LAW00150-Introduction to Business Law

Task

Problem 1

Charlie operates a flower shop. He agrees to sell his business to his sister Ali for $45,000. They both use their own solicitors to negotiate the terms of a formal written agreement. The agreement contains a restriction that Charlie cannot, in the following two years, open another flower shop within 2 kilometres of the one he has just sold to Ali. 

After six months, however, Charlie opens another flower shop just one kilometre away. Ali wants to sue Charlie for a breach of contract but fears the agreement was not intended to be legally binding because they are siblings.

a) What is the issue you need to consider? 

b) What are the relevant legal rules relating to this problem? 

c) What are the main cases related to this problem? 

d) Based on this information, if Ali sues Charlie for breach of contract, will she win in court? What is your answer – yes? or no?  Explain your answer. 

Problem 2

Nick is organising a university student party at the student union building. He approached the local police, wanting them to keep out “undesirables” such as drug dealers and intoxicated people. 

The station sergeant informed him that he would have a patrol car call in periodically during the evening. Nick said he actually wanted an officer stationed outside the entrance all night but was informed this would cost him $1000.  Nick agreed to this proposal. After the big event, when Nick received the account from the Police Department, he refused to pay.

a) What is the issue you need to consider? 

b) What are the relevant legal rules relating to this problem?

c) What are the main cases related to this problem? 

d) Based on this information, if the Police Department sues Nick for the reward, will Nick win in court? What is your answer – yes? or no?  Explain your answer. 

Problem 3

Mike, a motor mechanic, owes Helen $5000 due and payable on 24 June 2018. He phones Helen and informs her that he has lost his job and there is no chance he can hope to pay the full debt for a while because there are no job opportunities for mechanics in the area. 

Helen says “if you can bring me $1000 on 24 June, and while you’re here check my BMW’s steering because I’m worried there’s something wrong with it, I promise I will not sue you for the rest.” 

Mike does as Helen asks and then discovers that she is suing him for the outstanding amount.  

a) What is the issue you need to consider?

b) What are the relevant legal rules relating to this problem?

c) What are the main cases related to this problem?  

d) Based on this information, if Helen sues Mike for breach of contract (common law), will she win in court? What is your answer – yes? or no?  Explain your answer.  

Problem 4

Lizzie 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.  Lizzie pays the $100 joining fee and commences to enjoy recently released movies at that cheap price.  

Several weeks after joining Lizzie rents an overnight DVD and, because she falls ill, does not return it for eight days. When she does return the DVD, the shop owner tells her that she must pay an extra $140, referring Lizzie 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 the DVD-hire industry is $5 per week. 

a) What is the issue you need to consider?

b) What are the relevant legal rules relating to this problem?

c) What are the main cases related to this problem?

d) Based on this information, if The DVD store sues Lizzie for breach of contract (common law), will the store win in court? What is your answer – yes? or no?  Explain your answer.  

Problem 5

Tori took her best dress to the dry cleaners because it was badly stained at a recent party. She was asked to sign a small document which looked a bit like a receipt but was headed Agreement and contained the following clause, 

We will not be responsible for any loss or damage of whatever nature or howsoever caused. 

Tori’s dress is damaged beyond repair and she demands compensation from the dry cleaner’s owner who flatly refuses and draws her attention to the above clause in the agreement.  Tori hadn’t actually read the wording before she signed because it never occurred to her that anyone could avoid their obligations in this manner.

a) What is the issue you need to consider?

b) What are the relevant legal rules relating to this problem? 

c) What are the main cases related to this problem? 

d) Based on this information, if Tori sued the dry cleaners for the destruction of her dress would she win in court? What is your answer – yes? or no?  Explain your answer.  

Problem 6

Sandra wishes to buy a new copier for her accounting business. She tells Mr Smith of Smith’s Office Equipment that she needs one that can handle large volumes and can sort and complete work very quickly and asks for his advice on which copier she should purchase. He recommends a particular model that Sandra purchases for $12,000. Within a week she discovers that her new machine is very slow, continually overheats and is unable to handle the large amounts of work she requires. Parts of the copier have fallen off and cracks have appeared in the glass.  When she tells Mr Smith he responds that it’s not his concern and she should take it up with the manufacturer.

a) What is the issue you need to consider?

b) What are the relevant sections of the Victorian Sale of Goods Act?

c) What are the main cases related to this problem?  

d) Based on this information, Does Sandra have any rights against Smith’s? What is your answer – yes? or no? Explain your answer.