Professional Documents
Culture Documents
CONTRACT A
Tutorial Book
Semester 1, 2014
Prepared by:
Dr Jeannie Marie Paterson and Dr Rebecca Giblin (and amended by the 2014
Contract A Teaching Team)
Clayton Campus
Monash University
Produced and Published by:
Faculty of Law
Monash University
Clayton, Victoria, Australia, 3800
First Published 2008
Copyright 2014
NOT FOR RESALE. All materials produced for this course of study are protected by
copyright. Monash students are permitted to use these materials for personal study
and research only, as permitted under the Copyright Act. Use of these materials for
any other purposes, including copying or resale may infringe copyright unless written
permission has been obtained from the copyright owners. Enquiries should be made to
the publisher
Tutorial 1
Offer & Acceptance
1
Short answer questions give reasons for your answer including reference
to authority
1.1
What are the differences between: (a) an offer; (b) a puff; and (c) an invitation
to treat?
1.2
What is an acceptance?
1.3
What is a counter-offer?
1.4
1.5
1.6
2.1 If you are representing Chocolate Printers Ltd, what date (or time) would you
argue the contract between your clients and McRobertson Equipment Supplies
Ltd was made? Provide reasons and relevant cases for your answer.
2.2
If you are representing McRobertson Equipment Supplies Ltd, what date (or
time) would you argue the contract between your clients and Chocolate Printers
Ltd was made? Provide reasons and relevant cases for your answer.
Tutorial 2
Consideration
1
Short answer questions give reasons for your answer including reference
to authority
1.1
What is consideration?
1.2
What does it mean to say that consideration must move from the promisee?
1.3
1.4
What is past consideration, what is the legal effect of past consideration, and
when may what appears to be past consideration be good consideration?
1.5
1.6
2.1
Does your client want the price rise apparently agreed on 14 June 2009 to be
binding?
2.2
2.3
Tutorial 3
Intention and Certainty
1
Short answer questions give reasons for your answer including reference
to authority
1.1
1.2
1.3
What are the differences between an illusory promise, an uncertain promise and
an incomplete contract?
1.4
2.1
Are there any issues of uncertainty in any contract between Chocolate Printers
Ltd and McRobertson Equipment Suppliers Ltd?
2.2
Tutorial 4
Formalities and Estoppel
1
Short answer questions give reasons for your answer including reference
to authority
1.1
1.2
1.3
What is the difference between common law estoppel and equitable estoppel?
1.4
What is the effect of the decision in Waltons Stores (Interstate) Ltd v Maher?
1.5
1.6
2.1
Tutorial 5
Express Terms
1
Short answer questions give reasons for your answer including reference
to authority
1.1
A party who has signed a contractual document is usually bound by the terms
of that document even if that party has not read the document before signing it.
What is the authority for this statement? What are the exceptions?
1.2
When do the terms contained in a displayed sign or document form part of the
contract between the parties?
1.3
1.4
Tutorial 6
2011 Examination Paper
Question One
Armstrong Jones (AJ) owns and manages Pace Suites (PS), a hotel and
serviced apartments in Melbourne. In June 2010, AJ tendered for, and won, a
contract to host the Melbourne Motor Racing (MMR) events scheduled for 28
March to 3 April 2011.
A condition of AJs contract with MMR Corporation (MMRC) was that a wide
range of specified facilities within PS was to be refurbished and a new show
room built to be ready by 28 February 2011. If the work was not completed by
the scheduled date, AJ was to pay to MMRC liquidated damages of $25,000
for each week, or part thereof, until completion.
AJ invited tenders for the refurbishment and construction work. Ian Crap (IC),
who owns and manages a construction business called Quality Constructions,
won the contract. The price for the works, incorporated into a detailed
contractual document between AJ and IC, was $15 million. The contract,
which was signed by AJ and IC, also contained the following clauses:
Clause 8:
The contractor (IC) may use the services of subcontractors as he deems fit. IC does not guarantee the
quality of the workmanship or any materials used by any
such sub-contractors. Neither is IC liable for any loss or
damage that may flow from the work of any subcontractor.
Clause 20:
On 15 December 2010, IC, who (by himself and through sub-contractors) had
completed about 70% of the work required under the contract, wrote an email
to AJ stating that he would have to stop work because he had already spent
$15 million dollars on the project and there is still a lot to be done. He stated
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further that the only way out is for AJ to agree to an additional payment of $8
million, as costs have been much higher than he (IC) anticipated.
AJ, who thought that ICs tender price of $15 million was on the low side,
responded that he understood the market, and would pay the additional
money if he could afford to do so. He continued:
Unfortunately, I am in serious financial difficulty, and I am counting on
my hosting the MMR events to save me. I may still have to sell some
assets. I am confident you can propose a solution that suits us both; I
see in you unmatched ingenuity. This has to resolve quickly so the
project can get back on schedule, otherwise I will go under, for sure
On 20 December 2010, IC sent AJ an email proposing that he can finish the
work with borrowed funds in exchange for the new showroom and the land on
which it is situated being transferred to him (IC) straight after the MMR
events. AJ phones IC and says, I agree with your proposal. Please move fast
to complete the work on time; the paperwork for the showroom will be done
later.
Required:
Advise the specified parties as to their legal rights and/or liabilities in the
following scenarios. Each scenario is separate and does not follow on
from the other.
A. IC completed the work on time. MMRC was pleased with the facilities at
PS, and has extended AJs hosting contract for another 5 years. However,
AJ has refused to transfer the showroom to IC, although he (AJ) has done
well financially from hosting the MMR events. AJ says that the Showroom
is crucial to his hosting of the MMR events in the future, it is the newest of
all of his PS facilities and, besides, he does not think he is legally obliged
to transfer the showroom to IC.
IC seeks your advice as to his legal position relating to his
contract with AJ
(30
Marks)
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Question Two
Emma runs a dry cleaning business. One of her regular customers is George,
who has used her services many times. One day, George hands in his
designer suit for dry cleaning. Emma gives him a receipt. During the dry
cleaning process, Emma fails to handle the suit with reasonable care, and the
suit gets spoiled with irremovable stains. George is furious and demands that
Emma pay him $1,000 to purchase another suit of similar quality. Emma
refuses, pointing to the clauses printed on the back of the receipt. She has
printed these clauses on the back of receipts since she started the business.
Clause 3 on the back of the receipt reads:
All articles are received and treated entirely at the owners risk. No
liability is accepted for loss of, or damage to, articles through any
cause whatsoever.
Meanwhile, Emma intends to upgrade her dry cleaning equipment. In
particular, her current shirt pressing machine can only process 10 shirts per
hour, which is too slow. Emma meets with Bob, who is a representative of
SEC Pty Ltd, a company importing and selling dry cleaning machinery. Emma
tells Bob that she needs a shirt pressing machine that can process at least 20
shirts per hour. Bob says that SECs new FastPress66, which costs $10,000,
is exactly what she needs. Emma replies that she would like to buy one
FastPress66. Bob takes a document with several pages out of his suitcase
and says to Emma that this document contains the terms of their agreement.
On the first page of the document, Bob enters the details of Emmas
business, FastPress66 as the subject matter and $10,000 as the price. He
then hands the document to Emma and tells her that she needs to sign it if
she wants to purchase a FastPress66. Emma signs the document without
reading it.
Two weeks later, Emma receives a FastPress66. It turns out that it can only
process 15 shirts per hour. When Emma complains to SEC Pty Ltd, she is
referred to the following clauses in the document she signed:
Clause 5:
Clause 6:
In order to relax from the stress of her business, Emma decides to become a
member of her local gym operated by FIT Pty Ltd. She goes to the counter of
the gym and says that she would like to become a member. She is handed a
document which states that the membership is initially for one year, and that
the membership fee is $50 per month. It also says that the contract is subject
to the standard terms and conditions of FIT Pty Ltd, which are set out in a
brochure available at the counter. Emma sees the brochure but does not read
it. She signs the document and pays the fee for the first month. Two weeks
later, Emma receives a letter from FIT Pty Ltd informing her that her
membership fee will increase to $75 per month from the following month.
When Emma contacts FIT Pty Ltd to complain, she is referred to clause 4 in
the terms and conditions of FIT Pty Ltd, which reads: FIT Pty Ltd is entitled to
increase the fee by up to 50% at any time.
Required:
Advice Emma on her rights and obligations under her contracts with
George, SEC Pty Ltd and FIT Pty Ltd.
(50 Marks)
END OF PAPER
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Mr N McRobertson
McRobertson Equipment Suppliers Ltd
The Tramshed Docklands
Melbourne Victoria
Dear Mr McRobertson,
I see from your website that you can supply refurbished flexoprint machines. We
would be interested in acquiring such a machine urgently and request your best
price and delivery for a six colour machine with a varnishing stand.
We are interested in printing coated and uncoated papers for wrapping polyester
and also metallic foils for use in the confectionery market and similar fields.
Typical plain and coloured aluminium foil for chocolate wrappers may be of 8
micrometer thickness.
There is no other flexoprint operator in Gibbsland and we believe the machine
you supply will enable us to develop a commanding lead in the Gibbsland
market. At present users of foil products in particular have to import the
printed products, which is expensive. We have identified another possible
source for a machine to fit our requirements, located in Belgium. We would
however prefer to use the services of an Australian supplier such as yourself.
Yours faithfully,
(Signed)
Roland
Chocolate
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Mr N McRobertson
McRobertson Equipment Suppliers Ltd
The Tramshed Docklands
Melbourne Victoria
Dear Norman,
The trip to Hobart was most enjoyable. It was my first time in Tasmania and I am
glad we had a few days to be tourists.
The Magiprint Flexometix machine looked to be just what we need. It appears much
more suitable to our needs than the alternative machinery offered to us for purchase
by the Belgium firm mentioned in my earlier correspondence.
It is imperative that we move fast on this. We signed a contract with Prestige
Chocolate Confectionaries yesterday, which we must be able to service by 15 July.
It is an excellent contract from which we can expect to earn a profit of $400,000 a
year. The contract runs for four years, subject to renewal at the end of that period.
Unless something unexpected happens, we can anticipate a long period of
handsome profits.
There is one other concern. It now appears that Reliable Printers, another printing
firm in Gibbsland, is also considering the purchase of a flexoprint machine. They
have not decided yet but, if our machine is in place and producing, they certainly
won't make the purchase. They would go for the Prestige Chocolate Confectionaries
account if they had any possibility of getting it. While there are other uses for the
machine, of course, the market in the Gibbsland region is very small and it is the
Prestige Chocolate Confectionaries account that makes the flexoprint machine most
worthwhile.
The relevant Belgium firm has indicated that they could supply us with suitable
machinery within the required time frame. However, as indicated, we would prefer
to deal with your firm if you are able to satisfy our needs.
I look forward to your prompt reply.
Yours faithfully,
(Signed) Roland
Chocolate
21 May 2011
Mr N McRobertson
McRobertson Equipment Suppliers Ltd
The Tramshed Docklands
Melbourne Victoria
Dear Norman,
We acknowledge your letter of 16 May 2011.
Please take this letter as our Order to buy the refurbished Magiprint Flexometix
Mark 8 flexoprinter machine as discussed, direct to our plant in Erica all for the
sum of $42,000 to be made up of a payment of $34,000 plus a top up amount
consisting of preference share options. We will arrange payment of the cash sum
by direct transfer when we receive your Bank details.
For and on behalf of Chocolate Printers Ltd.
(Signed)
Roland Chocolate
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Contract
Instruction Manual
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Mr N McRobertson
McRobertson Equipment Suppliers Ltd
The Tramshed Docklands
Melbourne Victoria
Dear Norman,
I have given careful consideration to your last letter. I understand your difficulties
although they do not represent good news for us. It is essential that we have the
machine operating on time and accordingly I am prepared to accede to your request.
Yours faithfully,
(Signed)
Roland Chocolate
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1 July 2011
Mr N McRobertson
McRobertson Equipment Suppliers Ltd
The Tramshed Docklands
Melbourne Victoria
Dear Norman,
Your workmen are first rate. They have refurbished the Magiprint Flexometix and
given it a test run. So far, so good.
We plan on starting production printing next week.
Yours faithfully,
(Signed)
Roland Chocolate
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William Swain
McRobertson Equipment Suppliers Ltd
The Tramshed Docklands
Melbourne Victoria
10 July 2011
Mr N McRobertson
McRobertson Equipment Suppliers Ltd
The Tramshed Docklands
Melbourne Victoria
Dear Mr McRobertson,
This is to confirm what I told you on the telephone. We installed the Magiprint
Flexometix Mark 8 machine at the premises of the Chocolate Printers and
refurbished it once installed. By 1 July we had started doing the test runs and
made the final adjustments. The machine worked perfectly.
We turned over the machine to Mr. Chocolate on 8 July 2011. The first job they
wished to use it for was to print aluminium foil wrappers for Chocolate
Confectionaries. We were at the hotel preparing our luggage for departure when Mr
Chocolate called us. He told me that the foil would crease and the colors were out
of register.
When we arrived at the plant we saw that they were feeding 8 micrometer foil into
the machine. Naturally it wouldn't print properly. The foil was too thin. Because
Mr Chocolate stressed that it was imperative that they be able to print on the 8
micrometer foil and that they had to be ready to deliver by 15 July, we have done
everything I know of to adjust the machine to print on thinner material than it was
designed for. So far we have been unsuccessful.
We will stay here for awhile yet. It may be that there are ways to get around the
problems, but I have my doubts.
I will keep you informed of developments.
Yours truly,
(Signed)
William Swain
Foreman
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for it at present. My fear is that they will soon be fully occupied while we sit with an
idle machine.
If your personnel are not able to bring the machine into full operation soon, we will
expect you to cover all of our expenses and losses.
Yours faithfully,
(Signed)
Roland Chocolate
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