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- QUESTION
NB – problems are NOT of equal value
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.
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.
In each problem you will be assessed on your ability to:
- identify the legal issue/s;
- state the relevant rule/s
- identify relevant case/s as appropriate; and
- apply the above rule/s and case/s in answering the problem
Problem 1 (5 marks)
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.
- Will Bill have to pay this amount to Anne?
- 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.
Problem 2 (10 marks)
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?
Problem 3 (5 marks)
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 normal late fee in other video shops is normally $5 per day. Advise George.
Problem 4 (10 marks)
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.
- 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)
- 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.
Assignment 2 Ethical analysis of news issue
Due: week 8
Length: 2,000 words max.
Weighting: 30%
You are required to select an ethical issue which has been reported in the news media in the past 12 months. Collect one recent (2015 or 2016) news article which identifies the issue, and perform further research to collect relevant background information and facts, to enable you to answer each question listed below.
This ethical issue must be different from the issue which you analysed in Assignment 1.
Your assignment must be submitted electronically via the MySCU SOC10236 unit site using the Turnitin assignment submission function. For more information on Turnitin, see http://study.scu.edu.au/turnitin/ .
You must provide a full reference of all sources of information you have used to inform your research. Provide separate answers to each of parts ‘a to e’ of this assessment under clearly headed sections:
- Clearly define the ethical issue and provide a brief explanation as to why it is important. (3 marks)
- Identify facts and key assumptions which are relevant to your analysis of the ethical issue. (6 marks)
- Analyse the ethical issue using act utilitarianism, identifying all relevant consequences. Compare negative versus positive consequences and assess whether net utility will rise or fall as a result of the ethical act being examined. (8 marks)
- Apply Kant’s categorical imperative by defining the rule that authorises the act central to the ethical issue you have chosen. Discuss whether this rule can be applied universally. (8 marks)
- Provide a conclusion comparing results in parts c & d above identifying whether your ethical conclusion equates with your conscience on this issue. (5 marks)
You do not need to provide a copy of the news article but you must provide full references of all articles and other sources you have used to inform your ethical analysis.
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| Subject | Law and governance | Pages | 9 | Style | APA |
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Answer
Legal Problems
Problem 1
A debtor borrowing money has the right to be told the truth by the creditor. In case of a written agreement, the debtor should be given a copy of the key terms before taking the loan or a few days after taking the loan. In case one party has not received all the information concerning the agreement, one has a right to opt out. Oral loan agreements are difficult to enforce but are still enforceable. However, they must meet certain conditions for this to be possible.
If a debtor experiences unforeseen hardship, for instance loss of job, the law allows one to request for change of the credit contract. This is evident in Patel v Ali [1984] However, the debtor must be up to date in his payments when requesting changes in the credit contract (Gooley, Radan, & Vickovich, 2013). A creditor who has suffered an unforeseen hardship can request the payments to be spread over a longer period of time, or for the payment to be postponed for a period of time. Sometimes it is a combination of the two. However, the result in most cases is that the debtor ends up paying more. In requesting for changes based on hardship, one must prove that the hardship was unforeseen, that due to the hardship he cannot meet his contract obligations and that he believes that he can meet the obligations if the terms are changed (McDougall, 2006). When a borrower applies for hardship, the lender has to treat him reasonably and in an ethical way, hence cannot raise the interest rate. The borrower on the other hand must ask for changes that are fair to both him and the lender. In case the lender does not agree to the hardship terms requested by the buyer he should explain his position in writing and advise the borrower to seek the help of a tribunal.
In the case of problem 1, Bill will not have to pay the total amount to Anne. Despite the fact that he actually faced hardship, and that the terms he requested for are unreasonable, Anne agreed to the terms and promised that she would not sue. She chose to agree to a bad hardship application instead refusing and guiding the borrower on what further steps to take as provided for by the law. By so doing she lost her right to a fairer deal. Bill’s request was not fair, but neither was Anne’s.
Problem 2
A contract is more than a mere agreement between two people. A contract takes place when an offer placed by one party is accepted by the other party. However, mere willingness alone cannot be taken to a contract. By accepting the offer, the parties agreed to be bound by terms of that offer. This is made clear in Vantage Systems Pty Ltd v Priolo Corporation Pty Ltd [2015]. Hence, the buyer accepts to buy exactly what has been offered in exchange for the exact price quoted (Stewart, 2012). The party being given an offer is allowed to suggest a counter offer. On the other hand, the person giving the offer also has a right to withdraw the offer before it is accepted. However, the one giving the offer must communicate to the other party that the offer has been withdrawn.
Acceptance of an offer occurs when the party of an offer writes to accept the offer or acts in a manner to show that he accepted. However failure to accept an offer can be taken as acceptance. Again, the offer inviting people to buy cannot be misleading or deceptive. For a contract to have taken place the two people in agreement must be considered to have had the intentions to enter into a legally binding agreement; not just any agreement (Gooley, Radan, & Vickovich, 2013). This is true even if the intention was not stated explicitly. Casual agreements between siblings are rarely considered to be legally binding agreements. For a party to be considered as having accepted an offer, the other party must have paid some kind of price referred to as consideration. However, the consideration must be legal. All people are free to enter into a contract except someone who is bankrupt, minors, mentally impaired or prisoners. A contract is not valid those who entered into it gave genuine consent.
A contract can be rendered non-binding for several reasons. For instance if there is a mistake that affects the basis of an agreement, the contract can then be rendered non-binding. If one enters into a contract only to realize that it referred to something entirely different, then contract can be considered non-binding. However an individual who signs a contract knowing it is a contract cannot claim it was a mistake. A contract can also be rendered non-binding if a party to the contract knowingly makes a false statement. If the two came to agree on a contract as a result of one of the parties making a false statement, then the contract can be declared unenforceable. In some instances, the wronged party may be entitled to some damages but not end of contract.
In the case of Eric and Michael there was fraudulent misrepresentation. Eric rightly expected Michael to know that he was talking in terms of Australian dollars and not Hong Kong Dollars. This is because they were having the transaction in Australia and not Hong Kong. Michael too knew this but decided to take advantage of Eric. Michael’s action was illegal. One cannot pay in a form that is not recognized as legal tender unless the other party is aware of it and agrees. Hong Kong Dollars is not legal tender in Australia hence Eric has a right not to be paid in such currency without his prior consent. Michael paying Eric in Hong Kong dollars yet the deal was made in Australia amounts to changing terms of contract. Hence Michael should pay Eric the remaining amount.
Problem 3
For a contract to be valid there has to be consent from the parties involved. This comes out clearly in Barton v Armstrong [1973]. The parties involved must do it out of free will and good understanding of what they are getting into. The consent given by each party to the contract has to be genuine. If the contract lacks elements of legal consent then it may not be regarded as binding to the parties (Sweeney, O’Reilly & Coleman, 2013.)
One of the factors that affect consent is mistake. If the contract includes a mistake that affects the basis of the contract, then the contract can be termed as being invalid. However very few mistakes are serious enough to cause the contract to be regarded as being non-binding. However, a person who signs a contract knowing it is a contract but fails to read the terms of the contract cannot request not to be bound by the contract on the basis that he made a mistake. If a party to a contract was careless and failed to take the necessary precautions, then they cannot request not to be bound by the contract for their own carelessness.
A contract may be regarded as not being binding if it contains false statements. However the consequences of the false statement on the contract will depend on whether the false statement was serious or minor (Valente, 2010). If the contract was signed under duress then it cannot be valid. The contract should not be extremely unfair to one party to the contract especially if, the contract was not transparent enough to the disadvantaged party.
In problem 3, George was careless. He did not take enough time to read the terms and conditions when renting the movies. Hence, he is fully bound to pay the sum as per the prior agreement. He cannot be excused from the agreement just because he was careless.
Problem 4
Every party to a contract agrees to abide by terms laid down in that contract. Hence the parties to a contract are bound by the terms of that contract unless there are factors in that contract that may make the court decide to term the contract as being non-binding (Sweeney, O’Reilly, & Coleman, 2013). For instance, all terms of contract must be fair to both parties. This is evident in Office of Fair Trading v Abbey National PLC [2009]. However, a seemingly legal contract may be declared non-binding if the court rules that the terms of the contract are unfair to one party. This is determined by looking at how transparent the contract was as well as how the contract as whole operates. However, there are those terms of contract that are considered to be automatically fair, for instance the price of a good. A term of contract is considered unfair if the said term leads to an imbalance in the rights and obligations of the party as spelt out under the contract (Capper, D. 2009). It may also be considered unfair if it unreasonably affects the interests of the other party. A term of contract cannot be considered fair and enforceable if it obviously puts the other party to a detriment.
In problem 4, it is clear that the actions of Andy the security guard could have been foreseen and avoided if he and his employer exercised due diligence. Smoking in a car yard is a foreseeable mistake that can be avoided. Hence, Eagle Eye security will have to pay Grant for the losses as per the agreement. Even if the clause as stated in part (b) of problem 4 existed, Eagle eye security would still have to compensate Grant for the losses emanating from the fire. The clause states that under no circumstances at all would the security firm be liable for any losses. This is clearly an unfair term of contract as it places Grant at an obvious disadvantage. It makes the security firm unaccountable for the same obligations they have signed up for in the contract; providing security. The clause obviously affects Grant’s right to demand provision of security from Eagle Eye Security, yet that is what they have been contracted for. Hence the clause cannot be binding.
References
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Capper, D. 2009, Common mistake in contract law, Singapore journal of legal studies, 1, 457–473.
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