Preparation for my exam paper
Section 1 – Short Answer
1. An advertisement in a local newspaper says that a new, all natural health drink can protect people from the Mumps. The advertisement says that, provided customers buy and drink a bottle of the health drink each day, for at least one year the manufacturer will pay $10,000 to anyone who is subsequently diagnosed with the illness. John read the advertisement and started buying and drinking the bottle each day continuously for one year. Two years later, he developed mumps. He was in hospital for two weeks.
2. At the age of 20, John started living with his ill grandfather to take care of him. A year later he persuaded his grandfather to sell his house to him for $40,000 where the market value of the house was about $200,000. With reference to contract law explain whether it is a valid contract. Why/why not? Can other relatives have the contract rescinded? (3 Marks)
3. Explain what is an exclusion clause? What tests determine whether it is an enforceable part of a contract? Explain with reference to the relevant law. (1.5+ 1.5=3 Marks)
4. Rhodes buys a bike from ABC Pty Ltd. He did sign the contract with one of the assistants at the company. He did not know that the bike which is being sold is an old bike (second hand) as he was not able to read the contract due to being illiterate. Is the contract binding on Rhodes? Write your interpretation with reference to Common law only. Support your answer with evidence from relevant cases and legislation. (4 Marks)
5. There are three tests for a contractual term to be differentiated between a condition and a warranty. Explain all tests with reference to contract law. (3 Marks)
6. When does acceptance take place under an electronically created contract for the supply of goods? Explain with reference to the law. (2 Marks)
(Total 20 marks)
Section 2 – Problem Questions
a) Mary has had a fight with her boss, Tom, so she decides to play a trick on him. She phones the local pizza shop and says she is ringing on behalf of Tom and orders 20 Supreme pizzas for a business working dinner to be delivered to Toms house that evening. When the pizzas are delivered to Toms house he does not know what to do. Because he is home by himself, Tom refuses delivery.
a. advise Tom (4 marks)
b. advise the pizza parlour (3 marks)
c. explain whether your answer would be different if Mary had ordered dinner on numerous other occasions for Tom from the pizza shop . (3 marks)
(Total 10 Marks)
b) Ace Petrol Pty Ltd has owned a freehold service station as an independent trader in NSW for 20 years and has decided that it is time to sell up. The managing director of Ace is Jones. As well as selling fuel there is a shop attached to the station that sells local produce and assorted grocery items. In negotiating the sale to Smith, Jones makes the following statement to Smith: The annual takings from the business are around $200,000.
He fails to tell Smith that a bypass road is planned by the local council which will result in a huge decrease in the traffic going past the service station in the future. Jones also tells him that the grocery supplier is reliable and will continue to provide supplies if he buys the station. A few days after making this statement Jones learns that the grocery supplier has decided to cease business but decides to keep this information to himself.
One week later Smith enters into a contract to buy the service station from Ace Petrol Pty Ltd. The contract contains no terms regarding the annual takings or the reliability of the grocery supplier. Smith has not undertaken any searches related to the bypass, which would have been revealed on a roads search. After a few months of ownership Smith learns about the planned bypass and realises there is no way he will make the net profit that Jones had suggested once the bypass proceeds. He also discovers the problem associated with the supply of groceries.
Smith comes to you because he wants to rescind the contract of sale, recover his losses and leave the region as fast as he can. Advise him with reference to the Australian Consumer Law only.
(Total 10 Marks)
Section 3 Case Study
Terrifying Rides Ltd operates an amusement park and has a popular ride called the Topsy-Turvy. Above the counter window where tickets are sold for the Topsy-Turvy is a sign that reads: Refer to ticket for conditions of ride.
The ride starts about 15 meters from the counter, and before the customer gets on the ride the attendant takes the ticket from the customer. Printed on the ticket is a clause which effectively limits liability for injuries caused to customers by the ride. Rex goes to the amusement park for the first time. Although he sees the sign he does not read the clause on the ticket, as he does not have the time between purchasing the ticket and getting on the ride. Rex is injured during the ride when his car stops suddenly.
He seeks your advice:
a) as to whether Terrifying Rides Ltd is protected by the clause printed on the ticket. (4 marks)
b) Would your answer be different if Rex had been to the amusement park on several other occasions? Explain. (3 marks)
c) Explain if your answer would be different had Rex been to the amusement park on many other occasions but his accident was not caused by showing-off; instead it occurred because Sonny Bill, the attendant responsible for controlling the speed of the cars, was too busy kissing his girlfriend whom he had smuggled into the control box. (3 marks)
(Total 10 Marks)
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