RMIT: Commercial Law

RMIT
COMMERCIAL LAW

LAW2442

Weekly Tutorial Problems

Semester 1, 2014
Week 1: No tutorials, except for
Monday tutorial groups

There are no Commercial Law tutorials for the Tuesday, Wednesday and Thursday tutorial groups in week 1.
However, for the Monday tutorial groups, Commercial Law tutorials start in week 1. This is to make up for the loss of the Commercial Law tutorials on Monday March 10 (in week 2) which is the Labour Day public holiday. Students in the Monday tutorials should prepare the week 2 tutorial questions (below) for discussion in their week 1 tutorial.

Week 2: Introducing the Law

The following questions relate to the textbook Business Law chapter 1:

1. How would you define the law?

2. In what ways does the law impact upon your personal life?

3. In what ways does the law impact upon business activities?

4. What is the difference between public law and private law?

5. Which category or categories of law would be the most relevant in each of the following situations?
a. The Federal Parliament has passed legislation establishing new industrial relations regime. The Queensland government claims that the Federal Parliament does not have authority to pass such a law.
b. A journalist has written a news story that contains defamatory allegations about Ash that are not true.
c. The Department of Transport has refused to grant Johnny’s mother a driver’s licence. Johnny’s mother believes that the decision maker was biased.
d. Ash has been charged with shoplifting.
e. One of Johnny’s competitors is using a logo that looks substantially similar to Johnny’s logo.
f. In breach of a written agreement, one of Johnny’s suppliers has failed to deliver important supplies to his restaurant on the agreed date. 6. What are the three levels of government in Australia?

7. What is the judiciary and what is its role?

8. Why is the law often changing?

9. Do the Quiz on pages 46-48 of the textbook Business Law.

Week 3: (a) Understanding the Australian
Legal System
(b) Exercising Legal Skills

NB: The 30 minute online multiple-choice test worth 20% is conducted on Blackboard in week 3 of semester. The test is to be done in your own time during week 3.

The following questions relate to the textbook Business Law chapters 2 and 3:

1. Distinguish between:

a) Common law courts and courts of equity
b) Common law and statutory law
c) Common law and civil law systems of law
d) Criminal law and civil law
e) Ratio decidendi and obiter dicta.

2. Study the following case extract:
AUSTRALIAN SAFEWAY STORES PTY LTD v ZALUZNA

HIGH COURT OF AUSTRALIA
MASON, WILSON, BRENNAN, DEANE and DAWSON JJ
36 November 1986, 10 March 1987 – Canberra

Negligence – Duty of care – Duty of occupier to invitee – Occupier’s liability – Personal injuries – Plaintiff slipped on wet floor – Whether special duty of care owed to invitee – Whether general duty of care.

The respondent was injured when she slipped in the appellant’s supermarket on a floor which had become wet as a result of persons entering from the rain outside. The trial judge applied the statement of the duty of care owed by an occupier to an invitee formulated in Indermaur v Dames (1866) LR 1 CP 274 and found that, it being a rainy day, the moisture on the floor did not constitute an “unusual danger” within that formulation. Accordingly, he dismissed the respondent’s action. The respondent appealed on the ground, inter alia, that the trial judge should have considered whether the appellant owed a general duty of care to the respondent in addition to the special duty of care owed to an invitee. The Full Court of the Supreme Court of Victoria allowed the appeal on this ground and an appeal from that decision was taken to the High Court.

Held, per Mason, Wilson, Deane and Dawson JJ, dismissing the appeal:

The duty which an occupier of land owed to an invitee was properly to be seen as the ordinary common law duty to take reasonable care. Hackshaw v Shaw (1984) 155 CLR 614; 56 ALR 417; Papantonakis v Australian Telecommunications Commission (1985) 156 CLR 7; 57 ALR 1, followed.
Indermaur v Dames (1866) LR 1 CP 274, explained.
London Graving Dock Co Ltd v Horton [1951] AC 737, disapproved.

What was reasonable would vary with the circumstances of the plaintiff’s entry upon the premises. Observations on the nature of the so-called special duties resting on an occupier of land with respect to persons entering as licensees or trespassers and in other circumstances.

San Sebastian pty Ltd v Minister Administering the Environmental Planning and Assessment Act 1979 (2986) 68 ALR 161; Cook v Cook (1986) 61 ALJR 25; 68 ALR 353, referred to.

Appeal This was an appeal from the order of the Full Court of the Supreme Court of Victoria allowing an appeal from the decision of a single judge of the court and ordering a new trial. The trial judge had dismissed the plaintiff’s action. J E Barnard QC and J G Meagher for the appellant. D J Ashley QC and P F O’Dwyer for the respondent.

Now answer the following questions:

(a) Which court is this decision reported from?
(b) Is this a matter heard at first instance?
(c) Who is appellant? Who is the respondent?
(d) Where in the report are the catchwords?
(e) Where in the report is the headnote?
(f) What was the decision of the court?
(g) Which judge(s) comprised the court?
(h) Is this a civil or a criminal matter?

3. What is the doctrine of precedent? What are law reports?

4. The Australian Constitution gives the Australian government full power to make any laws it wants. Discuss this statement.

5. Which government (State or Federal) can pass legislation in respect of the following matters:

(a) Education
(b) Trade and commerce
(c) The Royal Australian Air Force
(d) Taxation
(e) Duties of customs and excise
(f) Environmental issues

6. Additional questions:
(a) Discuss revision questions 2.1 - 2.12 on page 61 of the textbook Business Law.
(b) Do the Quiz on pages 108-109 of the textbook Business Law.
(c) Do the Quiz on pages 156-157 of the textbook Business Law.

Week 4: Causing Harm

The following questions relate to the textbook Business Law chapter 4:

1. What is a "tort"? How does it differ from a "crime"?

2. Distinguish between trespass, detinue, battery, assault, nuisance, defamation and negligence.

3. When is an employer liable for the conduct of an employee?

4. Johnny sees George, a young customer at his restaurant, reach into the open cash register and grab a handful of notes while Stephen, the person serving him, is looking the other way. Johnny rushes up to George, grabs his arm, pulls the money out of his hand, pushes him into a chair, and orders him to ‘stay there until the police arrive, or I will lose my temper’. Thirty minutes later the police arrive and take George away for questioning. George has now threatened to sue Johnny in the tort of trespass to the person. Has Johnny committed the tort? When answering this question consider all three forms of the tort.

5. Elaine has opened a new steakhouse restaurant next door to Johnny’s vegan restaurant. Johnny is concerned that the smell of cooking meat wafting from the steakhouse is turning customers away from his restaurant. Can he establish that Elaine is committing the tort of private nuisance? If so, what remedy would Johnny be entitled to?

6. Robin writes a popular restaurant review blog for the local online city guide. Her latest blog includes the following: ‘By the way, I ate at a certain vegan restaurant on Kerouac Avenue last Saturday night. Whatever you do, do not order the tofu burger unless you happen to like eating something that tastes like the congealed leftovers of a liposuction treatment that is smeared between two slices of stale bread.’ Johnny wants to sue Robin in the tort of defamation. Is Johnny’s action likely to succeed? When answering this question consider (a) the three elements of the tort, and (b) whether or not Robin can rely upon the defence of honest opinion.

7. What elements do you need to prove to make a case of negligence? What defences are available?

Week 5: Causing Harm: Negligence

The following questions relate to the textbook Business Law chapters 4:

1. Bloggs was shopping at Quills Department Store when he slipped on the highly polished floor and broke his leg. As a result of the accident he was out of work for four months, and he incurred considerable medical expenses. His leg did not heal quickly or completely because of a hereditary bone defect which he suffered. Hence he had to take on lighter work which did not pay as well as his former employment.

(i) What legal action is available to Bloggs against the proprietor of the store, or the cleaner or the floor polish manufacturer?

(ii) Is the situation different if Bloggs suffered his injury after breaking into the shop with the intention of committing theft and arson?

(iii) Will Bloggs succeed in a claim for loss of earnings from his change of employment?

2. Ben was attending a rock concert in the park. He had not purchased a ticket but had climbed over a two metre fence to join the spectators who had purchased tickets. Strong wind and heavy rain forced the spectators to take cover from a storm under a temporary tarpaulin set up by the organisers to protect the musicians and their equipment. During the storm the tarpaulin became heavy with water and collapsed onto the musicians, their equipment and spectators who had taken shelter under it. Ben was seriously injured. As a result of the accident he required emergency surgery. Ben was unable to complete his university studies that year and had to resign his part time employment.

His mother, Kath, also resigned from her employment to take care of Ben. As a result, she has fallen behind in her mortgage repayments and has been advised that her home will be sold. Advise Ben and Kath as to their common law rights for compensation.

3. Norm, a mild-mannered RMIT student, is driving home from lectures one evening and stops at the Georgia Chicken Bar for some food to take home. He buys a QUIK-PAK of chicken which he starts to eat as he drives along the South Eastern Freeway. One piece of chicken has a peculiar flavour so Norm turns on the car light and takes a quick glance only to see that he has been eating a crumbed fried mouse. He feels ill immediately and loses control of the car which then crashes into a car in the next lane which was driven by Paul. Both Norm and Paul suffer injuries in the accident and are taken to hospital. Norm's mother, Edna, visits him that night in Casualty and is so distressed by his sad tale about the mouse that she subsequently develops a serious allergy to chicken and mousetraps.

Norm, Paul and Edna are all keen to sue someone. Advise each of them, as well as the Georgia Chicken Bar, as to their respective rights and liabilities; what they must prove in order to win their cases and what defences may be available.

4. Jenny inherited $50,000 from her aunt and decided to invest the money in rural property. After considerable searching for a suitable site, she considered buying 500 acres of land being offered within the Meadows Shire Council’s administrative area. Jenny was unaware of the block’s zoning status.

While investigating the suitability of the land for the purpose of sheep farming, she approached the Meadows Shire Council for advice and information as to the possible establishment of a future sheep farm on the land. She was advised by Steve, a land surveyor employed by the Council, that the property was zoned “agricultural use only”. In their conversation, Steve told Jenny that there were no notices or restrictions in force in regard to the area which would have the result of changing this zoning or having any impact upon the land or its future use. In providing this advice Steve failed to notice and take account of a restriction attached to the Council area map warning that the land was subject to a State Government order allowing the building of a water supply dam. Jenny bought the land and instructed a builder to commence construction of fences and sheep-pens upon it. Shortly after completion of construction work Jenny received a notice from the State Government requiring that all buildings be removed from the land as it was required for building a dam. Advise Jenny.

5. Fred Bishop, a well-known radio investment advisor was cornered by Muriel Booper at a party. Muriel asked Fred if he considered "Going Downhill Ltd" to be a company with bright prospects. Fred replied "yes" and promptly left Muriel. The very next day Muriel bought $10,000 worth of shares in "Going Downhill Ltd". A week later "Going Downhill Ltd" went into liquidation and Muriel learned that she would be highly unlikely to recover her $10,000.

Muriel seeks your advice as to whether she has a cause of action against Fred. Advise her accordingly, giving reasons for your advice.

Would it have made any difference to your advice had Muriel telephoned Fred for his advice whilst he was on the radio?
Week 6: Making Deals: Forming a Contract

The following questions relate to the textbook Business Law chapter 5:

1. Eva, lived in Queensland and sent a series of letters to her cousin who lived in the United States. She encouraged her cousin, Suzie, to move to Queensland saying to her over the phone ‘I’m offering for you to share my home…no rent at all.’ The defendant even promised to alter her will to provide that her cousin could live in the house for life free of rent. Suzie accepted the offer, quit her job as a nurse, sold her assets in the United States and flew to Queensland. After arriving, Eva and Suzie had a fight and Eva asked Suzie to leave the house.

Advise Suzie.

2. Pete ran a golf shop. His employee, Sam, was careless in pricing a set of golf clubs. The price tag read $50 instead of $500. Norm was walking past the shop when he saw the golf clubs in the window. He entered the shop and told Pete he would buy the clubs for $50.

Can Pete be forced to sell the clubs at $50?

3. X lost an expensive watch and put an advertisement in the newspaper offering a reward. Y found the watch and from the engraving on the back was able to return it to X. The following day Y saw the advertisement in the newspaper and claimed the reward from X. X refused to pay. Y approaches you and wishes to know whether a contract exists between herself and X.

Explain the legal position to Y.

4. David and Jack are good friends. David heard that Jack was keen to buy his car. David wrote to Jack and said "I hear you want to buy my Mazda. You can have it for $3,000. I'll give you a week to make up your mind".

The next day David met another friend Sue and after some discussion sold her the car for $3,500. Two days later Jack heard from a mutual friend Peter that David had already sold the car. Jack immediately rang David to accept the Mazda for $3,000.

Does Jack have a concluded contract with David? Would your answer be different had Jack given David $50 to keep the offer open?

5. Ludwig advertised his piano for sale in the local paper for $2,000. Johann saw Ludwig on Monday and said he would like to buy it but would not pay more than $1,800. After further discussion, Ludwig agreed to reduce his asking price to $1,900 and told Johann he would give him two days to make up his mind.

The next day Johann faxed Ludwig: “Price OK. Is delivery included?” Ludwig read the fax, but didn’t reply.

On Wednesday Amadeus, in desperate need of a piano, rang Ludwig and said he’d pay the $2,000 asked as long as the piano was tuned. Ludwig replied, “It’s yours!”, but didn’t hear Amadeus’s comment about the tuning. Ludwig immediately rang Johann, but failing to find him at home left a message on his answering machine to say the sale was off.

On his way home from choir practice, Johann saw Ludwig’s piano being wheeled into Amadeus’s flat with a “sold” sign pinned on the back. Johann rushed home, rang Ludwig and said, “I’ll pay the $1,900 for your piano”. Ludwig replied, “Didn’t you get my message? Amadeus is the new owner”. But, Amadeus now doesn’t want the piano – it’s out of tune.

Advise the parties as to their common law rights.

6. Duncan had a painting, valued at about $15,000, stolen from his house. He offered a reward to anyone giving information leading to the recovery of the painting.

Errol was a policeman stationed in the area of Duncan's house, and in the course of routine investigations, discovered the thief and the painting.

He now approaches Duncan for the reward.

(a) Does Duncan have to pay him?

(b) Would your answer be any different if Errol was off duty at the time he discovered the thief and painting?

7. Katherine is employed by an accounting firm. She is working in a team of four persons to complete a special finance project by 1 August 2007. Two of the team members leave the firm, leaving the finance project short staffed. Katherine’s boss promises Katherine that if she works weekends on the project, he will pay her an extra $1000. When the project is completed, Katherine’s boss refuses to pay the $1000.

Advise Katherine whether she has any rights to the extra $1000.

8. Alfred has for many years worked on his parent’s farm as a partner in the family business. Alfred is an experienced house builder but decided to give up his successful business to help his elderly parents on the farm for no payment. Several months ago, Alfred decided to marry and was keen to return to his business to better provide for his family. Knowing this, Alfred’s parents promised him that if he continues to work on the farm they will divide-off and give to him part of the farm property so that he could build his own home. In reliance on this promise, Alfred continued to work on the farm and obtained a large bank loan to pay for the construction of his new home. The parents had promised they were arranging with their lawyer to execute a contract to evidence this transfer of the property. However after many months and with the house almost completed, no formal contract was yet entered into. Unknown to Alfred, the parents were reluctant to proceed with this arrangement. They wanted to give the entire farm to their daughter, Maria. The parents told their lawyer to “go slow with the preparation of the contract”. Alfred has recently spoken to his parent’s lawyer and was told that his parents now refuse to sign any contract and want him to leave the farm immediately.

Advise Alfred as to any relevant common law rights he has against his parents.

9. Do questions 1–12 of the Quiz on pages 275-276 of the textbook Business Law.

Week 7: 2nd mid-semester test

The second mid-semester test is conducted in tutorials in week 7.

This test is worth 20% of total assessment. It is open book.

Weeks 3-6 lecture topics are examinable.

You may only do this test in the tutorial in which you are enrolled.

Week 8: (a) Making Deals – Negating a Contract

(b) Terms and Non-contractual
Representations

The following questions relate to the textbook Business Law chapters 5 and 6:

1. Charlie, a 17 year old, bought a suit from Danny for $500. Charlie wanted a suit so that he could go to an interview for a job as a sales representative. When Danny sent Charlie an account for the suit Charlie refused to pay.
Advise Danny whether he can enforce the contract.
2. Adam entered the Reality Art Gallery and saw a painting which he immediately liked. On making enquiries to Rudy, the owner of the gallery, he was told the particular painting was a Vermeer landscape and had a price of $500,000. Adam saw this as a good investment and so he purchased the painting. Some months later a scandal broke out involving a master forger who specialised in Vermeer paintings. Adam became very worried and after seeking an expert evaluation, his worst fears were confirmed. He further learnt that the painting has a value of about $1,000.
Adam wishes to know whether he has any legal remedies. Advise him.

3. Sam and Dave negotiated for the sale of Dave's Hardware Store. During negotiations, Dave stated that the gross takings of the business were $3,000 per week. Soon after these negotiations, extensive road works commenced outside the store, and gross takings fell to $1,400 per week. Some two months later, Sam purchased the business and found the takings significantly less than Dave had represented.

Advise Sam of his common law rights.

4. Olivia recently bought her own hairdressing salon. However business has been sluggish ever since she opened the shop and bills could only be paid out of an overdraft facility provided by the Eastern Suburbs Bank. The bank then advised her that it could no longer extend credit without some form of security. While her boyfriend, Pete, was recuperating in hospital from concussion sustained in a football match, Olivia and the bank’s loans officer got Pete to sign a guarantee to secure the business debts. When signing, Pete understood the nature of the document but not the extent of his potential liability. Olivia’s business went broke and the Eastern Suburbs Bank now seeks to recover $100,000 from Pete under the guarantee.

Advise Pete as to his legal position. What additional rights would Pete have if the Eastern Suburbs Bank was a corporation?

5. Rebecca owns two cars, a 1997 Mercedes and a 1992 Nissan Pulsar. Last week she wrote to Pamela and offered to sell her car for $30,000. Pamela wrote back and agreed.

However it now turns out that Pamela thought she was buying the Mercedes sports car, when in fact Rebecca had meant to sell her the Nissan Pulsar. Is there a legally binding contract between Pamela and Rebecca?

6. Ann Onymous is a struggling comedian. She is offered a contract to have her jokes published. The contract provides that the publisher is not bound to publish any of her jokes but that she must provide at least one joke per week. Should any of the jokes sell, Ann is entitled to only 5 per cent of any royalties. She subsequently signs the contract. Is Ann bound by the contract?

7. Tony agreed to transport a shipment of fruit for Manuel. When carrying the fruit, Basil overloaded the truck in contravention of the Road Transport Act 1958 (Vic). He was fined by the Fruit Squad of Victoria Police after being stopped on the highway. When Manuel heard about the incident he refused to pay Tony for the fruit delivery. Advise Tony of his contractual rights.

8. Roberta is about to be employed by Max, the owner of the Golden Castle Chinese Restaurant Pty Ltd. Roberta is a recent cooking graduate and Max knows that Roberta would be grateful for an opportunity to gain experience as a Chinese chef. Max prides himself that his restaurant serves his grandmother’s prized “Beijing Duck Supreme” soup. This recipe is a guarded family secret. Max wishes to include terms in the employment contract with Roberta to permit him to fully restrain her future use of any skills and information obtained during her employment with Golden Castles. Advise Max as to what extent the common law would permit him to include such a restriction in this contract.

9. At an auction for the sale of a particular farm property of 1,000 acres, the auctioneer claimed that 700 acres were cleared and ready for agricultural use.

Hank bought the property and signed a contract of sale, but later found out that only 300 acres were cleared. No mention of any clearing of the land was made in the contract.

Advise Hank of his common law rights.

10. Parker stopped her car at the barrier entrance to a car park and an automatic ticket issuing machine projected a ticket which Parker took in accordance with a large notice attached to the barrier which read:

“HALT - Parking at Owner's Risk - Take Ticket from Machine. Pay when leaving.”

Parker put the ticket in her pocket without looking at it, the barrier raised and Parker drove through and parked her car. On returning to pick up her car she found it completely demolished beneath a large concrete pipe which had fallen from a crane owned by the parking station proprietors who were working on an adjacent drainage ditch. The parking ticket had the following notice printed on it: “It is a condition of the issue of this ticket that vehicles are parked on these premises at the owner's risk and responsibility. The proprietors accept no responsibility for loss of damage to vehicles in the parking area whether caused by negligence or in any manner whatsoever”.

Advise Parker of her common law rights in relation to the notices on the barrier and ticket.

11. Do questions 13–20 of the Quiz on pages 276-277 of the textbook Business Law.

12. Do questions 1–14 of the Quiz on pages 327-328 of the textbook Business Law.

Week 9: Enforcing Deals – Remedies and
Ending the Contract

The following questions relate to the textbook Business Law chapter 6:

1. Jones, a promoter of live stage shows, contracted with Miss Belet, a temperamental French actress, for her to be the star of a stage show to run for a season of six weeks. The contract required her to attend at rehearsals five weeks before the performance season began.

Miss Belet decided to go on holiday and arrived for rehearsals only three weeks before the season was due to start. Jones told her that he had already engaged someone else and that she was no longer required.

Advise Miss Belet. Would your answer be any different if she had missed all rehearsals and had arrived at the start of the performances?

2. Bend University wishes to appoint a new Vice-Chancellor. It finally offers the job to Professor Chris Baker, of New York University. A contract is signed on 2 January, 199A, providing for a term of five years with a package worth $100,000 a year. Professor Baker is to take up position on 1 June, 199B.

On 1 February 199B, Professor Baker is seriously injured in a skiing accident, and on medical evidence available at the beginning of May 199B, it is clear that she will not be able to take up the appointment until January 199C.

The University wishes to know whether or not it can terminate Professor Baker's contract.

3. (a) Radish Constructions enters into a fixed price contract of $500,000 with Allan for the construction of a block of home units. When the units have been built to window height, Radish finds that it will be uneconomic to continue. Can Radish legally obtain payment for work done and the materials used thus far?

(b) Would your answer be different if Radish had built the whole block of units but had failed to put tiles in the bathrooms?

(c) Margaret ordered 25 blouses for her boutique from Cynthia. Because of a strike, only 5 blouses were delivered. Margaret accepted the five but being unable to sell any of them now refuses to pay for them. Can Cynthia obtain any payment?

4. Dingbat Surfboards Pty Ltd of Perth, engages a world famous board rider, Melvin Marvin, for a series of surfriding exhibitions in April, using Dingbat boards. Melvin and Dingbat agree that a commercial film "Balmy Summer" will be made of the exhibitions. Two days before the exhibitions were to be held Melvin informs Dingbat that he is going to Peru. The exhibitions have to be cancelled.

Dingbat sues Melvin for breach of contract, claiming damages for:

(i) loss of profits because of a reduced sale of surfboards arising because of the cancellation;
(ii) promotional expenses;
(iii) loss of profits on the projected film "Balmy Summer" and
(iv) loss of profits on a radio feature which Dingbat had negotiated with 6DA, a radio station.

Which of the above will likely to be assessed for damages, and why?

5. In what cases will the courts grant specific performance of a contract?

6. Do questions 15–20 of the Quiz on page 328 of the textbook Business Law

Week 10: Dealing with Consumers –
General Protections

The following questions relate to the textbook Business Law chapter 8:

1. Why do consumers deserve extra legal protection?

2. How is a ‘consumer’ defined in the Australian Consumer Law (‘ACL’)?

3. What needs to be proved in an action for breach of ACL s 18 (prohibiting misleading and deceptive conduct)?

4. Can ACL s 18 be enforced by persons other than consumers?

5. What are the consequences of contravening ACL s 18?

6. In what circumstances will a term of a contract be unfair and therefore void under ACL s 23?

7. Do exercises 8.1 – 8.4 on pages 428-329 of the textbook Business Law.

Week 11: Dealing with Consumers –
Specific Protections

The following questions relate to the consumer guarantees under the Australian Consumer Law (‘ACL’) discussed in Chapter 8 of the textbook Business Law.

1. Beryl decides to open a health food deli in the heart of the city and hopes to attract lunch-time crowds.

She goes to Zap Pty Ltd the largest microwave dealers in Canberra. She advises the salesman that she requires a reliable and durable microwave for commercial purposes to be used exclusively in her deli. The salesman recommends the Duro Model 3000. The manufacturer of this model is Micro Models Pty. Ltd.

Beryl returns to Zap Pty Ltd, the same day and purchases the Duro Model 3000 microwave.

Within days of purchasing the microwave Beryl discovers the microwave either burns the food to charcoal, even on the lowest setting, or fails to heat the food altogether.

Advise Beryl of her statutory rights, if any, against:

(i) Zap Pty Ltd; and

(ii) Micro Models Pty Ltd.

2. Ian bought a new DVD recorder from Sales Ltd on the basis of the salesman's recommendation. The machine had been manufactured overseas and imported by Cheap Imports Pty Ltd.

After six months of satisfactory operation, the machine developed serious faults and required extensive repairs.

Sales Ltd has denied responsibility on the grounds of a term of the contract, signed by Ian, which stated:-

"It is expressly agreed that the only conditions or warranties expressed or implied which apply to the contract are those resulting from the warranty issued by the importer."

The warranty which came with the machine read:-

"The importer shall repair any defects in the video machine up to a period of three months from the date of purchase. All other conditions and warranties are expressly excluded."

The importer, Cheap Imports Pty Ltd has denied responsibility on the basis of the warranty.

Assess Ian's legal position and advise him of what action he should take, if any, under national legislation against Sales Ltd and/or Cheap Imports Pty Ltd.

3. Harry Brown, a wealthy grazier, has purchased a large ride-on mower in order to keep the growth of the grass down on his property at Gisborne. Harry has a real fear of bushfires and mows regularly. One day Harry was operating the mower and it caught fire without warning. Harry jumped off the mower but it exploded and he suffered severe burns. Harry's son Sean who was standing nearby was hit by flying shrapnel and suffered head injuries. The explosion started a large grass fire which destroyed Harry's Rolls Royce and substantially damaged his home office and irreplaceable business computer records and customer lists. This latter damage caused loss of profits in Harry's business as he was only able to function at 25% of normal capacity for some months after the fire.

The mower was assembled by Greenacres Ltd in Brisbane however many of the components were sourced in the USA and in particular the motor was manufactured by Turbo Inc in the USA.

Investigations have established that the explosion was caused by a defective fuel line which was made by Wonki Plastics in Mexico.

Discuss the statutory rights and liabilities of the parties.

Week 12: Starting a Business

The following questions relate to the textbook Business Law chapter 10:

1. Why is the choice of business structure an important decision?
2. What is (a) a sole trader, (b) a partnership and (c) a company?
3. What are the key features of each of these business structures?
4. Do exercise 10.1 on page 551 of the textbook Business Law.
5. Do the Quiz on pages 549-551 of the textbook Business Law.