Tony and his wife Sarah went to the Farmers' Market on Sunday and saw a beautiful antique lamp. It had stained leaded glass with a very beautiful floral design and bore the marking LCT. They believe it would be an excellent present to Tony's parents for their upcoming 50 years anniversary celebration.
The owner of the lamp Amanda says that she hasn't decided whether to sell the lamp yet, but she would not sell it for less than $2,000. Tony and Sarah decided to go home and have a think as the price was quite high in their view. They got Amanda's phone number and said that they would text her if they decides to buy the lamp.
When Tony and Sarah got home, Tony did some research online and discovered that the lamp was potentially a genuine Tiffany lamp handcrafted in the late 19th century and could be worth up to $1,000,000.00 USD. He immediately sent a text to Amanda stating "We agree to pay $2,000 for the lamp and are coming to pick up next Sunday." He did not receive a response but his iPhone showed that the message was read.
On the following Sunday Tony and Sarah went to the Farmer's Market and found Amanda. Amanda still had the lamp but told them that she has discovered the lamp is worth a lot of money and isn't interested in selling it anymore.
Tony and Sarah still really wants the lamp for $2,000.
Question:
Is there a valid contract between Tony/Sarah and Amanda? Cite relevant case law in your in your answer, using the ILAC method.
Question 2 Contract - Consideration 10 Marks
Application Question (ILAC)
Soltex Construction Ltd is a building company who has contracted with Greenheights Development Ltd to construct 7 terrace houses around Albany. Soltex's contract specified for the works to be completed within 12 months and that each property is to have Hermpac vertical shiplap cedar as external cladding.
Soltex ordered the cedar cladding from Hermpac Pacific Ltd and pays $25,000 deposit. According to the terms of the order, Soltex is to pay the balance of $25,000 to Hermpac upon delivery.
By August Soltex had still not received the cladding material from Hermpac. Soltex inquired with Hermpac and was told that there was a fire at the manufacturing plant and due to extensive backlog, Soltex's order may not be delivered until October.
When Soltex notified Greenheights of this delay, lawyers for Greenheights warned Soltex that under the terms of the contract, if the properties were not constructed within the 12 months, Soltex would be subject to penalty interest at 5% per day until completion of works. The director of Soltex calculates that this is likely to reduce Soltex's profits by $50,000. It was also too late to order the cladding material from any other supplier.
Soltex therefore offered a bonus payment of $15,000 to Hermpac if they could prioritise their order and deliver before the end of August. Hermpac agreed and managed to deliver the material on 29 August. They also issued an invoice for $40,000 to Soltex.
Soltex paid $25,000 and refused demands by Hermpac to pay the $15,000.
Question:
Will Hermpac Pacific Ltd succeed in a claim for $15,000 bonus? Cite relevant case law in your in your answer, using the ILAC method.
(10 Marks)
Question 3 Contract - Capacity 10 Marks
Short Answer Questions
Scoundrel Dealership Ltd sells used cars and their motto is "We will sell anything to anyone".
Thomas, the chief sales person at Scoundrel is particularly dodgy in his sales and doesn't care about anything other than making commission.
On Tuesday, Eddy, a 16 year old high school student came to the dealership. Thomas was able to convince Eddy to buy a rundown car with over 150,000km for $15,000. He told Eddy that everyone at school would think he was a loser if he didn't buy the car. He told Eddy that he can arrange finance for him as long as Eddy bring a adult family member to sign a contract of guarantee.
The next day, Eddy brought his 85 years old grandpa, Dean to the dealership. While Dean was at the dealership, he continued to ask Eddy if they were at the cake store and when can they have cake. Thomas saw and heard this but said nothing. Eddy was able to get Dean to sign the contract of guarantee and obtained financing. He then drove away in his brand new car with Dean.
When Eddy got home, his father Nick found out about the purchase and was furious. He was extremely angry at Eddy for taking advantage of Dean who suffers from Alzheimer's and also angry at Scoundrel for encouraging Eddy's behaviour.
He has come to you for legal advice on the validity of the two contracts.
Questions
- Advise Nick whether Eddy is bound to the contract with Scoundrel Dealership Ltd. Cite statutory provision(s) and/or case law authority in your answer.
[5 marks] - Assuming the contract is binding between Eddy and Scoundrel Dealership Ltd, Advise Nick whether Dean is bound to the contract of guarantee with Scoundrel Dealership Ltd. Cite statutory provision(s) and/or case law authority in your answer.
[5 marks]
Question 4 Contract - Cancellation 10 Marks
Application Question (ILAC)
After the Greenheights Development contract, Soltex Construction Ltd decided to build and market a high value residential property in Gulf Harbour. Their design called for six bedrooms, three floors luxury unit with cedar cladding sitting right on the cliff overlooking the waterfront. The building was completed within timeframe and put on the market.
James and his wife Rebecca, along with their five children had recently moved to Auckland from the United States. They saw the listing for the property and went to its open home. After seeing the property, James and Rebecca were very interested in purchasing it. However, James was cautious about living near the waterfront. He lived in Florida when hurricane Irma struck, and the property he was renting at the time had its external cladding ripped clean off. It was very important to James that the property can withstand high winds in cyclone conditions.
Anthony, the sales representative for Soltex told James that the external cedar cladding was manufactured to withstand category five (the highest) cyclones. In addition, the manufacturer will provide 30 years guarantee for the cladding. Satisfied with the response, James and Rebecca signed an unconditional contract to purchase the property
for $3,500,000 and paid a $350,000 deposit to Soltex.
James and Rebecca decided to do some additional renovation before they move in. They took Tom, an experienced builder to visit the property and told him what they wanted. While Tom was at the property, he noticed that some of the cladding wasn't fixed according to the manufacturer's instructions. Upon further investigation, it was discovered that none of the cladding was installed in accordance with the manufacturer's instructions. This puts the ability for the cladding to withstand high winds in cyclone conditions into doubt but it also meant that the manufacturer's guarantee was void.
James and Rebecca do not want the property anymore and wants to get their deposit back.
Does James and Rebecca have the right to cancel the contract and get their deposit back? Cite common law and/or statutory provisions accurately.
Question 5 Fair Trading Act 10 Marks
Application Question (ILAC)
Ultimate Strength Ltd was advertising and selling a product called Absolute Guard. It was promoted as a alternative drinkable solution which promised to boost immunity, grant additional energy and act as a natural working alternative to all forms of vaccination. In particular, one of the most recent advertisement stated "Protect your child from measles! Drink Absolute Guard!".
The advertising material for Absolute Guard claims that it was lab tested in the United Kingdom and widely distributed in Africa as an alternative to vaccines. They even have posters showing Richie McCaw holding a bottle of Absolute Guard giving a thumbs up.
The New Zealand Medical Association is extremely alarmed by the advertisement for Absolute Guard as their own laboratory testing shows that the only materials detectable in
the solution was food colouring, sugar, and vinegar. While drinking the solution will not cause any harm, it does not have any effects in preventing diseases.
The NZMA attempted to contact the UK lab listed on the advertisement and found that it did not exist. They could not find any evidence to show that Absolute Guard is being used in Africa to great success. They also contacted the spokesperson for Richie McCaw who said that Richie was unassociated with the product and had no knowledge that his image was being used in the advertisement.
The NZMA are already having reports of parents who are choosing Absolute Guard over proper vaccination.
Advise the NZMA whether Ultimate Strength Ltd is in breach of the Fair Trading Act 1983 and what can be done against Absolute Guard. Cite common law and/or statutory provisions accurately.
Question Marking Schedule Marks & Comments
Q1 ILAC Question – Offer and Acceptance
Issue: Correct statements of the Issue (1 marks)
Law: Correct principles of law clearly set out and explained well, with reference to relevant case law and/or legislation (4 marks)
Application: Principles of law systematically applied to the fact situation. Good explanation of application in clear and simple language (4 marks)
Conclusion : Correct statement of conclusion (1 marks)
/10
Q2 ILAC Question – Consideration
Issue: Correct statements of the Issue (1 marks)
Law: Correct principles of law clearly set out and explained well, with reference to relevant case law and/or legislation (4 marks)
Application: Principles of law systematically applied to the fact situation. Good explanation of application in clear and simple language (4 marks)
Conclusion : Correct statement of conclusion (1 marks) /10
Q3(1) Short Answer Questions - Capacity
Marks awarded out of 5 for clear, concise explanation of the law and/or relevant cases (2.5 marks) and its application to the situation (2.5 marks)
/5
Q3(2) Short Answer Questions - Capacity
Marks awarded out of 5 for clear, concise explanation of the law and/or relevant cases (2.5 marks) and its application to the situation (2.5 marks)
/5
Q4 ILAC Question – Cancellation
Issue: Correct statements of the Issue (1 marks)
Law: Correct principles of law clearly set out and explained well, with reference to relevant case law and/or legislation (4 marks)
Application: Principles of law systematically applied to the fact situation. Good explanation of application in clear and simple language (4 marks)
Conclusion : Correct statement of conclusion (1 marks)
/10
Q5 ILAC Question – FTA
Issue: Correct statements of the Issue (1 marks)
Law: Correct principles of law clearly set out and explained well, with reference to relevant case law and/or legislation (4 marks)
Application: Principles of law systematically applied to the fact situation. Good explanation of application in clear and simple language (4 marks)
Conclusion : Correct statement of conclusion (1 marks)
/10