MLC101 LAW FOR COMMERCE T1 2023: MOCK (PRACTISE) EXAM
MLC101 LAW FOR COMMERCE T1 2023: MOCK (PRACTISE) EXAM
PROBLEM QUESTIONS Full answers should take approximately 30 minutes to type for each question.
You MUST answer all of these questions.
Farida is a non-executive director of the Anaspeptic Group (AG), a listed waste-management company that develops strategies and technologies for managing waste and recycling in Australia and overseas. Six months ago, the Board invested a substantial sum of money in a new plastic recycling technology from Taiwan developed by IONATE, believing it to be the most promising advance in plastic recycling for many years. Unfortunately for AG, a recent study has demonstrated that IONATEs recycling process has significant flaws, and the shares of the Taiwanese company have since plummeted. The Board, in a desperate move to improve the position of the company, decide to invest in a new electronics waste recycling company in New Zealand. This decision was made, despite AG being on the verge of insolvency. Faridas expertise is in water management systems, and she was not aware of the financial situation of AG, as she has always felt that it was the role of the executive directors to oversee this aspect of the business. She was however, aware that AG was in financial trouble since the IONATEshare price plummeted.
Advise Farida of her civil and criminal liability under the Corporations Act 2001 (Cth). Please use case law and statute to support your answer.
Jill is off to the opera at the State Theatre. She drives her Mercedes to the underground car park owned and operated by Bilsons Ltd. Outside the car park is a large sign that says Take
ticket from machine. Ticket contains terms. Pay when leaving. No liability accepted. Jill does
not read the sign. As she approaches the boom gate, an automatic ticket machine issues her
with a ticket with these words printed on it:
CONDITIONS OF PARKING
It is a condition of the issue of this ticket that vehicles are parked on these premises at the
car owners risk. The car park proprietors accept no responsibility for loss or damage to vehicles in the parking area whether caused by negligence or in any way whatsoever.
When she returns to get her car, it is missing. An hour later, it is found in the Yarra River. The
police confirm that an employee of the car park broke into the car, somehow managed to start the engine and drove off. When he had had enough, he abandoned it in the river. Not only is the car beyond repair but Jills laptop, valued at $5,000, is also destroyed.
Jill seeks your advice as to whether the exclusion clause will prevent her from claiming damages from Bilsons Ltd.
Advise Jill whether she can void the contract.
Please use case law to support your answer.
Nigel is a partner in a medical practise that specialises in ear, nose and throat problems. One of his patients, Janine, is unilaterally deaf in her left ear. Nigel advises Janine that an operation on her left ear would restore her hearing to normal. Janine is thrilled about the possibility of restoring her hearing in her left ear so she agrees to have the surgery. After the surgery is performed, Janine loses feeling in the left side of her face, and is still not able to hear in her left ear. Nigel was aware that there was a very small chance of facial paralysis after ear surgery, but did not inform Janine of the risk, as it was quite rare. Janine is now very unhappy with her inability to feel or move the left side of her face, and she feels that Nigel is responsible for not letting her know of the risk of the operation.
Advise Janine whether Nigel owes her a duty of care. (PLEASE DO NOT DISCUSS OTHER ELEMENTS OF NEGLIGENCE ONLY DISCUSS DUTY OF CARE.)
Please use case law to support your answer.
Note the exam has 4 questions but this is only a Mock exam, so not a full exam question set. Please note that Topics presented in this mock exam may not be required for preparation of your actual exam. Ensure to check the Exam information and tips file for Exam Topics.
This is NOT the TRY-IT-OUT exam, which you must complete in the Examination folder in the Content.
MLC101 Law for Commerce Exam Practice Problem Questions 2 and 3
Question 2
Marco joins a local gym, U CAN FITNESS. The manager, John, gives Marco a contract to sign. The contract was pre-prepared, its terms typed in numerical order. Some of the terms include: -
The gym fees are $120.00 per fortnight to be directly debited from the customers bank account; and
U CAN FITNESS can change the terms at anytime they see fit; and
If the customer terminates the contract within a 12-month period the customer must pay a $1,000 early termination fee.
After 3 months Marco decides to move interstate and wishes to cancel the contract. Marco does not wish to pay the early termination fee.
Advise Marco if he has any actions under the ACL.
Hint: Use the IRAC structure.
Question 3Mary and Andy are partners of a restaurant. Mary decides to purchase a delivery van for their restaurant for $40 000 without discussing it with Andy first. She buys the van on credit with finance provided by Harry, the seller of the van. The interest rate is 30 per cent. The comparable rate at the time was 6 to 10 per cent. When Andy finds out he is furious and insists that Mary will have to pay off the interest on the loan from her own share of the profits.
If Mary is unable to make the payments, can Harry recover the money from Andy?
Hint: Use the IRAC structure.
MLC101 Law for Commerce Exam Practice Problem Question 1
Scott contracts with Chris to provide machinery and equipment to harvest wheat from Chris farm. Chris pays Scott a fee for the use of his machinery plus a percentage of the profits from the sale of the wheat. After the contract has successfully been on foot for six months, the government announces the compulsory acquisition of grain harvesting machinery with immediate effect. This new government policy means that some of the wheat harvesting equipment hired by Chris from Scott is now reallocated for government purposes. Chris would like to get out of the contract with Scott, but however, Scott insists that the contract is still on foot for the hire of the remaining equipment.
Advise Chris.
Hint: Use the IRAC structure.
MLC101 Law for Commerce IRAC Practice Problem Question 1
While Jamie is shopping at her local grocery store, she notices a sign in one aisle which states: SPECIAL OFFER, PUMPKIN $3 EACH. Jamie puts a pumpkin into her basket, dreaming of pumpkin soup. At the checkout the shopkeeper tells her that the pumpkin is actually $5. Jamie is furious and argues that stock displayed with a price on it is an offer and insists on paying $3. The shopkeeper argues that the sign is not an offer. Is Jamie or is the shopkeeper correct?
With reference to the rules of offer and acceptance in contract law, explain how much Jamie is required to pay for the pumpkin.
Suggested Answer
ISSUE
The issue in this case is whether the shop display was an offer or an invitation to treat.
RULES (Identify the law)
The display of an article in a shop, even with an indication of price, is not generally an offer but merely an invitation for someone to make an offer of purchase: Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1952] 2 QB 795 (Boots).
APPLICATION OF LAW TO THE FACTS
The pumpkins displayed in the store is an invitation to treat, not an offer. Applying Boots, Jamie is the one making the offer when she presents it at the cash register. This offer can be accepted or rejected by the shopkeeper.
CONCLUSION
Jamie is incorrect. She will have to pay $5 for the pumpkin if she wants it.
MLC101 Law for Commerce IRAC Practice Problem Question 2
David completes his course at Deakin College. He asks his friends, Lin and Bill, Would you like to buy my car for $7500?
Lin tells David, I am happy to pay $7000. David does not respond. Later on, that day Bill comes to Davids house and after inspecting the car with David, accepted Davids offer for $7500 to buy the car. David immediately sells the car to Bill. Lin thinks that he and David have a contract and that he should not have sold the car to Bill. Advise Lin.
Hint: Use the IRAC structure below.
What are the issues:
Rules (Identify the law):
Application of law to the facts:
Conclusion:
MLC101 Law for Commerce Exam Practice Problem Question 1
Scott contracts with Chris to provide machinery and equipment to harvest wheat from Chris farm. Chris pays Scott a fee for the use of his machinery plus a percentage of the profits from the sale of the wheat. After the contract has successfully been on foot for six months, the government announces the compulsory acquisition of grain harvesting machinery with immediate effect. This new government policy means that some of the wheat harvesting equipment hired by Chris from Scott is now reallocated for government purposes. Chris would like to get out of the contract with Scott, but however, Scott insists that the contract is still on foot for the hire of the remaining equipment.
Advise Chris.
Suggested answer
ISSUE: The issue is whether the contract has been frustrated.
RULES
Elements for frustration are:
1. Event occurring after contract made (but before completion)
2. Causes a fundamental change to the nature of contract & obligations of parties
3. The event was not the fault of either party
4. The event was not foreseeable by either party (not provided for in contract)
5. It would be unfair to enforce the contract
Where government intervention is such that it would make the subsequent carrying out of the remainder of the contract radically different from that envisaged by the parties, then the parties are absolved from further performance. In Metropolitan Water Board v Dick, Kerr & Co Ltd [1918] AC 119, it was held that the interruption suffered was of such duration and character as to alter the contract on resumption, and therefore the contract had ceased to be operative.
APPLICATION
All the above five elements apply. Like in Metropolitan Water Board v Dick, Kerr & Co Ltd, the event occurred after the contract was made, and there is a fundamental change to the nature of the contract, which was not the fault of either party and was unforeseen. It would certainly be unfair to Chris to enforce the contract, as the compulsory acquisition has significantly disrupted the harvesting process.
CONCLUSION
The government intervention amounts to frustration of the contract and Chris will be able to get out of the contract with Scott from the time the compulsory acquisition announcement is made.
Note that this question is from Topic 5 (not examinable this trimester but hopefully you were able to identify the legal issue!).
MLC101 Law for Commerce Exam Practice Problem Questions 4 and 5
Question 4
Lisa, company secretary, is often called upon to organise interstate accommodation for the company directors when they are visiting other offices. Lisa plans a private holiday to the Mornington Peninsula for her family and contacts Vicky, the letting agent used by the company for business travel. Lisa uses company letterhead and the company email to book a 3 night stay in Sorrento at the corporate rate, telling Vicky that the stay is for the managing director. Vicky later contacts the managing director to inquire about the booking, and he informs Vicky that the booking was fraudulently made and that the company will not pay the bill. Vicky argues that she legitimately assumed that Lisa was booking on behalf of the managing director.
Was Vicky entitled to assume that Lisa was booking on behalf of the managing director under the Corporations Act 2001 (Cth)? Why/Why not?
Please use case law and statute to support your answer.Hint: Use the IRAC structure.
Question 5
Bill sends his bike for repair. The next day, he goes to collect his bike just ten minutes before the shop closes. The mechanic tells him he has had to adjust the gears, because they were slipping badly. The mechanic advises Bill to ride round the yard at the back of the shop for a while to see how the gears feel now. The mechanic leaves work and forgets to tell the owner that Bill is still on the premises. The business is locked for the night and Bill is left in the yard. In a panic, Bill rests his bike against a fence and tries to balance on the bike to climb over the fence. Unfortunately, the handlebars twist and Bill falls awkwardly, injuring his knee and shoulder. If Bill looked carefully, he would have found a ladder in the yard, which he could have used to scale the fence.
The Court has found Two Wheels negligent all the elements of negligence have been proved against Two Wheels including duty of care, breach of duty, causation and remoteness. Will Bill succeed in obtaining full compensation? Why/Why not?
Hint: Use the IRAC structure.
MLC101 Law for Commerce IRAC Practice Problem Question 2
David completes his course at Deakin College. He asks his friends, Lin and Bill, Would you like to buy my car for $7500?
Lin tells David, I am happy to pay $7000. David does not respond. Later on, that day Bill comes to Davids house and after inspecting the car with David, accepted Davids offer for $7500 to buy the car. David immediately sells the car to Bill. Lin thinks that he and David have a contract and that he should not have sold the car to Bill. Advise Lin.
Suggested Answer
ISSUE
The issue whether there is a contract between David and Lin. More specifically, the issue is whether there is an agreement between David and Lin, i.e., offer and acceptance.
RULES
Offer is an expression of willingness to enter into a legally binding contract with another (Turner et al. 2021:62). Acceptance is the act of agreeing to something that has been offered. An acceptance must be unconditional. An attempt to accept an offer on new terms, not contained in the original offer, is a rejection of the original offer and is a counter offer, which means the original offer lapses and can no longer be accepted. Hyde v Wrench (1840) 49 ER 132.
Acceptance cannot be inferred from the silence or inaction of the offeree: Felthouse v Bindley (1862) 142 ER 1037.
APPLICATION
Davids statement would you buy my car for $7500 is an expression of willingness to be bound by it. Therefore, it was a genuine offer and not an invitation to treat. Lin by telling David I am happy to pay $7000 was an attempt to accept an offer on new terms, not contained in the original offer. Therefore, Lin has rejected Davids original offer and it is a counter offer: Hyde v Wrench. Lins counter offer has not been accepted by David because he did not say anything and acceptance cannot be inferred from silence: Felthouse v Bindley. Therefore, there is no contract between David and Lin.
CONCLUSION
I would advise Lin that there no contract between himself and David as he did not accept Lins counter offer. Therefore, David has not breached the contractual obligations with Lin by selling the car to Bill.
