though terms are same but it will still not be considered a contract as parties are not aware of the offer of the other party. In the matter of Tinn v Hoffmann (1873) 29L.T.271 A showed his willingness to sell 800 tons of iron at a price of 69 sh. per ton through a letter to B. Same day B also wrote a letter to A expressing his desire to buy 800 tons of iron at a price of 69 sh. per ton. The two letters were cross offers still B challenged A in court contending that there was a valid contract and supply of iron should be made. The court held that the two letters were cross offers and neither of the parties have actually accepted the offer hence there is no contract to be enforced.
(ii) Acceptance of the offer by the other party
It is only after the acceptance of the offer by the party to whom the offer is made that a contract can arise. A person making offer is not bound till the time his offer is accepted.
For a valid contract it is important that acceptance is communicated to the offeror and this point may be explained with the help of Felthouse v Bindley (1863)7 L.T. 835. Felthouse wanted to buy horse of his nephew for £30-15 sh and wrote a letter to him and it was also stated in the letter that if Felthouse do not get to hear about the horse he will presume it to be his. There was no reply to this letter by the nephew though there was a communication between the nephew and his auctioneer that he wants to reserve the horse for his uncle and it need not be sold by auction. The auctioneer sold the horse by mistake. Felthouse filed a case against the auctioneer as he thought that he was the owner of the horse. It was held by the court that because nephew had not expressed his acceptance of the offer made by his uncle to Felthouse, it is not a valid contract for lack of acceptance of offer.
Conduct of the party can also be considered as his acceptance of the offer. In that matter of Carlill v Carbolic Smoke Ball Co. (1893) 1 Q.B. 256 defendants manufactured a product called Carbolic Smoke Ball and advertised that £100 would be given as an award to a person who contracted influenza even after using the product as per their direction i.e. having a carbolic smoke ball three times a day for two weeks. The plaintiff relied on the advertisement and used the smoke ball as per the direction of the company but still contracted influenza. She filed to case to claim £100 from the manufacturer. The manufacturer contended that as there was no acceptance of the offer by the plaintiff she is not entitled to claim. The court held that in this case acceptance was by way of conduct and hence a valid contract.
Acceptance can lapse if there is any counter offer or it is not absolute or unqualified. Communication of acceptance is complete in the following situations:
(a) Offeror is bound by the offer when acceptance is posted or conveyed to him
(b) Acceptor is bound when his acceptance is reached or conveyed to the offeror.
Application of the law
A contract is legally enforceable if it has complied with three basic requirements and those requirements are agreement, consideration and intention.
It is important that the acceptance of offer should be absolute and unqualified. Sally cannot claim that the communication between her and Burt leads to valid contract as her acceptance was not absolute and the terms of offer to buy by Burt were not fully accepted by Sally. It would have been an enforceable contract if Burt would have replied positively to the Sally letter of changed price of $5,500.
However the communication between Sally and Peter gives birth to a proper enforceable agreement as Sally accepted the offer made by Peter to buy Cadel Evan bicycle for $4,000 without any condition and before the lapse of time. The communication of acceptance was made by Sally but per law offeror i.e. Peter in this case is bound the moment the communication is posted to him. Hence it a valid contact and Peter is bound by it.
Conclusions
The agreement between sally and Peter is a valid agreement as it fulfils all the conditions of an agreement. Offer was made by Peter to buy Cadel Evan at $4,000 and Sally accepted it absolutely and unconditionally hence a valid contract.
Question 2
Using the four-step process, discuss what terms are expressly agreed in relation to the sale of the bicycle. In your answer be sure to discuss whether this includes the clause at the bottom of the document. You will also need to determine the status of any relevant terms, including whether they are a warranty or a condition. Students are reminded that they have been instructed to confine their answers for this assignment to topics four and five and NOT to consider the law in relation to performance, breach of contract or remedies.
Principle or issue of law
The issue of law is that a product is performed as per expectation even if there is no written warranty to it.
Rule(s) of law relevant to the principle/area/issue of law with reference to authority
Section 54(2) of the Australian Consumer Act states that goods purchased need to be of an acceptable quality. Products need to be durable, acceptable in appearance and finish, free from defects and durable.
Warranty is an assurance by the seller to the buyer that the product will function properly. It is not required that a warranty has to be written because even if there is no written warranty the seller cannot shirk his responsibility of a product which is not functioning properly as per the expectation of the buyer.
Warranties are of two types implied and express warranties. Implied warranties are unspoken and unwritten promises made by a seller to the buyer that the product being sold functions properly. The Express Warranties is a written or oral statement made voluntarily by the seller that a product will perform as per expectations. Even if a seller offers an express warranty, then also implied warranty exists.
The length of a warranty may be specified, but for implied warranty it is not necessary that this warranty be claimed within that period only. A product is always expected to perform well unless the product has expired and not the warranty.
Application of the law
Even if the written warranty has expired the seller is still liable because the type of advertisement it published was flashy like bait for consumers while the product turned out to be a disaster. It did not act as it was mentioned in the advertisement. The advertisement had some untrue statements like the color of the seat, comfort that it provides, repairs done etc but the cycle was not found when delivered in the same condition as said in the advertisement. Implied warranty exists on the part of Sally to provide with the cycle as it was presented in the advertisement. There were false promises made by the seller and buyer spent all his saving on the product which was not as to what he thought it to be.
Conclusions
Warranty exists even after 30 days have lapsed and Peter can file a case against Sally as the product that was delivered to him was not the condition as he thought it to be after seeing the advertisement which acted as bait.
Question 3
Can judges look outside an Act of Parliament for assistance in interpreting legislation? If so, in what circumstances? What specific material(s) can they refer to? Explain
Answer
The answer to this question is a big yes. Judges can look outside an Act of Parliament for assistance in interpreting legislation.
Judges deal with intrinsic and extrinsic evidences. Intrinsic evidences are those which can be taken out from the document itself instead of a testimony of a witness or any other terms of any other writing that have not been admitted before the court. Actually the facts which can be found from the documents though witnesses have not said anything about it. Extrinsic evidences are those which are not enshrined in any written agreement like a will, trust or contract. Extrinsic evidence is derived from outside sources and is not furnished by the document.
Other than intrinsic and extrinsic evidence judges also use various other tools and methods of interpretation and those are tradition of the country, legislative history and purpose of the Act.
List of Cases Referred
- 1. Harris v. Nickerson (1873) L.R. 8Q.B.386
- 2. Harvey v Facey (1893)A.C.552
- 3. Tinn v Hoffmann (1873) 29L.T.271
- 4. Felthouse v Bindley (1863)7 L.T. 835
- 5. Carlill v Carbolic Smoke Ball Co. (1893) 1 Q.B. 256
List of Other Sources
- Lambiris, M. 2011. First Principles of Business Law. Sydney: CCH Australia
- Austrlian Consumer law
- http://www.austlii.edu.au/au/cases/cth/HCA/2011/16.html
http://www.australiancontractlaw.com/law.html
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