James Cook University Business Law & Ethics BU1112 Practice Questions

1.Al operates a small business manufacturing specialist engine filters. In January he placed an advertisement in a car trade magazine stating that he would supply filters at $60 per filter, but would consider a reduction in the price for substantial orders. He received a letter from Bash Cars Ltd requesting his terms of supply for 1,000 filters. Al replied, offering to supply the filters at a cost of $50 each. Bash Cars plc responded to Als letter stating that they accepted his offer but that they would only pay $45 per filter. Al wrote back to Bash Cars Ltd stating that he would supply the filters but only at the original price of $50. When Als letter arrived, the purchasing director of Bash Cars Ltd did not notice the alteration of the price and ordered the 1,000 filters from Al, which he supplied. Analyse the situation from the perspective of contract law and in particular advise Al what price he is entitled to claim from Bash Cars Ltd.

2. Gadgets Galore is the sole agent of the Acme brand of washing machines. On 1 June, a Gadgets Galore salesman visited Home Superstore, a leading home appliances megastore, stating that Gadgets Galore had 20 of the latest Acme washing machine models for sale at $400 each, cash on delivery.

The next day, Home Superstore replied by fax as follows: We accept your offer subject to a 30-day credit period. Please advise us of the delivery date as soon as possible. On 3 June, Home Superstore decided to purchase another brand of washing machine from a competing supplier. They then sent a letter on 5 June to Gadgets Galore stating that they were no longer interested in buying the Acme machines. Gadgets Galore received this letter on 7 June. However, Gadgets Galore had earlier sent out a letter on 6 June advising Home Superstore that the Acme machines would be delivered to them on 11 June. This letter reached Home Superstore on 8 June.

Analyse the scenario from the perspective of contract law and discuss whether there is a binding contract between Gadgets Galore and Home Superstore.

3. Gertrude drives to work each day. She is in the habit of giving Hermione and Ivan a ride to work. At the outset of this arrangement, Hermione told Gertrude that she would pay her $200 per month towards the cost of petrol and vehicle maintenance. Hermione told Gertrude that, as it would be difficult for her to arrange an alternate method of transport, she would need a months notice if Gertrude could not take her. Ivan did not offer Gertrude any money for the journey, but at the end of the first month, told her that he would give her $85 for the inconvenience of calling by his house early in the morning. Jeremiah is Gertrudes younger brother and he promises to keep the car clean and mechanically sound if she will give him a lift to school each day. Ivan fails to pay anything and Jeremiah never does clean or maintain the car Gertrude has to pay $40 a month for cleaning and maintenance. Six months later, Gertrude decides to begin cycling to work each day, believing that the exercise will do her good. She informs her three passengers that she will no longer be driving to work. Advise Gertrude.

4. John visited Simons boatyard, intending to buy a yacht. As he was looking at one of them, Simon came up to him and said: Ah, this yacht is fantastic. It has a top speed of 100 knots. You know it used to be owned by the King of Bain. John did not care very much whether the yacht could go at 100 knots as he did not like to speed. But he was very impressed by the King of Bain part. In actual fact, in the yachts documents a top speed of 80 knots was specified and the previous owner was the King of Bains nephew. Simon knew that neither of the statements was true. John bought the yacht happily and proudly. But a week later he was embarrassed and infuriated when he discovered that the King had never owned the yacht before.

Advise John

5. Alvin pays $3 via his cashcard to park his car in a multi-storey car park operated by Bozzo Pte Ltd. When he drives past the barrier, there is a sign displayed next to the barrier which reads Entry subject to the companys terms and conditions displayed on the premises. After parking his car, Alvin sees a notice situated at a far corner of the car-park. However, much of the notice has been covered with spray paint by vandals. One of the conditions, which is barely legible, reads Bozzo Pte Ltd is not responsible for any kind of bodily injury or damages. Alvin returns to find the side of his car damaged. The damage is caused by an employee of Bozzo Pte Ltd who accidentally crashed into the side of car with a metal-wheeled rubbish bin. Bozzo Pte Ltd refused to accept responsibility. Advise Alvin

6 . James paid for a booth at a three day Healthy Lifestyle exhibition to be held at Suntec City Exhibition Hall. He planned to exhibit the latest exercising machine for which he was the sole distributor. James had an excellent promotional video about the exercising machine and hired a sophisticated video projection set from ARX Systems for the 3 days. The exhibition started very well and James managed to clinch many sales. However at lunch time on the second day, the video projection set broke down. James immediately called up ARX Systems but was told that their serviceman was on medical leave and that there was no standby set available. So, for the rest of the exhibition James made do without the video but his sales fell sharply. Advise James on his claim for damages against ARX Systems.

7.

Bestfresh Foods runs a supermarket. One evening George was hurriedly doing his shopping in the supermarket. In his haste he knocked a bottle of sauce off the shelf, resulting in it spilling onto the floor. As he was in a great hurry he just rushed off to pay for his groceries. 20 minutes later Mary was shopping along the aisle when she slipped on the spilled sauce and fractured her hip bone. Advise Mary on her claim against George and Bestfresh under the tort of negligence.

8.

a) Explain briefly the facts of Donoghue vs Stevenson. b) What are necessary to prove negligence, as established in Donoghue vs Stevenson

c) What are the defences available for a person if sued for negligence? Explain with examples.

9. Jack, a stockbroker and keep fit enthusiast, bought an exercise machine from Sunnys sports goods shop. The sales note contained the following clauses:

11. The seller accepts no responsibility for loss or injury caused by defects in the manufacture or design of the equipment. 12. It is for the buyer to ensure that the equipment is suitable for his personal needs. No complaints will be entertained unless notified to the seller in writing within 6 weeks of the date of purchase.

13.

Jack used the machine regularly for 4 weeks. He then noticed that he was experiencing back pain, which he had never had before, and telephoned Sunny about this. Steve said there was nothing to worry about. Jack continued to use the machine for another month, but then suffered serious back injury when the saddle on the machine collapsed while he was exercising. The defect in the saddle could not have been discovered on examination, but it has now been established that the dimensions of the machine are totally unsuitable for a person of Jacks height and build. Advise Jack under the Sale of Goods Act

10. Roma, an actress, engages Sian as her manager for five years. After 12 months Roma decides that she wants to use Tess as her manager instead. Can Sian prevent Roma dismissing her?

11.Alf, a carpet supplier, advertised that he would carpet an average three-bedroom family home for $5000. Brenda selected one of the available carpet styles and Alf agreed to supply and install it for the advertised price saying: That is five rooms at $1000 per room - $5000 altogether. Alf carpets three rooms and discovers that he cannot get further supplies of Brendas carpet style. He notifies her that he cannot finish the job and submits a bill for $3000. Can Brenda refuse to pay? Would your answer be different if the special offer was to carpet rooms at $1000?

12.Alice ordered a new car from Braggart Motors on 10 January. She specified that it was to be red, with air conditioning, power steering, lambswool seat covers and a Wizzo brand CD player, and it was agreed that the car would be delivered on 24 January. On that day, Alice went to the dealers premises and found that the car was ready. She checked that all her requirements had been filled and, on being satisfied, drove the car away. Does that bring the contract to an end?

13.Colour Co. (Colour), a manufacturer of paint, orders a quantity of cans from Tinny Co. (Tinny) for a new brand of paint that Colour is planning to make and sell. Each can is to have a capacity of 1 litre, and Tinny agrees to deliver them in packs of 100 tins. The cans are delivered on 1 January. Some of the packs contain 120 cans and 10 per cent of the cans have a capacity of 1.1 litres. Colour does not realise that there are these discrepancies until the cans are filled with paint on 10 January. On 17 January, Colour discovers that a chemical reaction between the paint and the material from which the cans have been made has caused the paint to deteriorate. Tinny knew that this reaction might happen as the result of the chemicals used in some paints, but not all paints contain these chemicals. Tinny was unaware that Colours paint contained the chemicals and did not mention the chemical reaction to Colour at the time of the contract.

Advise Colour Co.

14. Romeo, an accountant, uses a car to visit his clients. He decides to replace it and so agrees to sell the car for $30000 to Juliet, who will use it in her business. Before the sale, Romeo suggests to Juliet that she give the car a thorough inspection and offers to put the car on to a ramp so that she can see underneath it, but she refuses. Juliet only takes the car for a drive and notices that when the brakes are applied the car diverts slightly from a straight line. Romeo says that he will fix the brakes if Juliet agrees to pay an additional $1000, but she decides not to bother and pays the original price. She drives the car away. It is four weeks before she arranges for the brakes to be repaired by a garage. As she is driving to the garage, the brakes fail and she crashes into another car owned by Tybalt. This accident causes $5000 damage to Juliets car and she has to pay $10000 to Tybalt for the damage to his car. While Juliets car is being repaired, the garage discovers that there is a serious rust problem in the floor of the car. Discuss the liability (if any) of Romeo under the Sale of Goods Act .

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