Commercial Law

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Doc TypeCase Study
Academic Levelcollege-undergraduate
Subjectcommercial Law
TitleCommercial law
Citationother
Other Citationaccording to provided information
Required Sourcesaccording to provided information
Pages8
Due Date2018-04-27 06:00:00
Paper DescriptionCase and Section are required and this assignment is 30% of the course so need to be done very carefully and use the terms and condition properly. if you are confused anywhere feel free to contact me

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THE UNIVERSITY OF ADELAIDE COMMERCIAL LAW I ASSIGNMENT – 2018 SEM 1 The Assignment is an individual assignment and not a group assignment. The Assignment covers and assesses the Contract Law topics to the end of topic 4 “Contract Terms - Implied Terms”. It is not intended to cover and assess topic 1 “Introduction to the Legal System and to Business Structures”. The Assignment answer is due at 9 am on Monday 30 April. This new due date overrides any date that has appeared in the Course Outline. Assignment answers are to be submitted electronically through the Turnitin link that will be made available on My Uni. Further instructions will be provided for this closer to the due date. Assignment Answer Format The Assignment answer must be no more than 2,000 words in content excluding footnotes. A penalty, of a reduction in mark, may be imposed if this word limit is exceeded. It must be type written (double spaced on one side of A4 paper), a font size of not less than 12 must be used and a word count must be noted on it. An Assignment answer that does not have a word count noted on it may not be marked. Please note that the use of footnotes is preferred over the use of endnotes. Footnotes should not, however, include content that is essential to the reasoning on an issue. Marks will only be given to the content of the body of the Assignment answer and generally will not be given to the content of footnotes. Before starting your Assignment answer, students should ensure that you have read carefully the “Assignment Notes” for more information about the format and content of the Assignment answer, and about the recommended steps you should take in preparing and writing your Assignment answer. Assessment Criteria 1 The extent to which the Assignment answer identifies relevant law and legal issues. 2 The extent to which the Assignment answer demonstrates concise and cohesive written arguments on those legal issues, including having references to any applicable case decisions of the unenacted law (Common Law) and any applicable statutory provisions of the enacted law, and showing how they assist the argument of a party. 3 The extent to which the Assignment answer sets out how the law applies to relevant facts to support the conclusion in the answer. 4 Whether the Assignment answer is easy to read and understand. Ease of reading can be achieved, for example, by the use of relevant headings and sub-headings. Assignment 2018 Sem 1 Author: D. Carbone 2 Assignment Question You are required to advise each of the parties for the legal disputes that have arisen from the “Background facts” below, and briefly outline how a judge would decide the issues in dispute. The two legal disputes are: 1) Adelaide Show Ltd v All Business Insurance Pty Ltd. 2) Peter v Amusement Rides Pty Ltd. Background Facts The Royal Adelaide Show is an annual event in South Australia that attracts thousands of visitors over nine days in September. The Show is one of the biggest in Australia and features exhibitions and displays, including farm equipment and animals, fashion and competitions. Its major attractions include a variety of carnival and amusement rides. The Show is organised and operated by Adelaide Show Ltd on premises owned by it. One of the Show’s oldest rides is the “Mad Mouse”. This is a roller coaster ride in which separate open carriages holding two persons at a time ride at a rapid speed on a convoluted track built high above the ground. The track includes steep slopes and sharp turns that provide thrills and enjoyment for the roller coaster’s riders. The roller coaster is owned and operated by Amusement Rides Pty Ltd, which carries on the business of supplying and operating amusement rides. Unfortunately late on the third day of the Show, as one of the Mad Mouse’s carriages was riding around the roller coaster’s tracks, it broke away from the ride. The carriage plunged downwards landing on the ground next to the Mad Mouse ride. This accident caused injuries to two riders in the carriage at the time, Peter and his 8 year old daughter. He sustained injuries to his body that will require medical treatment at a cost of $50,000. Following the accident, the government agency SafeWork SA impounded the Mad Mouse ride to undertake an investigation of the cause of the accident. This investigation reveals that the ride did not have a current safety certificate that was mandatory under the law for the ride to be operated. The investigation also reveals that two of the four bolts that secured the front wheel of the carriage had snapped in half and that the remaining two bolts sheared off, which caused the carriage to break away from the ride. 1) Adelaide Show Ltd v All Business Insurance Pty Ltd Shortly after the accident, Adelaide Show Ltd (Adelaide Show) sent a letter to its insurance company, All Business Insurance Pty Ltd (ABI), advising of the accident and the likelihood of claims being made by those who were injured or suffered loss as a result. Adelaide Show said that it expected the claims to be based on its negligence in failing to ensure that the Mad Mouse ride’s operator had a current safety certificate. ABI replied by a letter in which it stated that such claims arising from the accident would not come within the scope of the insurance cover taken out by Adelaide Show. The insurance cover provided was set out in a valid written contract signed by both parties, the terms of which had been drafted by ABI. The insurance contract included clause 20 that states: Assignment 2018 Sem 1 Author: D. Carbone 3 “(1) (2) The insurance cover under this policy extends to any liability for personal injury or property damage arising from the acts or omissions of Adelaide Show Ltd, its employees, servants and agents on Adelaide Show Ltd’s premises, and from the acts or omissions of persons invited by Adelaide Show Ltd onto its premises. However, the insurance cover does not extend to liability for personal injury or property damage arising from the acts or omissions of a person on Adelaide Show Ltd’s premises for an unlawful purpose.” ABI said in its letter that the insurance cover was excluded by clause 20(2) since the operator of the Mad Mouse ride not having a current safety certificate meant that the operator was “a person on Adelaide Show Ltd’s premises for an unlawful purpose”, namely operating an amusement ride without a current safety certificate that was mandatory and required under the law. Adelaide Show has now started legal action against ABI as a result of ABI’s refusal to indemnify Adelaide Show for any claims resulting from the accident. Adelaide Show claims that ABI has breached the express terms of the valid insurance contract. Adelaide Show points out that the day before the insurance contract was signed by it, Adelaide Show sent an email to ABI that stated: “Can you please explain the effect of clause 20(2). We are concerned that the clause will leave Adelaide Show Ltd exposed to a range of legal claims for which we would need insurance cover, especially the risks to the public arising from our animal display and competition events and from the other attractions on our premises during our Show.” Later the same day, ABI telephoned Adelaide Show and replied by saying: “Clause 20(2) is a standard term in all our insurance policies. It applies to ensure that we have no liability to indemnify for losses and damage arising from the acts of persons who are on your premises illegally, such as trespassers and burglars. The clause should therefore have no application to the risks mentioned in your email.” The next day Adelaide Show signed the insurance contract and delivered it to ABI. 2) Peter v Amusement Rides Pty Ltd Peter had entered into a valid contract with Amusement Rides Pty Ltd (Amusement Rides) by purchasing a ticket for the Mad Mouse ride service supplied by it in trade or commerce. The ticket cost Peter $5. Because he was injured as a result of the ride crashing, Peter has started legal action against Amusement Rides seeking damages. In its defence, Amusement Rides has pointed out that on the back of the entrance ticket to the Royal Adelaide Show, which Peter purchased from Adelaide Show Ltd at a cost of $15, there appears the following statement: “Animals displayed in Adelaide Show Ltd’s premises and amusement rides on these premises can be dangerous and accidents can and do happen that may cause an Assignment 2018 Sem 1 Author: D. Carbone 4 injury to you. To the extent allowed by law, legal liability for your death or personal injury is excluded automatically on you entering these premises.” Adelaide Show Ltd decided to include this statement on its entrance tickets after a recent Show during which an animal broke away from its handler and ran into some Show goers, injuring a number of them. Amusement Rides has also pointed out that above its ticket booth, where tickets to ride the Mad Mouse were purchased, there was a sign (measuring 60 cms wide x 30 cms high) that stated: “Persons using this ride do so at their own risk. Amusement Rides Pty Ltd is not legally liable for any injury or loss whatsoever (including property damage), whether due to its own negligence or that of its employees or contractors, or otherwise. All implied terms are completely excluded.” This sign was just below an illuminated flashing coloured sign (measuring 2 metres wide x 1 metre high) that read “Mad Mouse Ticket Booth”. Although Peter noticed and read the illuminated sign to find where he could buy a ticket for the Mad Mouse ride, he did not take any notice of the unilluminated sign below and did not read it and was not actually aware of its terms before buying his ticket for the ride. It was late in the day and dark but the area around the rides was lit up with street type lighting. Four months after the Mad Mouse crash, SafeWork SA produced a more detailed report from its investigation. In addition to the investigation’s initial revealing of the Mad Mouse ride not having a current safety certificate, the detailed report further reveals that the four bolts that secured the front wheel the Mad Mouse roller coaster carriage contained a latent defect. This latent defect was due to a machining error that had occurred in the manufacture of the bolts, and could not have been detected by visual inspection by Amusement Rides or by the manufacturer of the Mad Mouse ride. The SafeWork SA report also concluded that had the bolts not contained the latent defect, then it was unlikely that the two bolts that had snapped would have done so, that the other two bolts remaining in place would have sheared off, and that the carriage would have broken away from the Mad Mouse ride. Assignment 2018 Sem 1 Author: D. Carbone THE UNIVERSITY OF ADELAIDE COMMERCIAL LAW I ASSIGNMENT NOTES – 2018 SEM 1 For the Assignment, you are required to advise each of the parties for the two legal disputes that have arisen. Recommended approach to answering the Assignment 1 You should refer to the approach to answering a legal problem (or legal case study) set out in PowerPoint slides 11 to 12 of the orientation Topic 1-1 “Introduction to Commercial Law I”. This approach is also further explained in these notes. 2 Identify the parties to the dispute and the legal relationship (if any) between them, and identify the party who will be the Plaintiff in a potential Court case. 3 Your Assignment answer should identify the legal action to be brought by that Plaintiff and then the legal issues raised based on the relevant law. 4 For your advice to the Plaintiff, you should consider the matters that must be proved by the Plaintiff to succeed in the legal action. These matters are called the “required elements of the cause of action”. The burden of proof is on the Plaintiff to convince a judge of each of these required elements. In a civil dispute, the standard of proof is on “the balance of probabilities”. 5 For your advice to the Defendant, identify which of the required elements of the cause of action the Defendant is likely to concede and which they are likely to contest. The required elements that the Defendant is likely to contest become the issues in dispute. You should give most emphasis in your Assignment answer to the contested required elements. 6 You should ensure that each of the arguments relied on by the Plaintiff on an issue is responded to by the Defendant, unless the Defendant concedes the point. Not doing this in an Assignment answer is a common failing of student answers. 7 Given the word limit, in writing your Assignment answer there is no need to provide an Introduction that summarises the facts or sets out an overview of relevant legal rules. Therefore, after starting by setting out the legal issues in dispute, an Assignment answer can go on, for example, to take the form of “The Plaintiff can argue that …”, which should appear under a main heading “Advice to Plaintiff”. See further the sample part solution to Tutorial 3 Pauline v Steven. 8 For both the Plaintiff and the Defendant, use a subheading for each legal issue in dispute and then set out under that subheading the arguments that can be advanced or relied on for that issue. 9 Make sure you refer to any unenacted law Court cases or any statutory provisions of the enacted law that will support a party’s position. Assignment Notes 2018 Sem 1 Author: D. Carbone When referring to unenacted law Court cases, the level of detail required when referring to them is a matter of judgment. Usually a very brief statement of the facts of the case, the outcome of the case and the principle relied on by the Court will be sufficient. If such Court cases have been dealt with in the course PowerPoint slides, then you can use the same wording as is used in the slides. You do not need to and should not express the decided case law in your own words as this will have the effect of changing the law and its meaning. In regard to statutory provisions of the enacted law, it is not necessary to set out the section in full. Just give a brief paraphrase of the section and a precise reference, including the section number, the subsection number and paragraph number (if any), and the name of the Act (eg s15AA of the Acts Interpretation Act 1901 (Cth)). Again, if such statutory provisions have been dealt with in the course PowerPoint slides, then you can use the same wording as is used in the slides. You do not need to and should not express the enacted law in your own words as this again will have the effect of changing the law and its meaning. Also, it is important to explicitly show how previous Court cases or the statutory provisions assist the argument of a party to the dispute. A common failing of student answers is to leave it to the Assignment marker to work this out. 10 For the judge’s decision, you should state the overall decision for the case study and then briefly outline the reasoning of the judge that supports the decision. As indicated, you should be brief in this part of your Assignment answer because the majority of the marks for the Assignment will be usually allocated to the other parts of your answer, ie your advice to the Plaintiff and Defendant on their arguments for the legal issues identified. Despite this part of your answer not carrying many marks, it is noted that you may have some difficulty in making your decision. This is also often the case in the real world for judges as well as lawyers who advise clients. After all, if there is a clearly correct outcome that is agreed by everyone, a legal dispute and case would never get to Court. The parties would settle it out of Court. But despite this difficulty, you must state in your Assignment answer who you think would succeed in a legal action. Finally, note that judges are of course guided by their sense of fairness and common sense in deciding legal disputes, and so you should be as well in reaching your conclusion. Assignment Notes 2018 Sem 1 Author: D. Carbone THE UNIVERSITY OF ADELAIDE COMMERCIAL LAW I PART SOLUTION TO SAMPLE ASSIGNMENT - PAULINE v STEVEN On the following pages is part of a suggested solution to the legal Case Study question Pauline v Steven discussed in Tutorial 3. This suggested solution is provided to give you an indication of the format and layout that you should use for your Assignment answer. The “Assignment Notes” have further information about the Assignment answer format and layout, as well as other recommendations you should follow. Another reason for providing the part suggested solution is to help you to ensure that you have identified the legal issues and arguments that should be addressed in an answer for the legal Case Study question involving Pauline and Steven. The following points should be noted about the part suggested solution: 1 The arguments outlined for the parties are stated at their briefest. It is expected that some of the arguments would need to be expressed and explained in more detail in an Assignment answer. As stated in the “Assignment Notes”, it is important to explicitly show how any statutory provisions or previous Court cases assist the argument of a party to the dispute. A common failing of student answers is to leave it to the marker to work this out. 2 When the suggested solution refers to previous Court cases, only the name of the case has, in the main, been mentioned. Again as indicated in the “Assignment Notes”, in referring to relevant Court cases in your Assignment answer you can go further and usually give a brief statement of the facts of a Court case, the outcome of the case and the principle relied on by the Court. In this regard, the level of detail that is sufficient will be a matter of judgment. 3 The suggested solution does not include a part setting out an outline of how a judge would decide the issues in dispute or, in other words, a conclusion on the legal disputes. This has been done deliberately to reflect that the main focus of an Assignment answer should be on identifying the legal issues raised and setting out the supporting arguments needed for the particular Case Study question. Nonetheless, you must still include in your Assignment the brief outline of the judge’s decision. See further paragraph 10 of the “Assignment Notes”. 4 Of course, the legal issues in dispute that are relevant to this Case Study and discussed in the solution should not be taken as being indicative or determinative of the legal issues that should be identified as relevant and discussed in a student answer to the Assignment for the course. 5 Although the solution includes an Introduction of sorts setting out the relevant legal issues, it should be noted and remembered that it does not “waste” any of the word limit in repeating the facts of the Assignment question. See further paragraph 7 of the “Assignment Notes”. Assignment sample Part solution - Pauline & Steven 2018 Sem 1 Author: D. Carbone 2 PAULINE v STEVEN Whether Pauline (P) is entitled to recover the $50,000 from Steven (S) depends on: 1 Whether the first agreement for P to redecorate the cellar door for $55,000 was a first valid (oral) contract. 2 Whether the second agreement for P to accept $5,000 in full and final settlement was a second valid (written) contract. 3 Whether equitable promissory estoppel applies to the second agreement for P and or S. Advice to P Issues 1 and 2 each require the elements of agreement, intention to be legally bound, and consideration (unless exceptions apply).1 The facts state that P and S “agreed” in relation to issues 1 and 2 and so agreement is not at issue [and does not need to be addressed]. First valid (oral) contract was made Intention to be legally bound The intention to be legally bound can be specifically expressed by the parties to an agreement or be implied from their conduct. An objective test is used to determine the intention: what would a reasonable person in the circumstances of the parties have understood as the intention. In the past, Courts have relied on these “Common Law presumptions”:  Business and commercial agreements are presumed to be intended to be legally binding: Carlill v Carbolic Smokeball Co.2  Family, domestic, social and “voluntary” agreements are presumed not be intended to be legally binding: Balfour v Balfour.3 The presumptions can be rebutted by the express intention of the parties, or the implied intention determined objectively from the facts and circumstances. P can argue that the first agreement between P and S was a “business or commercial” agreement and not a “domestic” one because it involved the supply of redecorating services by one business to another business for a fee of $55,000. The agreement is therefore presumed to be legally binding: Carlill v Carbolic Smokeball. The presumption has not been rebutted because there was a commercial context to the agreement and its seriousness was supported by P doing the cellar door redecorating, at no doubt some cost to her: Carlill v Carbolic Smokeball. Alternatively, P can argue that if the first agreement was a “domestic” agreement, the presumption that it is not legally binding: Balfour v Balfour, is rebutted. The presumption 1 It is assumed that the fourth to sixth required elements of a valid contract are all satisfied for all the agreements mentioned (and so they do not need to be discussed), as per the Tutorial additional background and assumptions. 2 (1893) 1 QB 256. 3 (1919) 2 KB 571. Assignment sample Part solution - Pauline & Steven 2018 Sem 1 Author: D. Carbone 3 has been rebutted because, even though P and S were wife and husband, the agreement was not an ordinary domestic arrangement between them, such as in Merritt v Merritt.4 Rather, it was really an agreement between two businesses. Consideration (unless exceptions apply) Consideration is something of value given in return for something else under an agreement. The rules of consideration include that it:  Must have some value but need not be adequate: Thomas v Thomas (dec’d).5  Must be something more than what a party is already obliged to do: Stilk v Myrick.6 P can argue that she provided consideration by doing the redecorating worth $55,000 (although consideration need not be adequate: Thomas v Thomas (dec’d)). NO second valid (written) contract was made Intention to be legally bound P can argue that the second agreement was a “domestic” one because it was a case of a wife helping out a husband. P can further argue that the presumption against the second agreement being legally binding has not been rebutted. Putting the second agreement in writing and signing it was not done to reflect an intention to be legally bound by P and S, but to convince the bank to provide the loan to S. Consideration (unless exceptions apply) P can argue that S’s $5,000 payment of only part of the debt is not sufficient consideration because S was already under an existing obligation to pay the total debt of $55,000: Stilk v Myrick and Foakes v Beer.7 Further, there was no earlier payment before the due date by S, unlike in Pinel8 where there was an earlier payment that was sufficient consideration. Equitable promissory estoppel does NOT apply to second agreement in S’s favour The doctrine of equitable promissory estoppel applies to avoid unconscionable detriment resulting from a promise that is not performed: Walton Stores (Interstate) Ltd v Maher.9 This doctrine requires all of the following in the case of P and S: 1) S assumed or expected that a particular legal relationship exists between S and P. 2) P has induced S to adopt that assumption or expectation. 3) S acted or refrained from acting in reliance on the assumption or expectation. 4) P knew or intended that S would do so. 4 [1970] 1 WLR 1211. (1842) 2 QB 851. 6 (1809) 170 ER 1168. 7 [1881-5] All ER 106. 8 (1602) 77 ER 237. 9 (1988) 164 CLR 387. 5 Assignment sample Part solution - Pauline & Steven 2018 Sem 1 Author: D. Carbone 4 5) P’s action or inaction will result in detriment if the assumption or expectation is not fulfilled. 6) S has failed to act to avoid that detriment by failing to fulfil the assumption or expectation. P would concede 1) S assumed or expected that S was liable only for $5,000; 2) P induced that assumption or expectation by signing the written agreement and accepting the $5,000; 3) S acted on it by paying the $5,000; and 4) P knew or intended that S would do so. However, P can argue that there was no “detriment” to S as him taking on the liability and obligations under the bank loan was offset by his acquisition of a business asset presumably of an equal value, and of the opportunity to increase business profits. So S has not acted to his detriment but has in fact acted to his advantage. P can further argue that S’s case is different to Waltons Stores (Interstate) Ltd v Maher where the detriment to M was the destruction of an asset by M demolishing his building. Equitable promissory estoppel does apply to second agreement but in P’s favour P can argue 1) the assumption or expectation existed that S would hire P to decorate the new café/restaurant; 2) S induced P to adopt that assumption or expectation by S’ explanation of the situation as needing a loan to finance the purchase of the adjoining vineyard and the building and decoration of the new café/restaurant; 3) P acted on the assumption or expectation in agreeing to accept $5,000 in full and final settlement of the higher amount owed to her; 4) S knew or intended that P would do so; and 5) S’s action will result in “detriment” to P if the assumption or expectation is not fulfilled, that is P only receiving the lesser amount instead of the full $55,000. Advice to S NO first valid (oral) contract was made Intention to be legally bound S can argue that the first agreement was not a “business or commercial” agreement but a “domestic” one because it was made by a husband and wife. The agreement is therefore presumed not to be legally binding: Balfour v Balfour. S can further argue that the presumption has not been rebutted because P’s failure to enforce payment when it was originally due after 2 years is consistent with a lack in intention to be legally bound by the first agreement. Merritt v Merritt can be distinguished because in that case the husband and wife were separated when the agreement was made. P and S’s case is different because they were not separated when the first agreement was made. Alternatively, S can argue that if the first agreement was a “business or commercial” agreement, then the presumption in favour of an intention to be legally bound has been rebutted. Assignment sample Part solution - Pauline & Steven 2018 Sem 1 Author: D. Carbone 5 The presumption has been rebutted because, in addition to the first agreement being made between a husband and wife, there was a lack of a commercial context by not putting the agreement in writing and a lack of serious consequences supported by P’s failure to enforce payment when it was originally due after 2 years. Consideration (unless exceptions apply) S would concede that consideration existed for the first agreement. Second valid (written) contract was made Intention to be legally bound S can argue that the second agreement was a “business or commercial” agreement and not a “domestic” one because the agreement involved the compromise/part forgiveness of a business debt and had commercial consequences beyond both P and S in that it resulted in the loan from the bank. The agreement is therefore presumed to be legally binding: Carlill v Carbolic Smokeball. The presumption has not been rebutted because the circumstances of the second agreement were different from the first agreement. The parties put the second agreement in writing and signed it, S actually paid to P the $5,000, it had a commercial context and serious consequences. Consideration (unless exceptions apply) S would concede that there was no sufficient consideration for the second agreement. Equitable promissory estoppel does apply to second agreement in S’s favour S can argue that the required elements of 1) assumption or expectation, 2) inducement, 3) reliance, 4) knowledge or intention, and 5) detriment to S all exist [but refer to the relevant facts that satisfy the five required elements]. The detriment to S was him taking on the new liability and obligations under the bank loan. Equitable promissory estoppel does NOT apply to second agreement in P’s favour S can argue that he did not induce P to adopt the assumption or expectation claimed because the facts indicate only that P made that assumption as part of her reason for making the second agreement. Judge’s decision [Not included - see above page 1] BIBLIOGRAPHY The wording of the law used in this Assignment is as set out in the course PowerPoint slides authored by D. Carbone and or in the textbook “Business Law” 10th ed authored by Andy Gibson. Assignment sample Part solution - Pauline & Steven 2018 Sem 1 Author: D. Carbone
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