LEGAL PROBLEMS Essay Example

  • Category:
    Business
  • Document type:
    Assignment
  • Level:
    Undergraduate
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    3
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    2123

LEGAL PROBLEMS 9


LEGAL PROBLEMSProblem 1 (6 marks) Mary and her husband Tim are Australian citizens who live in the USA because Tim is a manager of a business there. Mary hates living in the USA so Tim agrees that she should return to their home in Australia and he will provide her with a weekly allowance of $500. Mary returns to Australia but after three months, Tim stops paying her the allowance. She divorces Tim and sues him for all the payments he promised to pay her but did not.

a) What is/are the issue/s you need to consider? (1mark)

The legal issues to be considered in this case are the agreement by Tim to make weekly provision to Mary of $500. Another issue that is to be placed under consideration is the breach of the agreement by Tim to fulfill the promise. Mary can also sue Tim for Damages caused by the breach of contract. Another element in this issue is divorce.
b) What is/are the relevant legal rule/s relating to this problem? If Mary sues Tim for breach of contract in court, she will not win. This is because the common law presumption is that any promise between husband and wife duly married does not amount to a legally binding contract. This principle seems to be a consequence of legal anxiety that if not properly handled will destroy the domestic calmness that exists in a home or in a relationship between two people.
d) Based on this information, if Mary sues Tim for breach of contract (common law), will she win in court? What is your answer – Yes? or No? Explain your answer. (3 marks)
The main case relating to this includes the Balfour vs the Balfour (1919). This case relates to a British couple, Mr. and Mrs. Balfour. Mr Balfour was living in Srilanka with his wife and time came for him to return to England. The wife was sick and could not travel as per doctor’s recommendations. Mr. Balfour therefore promised the wife to provide her with $30 till he returns. Mr. Balfour failed to honor this promise and the wife sued him for breach of contract.
c) What is/are the main case/s related to this problem?
The relevant legal rule relating to this case is the breach of contract. The promise by Tim to Mary that she would be providing her with weekly allowance of $500 amounted to a legally binding contract. Failing to comply after three weeks by Tim mounts to breach of contract. Tim was therefore legally bound by the contract to fulfill the agreed upon terms. Failure to comply with the contract terms calls for remedies for the non-breaching parties.


In addition, where these two people have separated, any agreement entered into is presumed to be void since it was only legally binding. Hence there is no love between these spouses which litigation might destroy. Merit v Merit Problem 2 (6 marks)
Fred has worked as the sales manager of Acme Plastics for five years. The business owner, Michelle, is so happy with his work that she tells Fred that she is going to give him a $100 per week increase in his salary. Michelle also says that she will back pay the extra $100 for the past 20 weeks (an extra $2000). When Fred examines his bank account the following week he finds that he has not been paid either the extra $100 for the first week since Michelle made the promise nor the extra $2000 which she had promised to back-pay him for the previous 20 weeks. When an unhappy Fred approached Michelle about this she told him that soon after promising the increase she had learned from her accountant that the business was doing worse than realised so she had changed her mind and he would have to remain on his original wage and would not be getting the $2000 back-pay.
a) What is/are the issue/s you need to consider? (1mark) b) What is/are the relevant legal rule/s relating to this problem?
One of the most evident issues in this case are creation of an offer. The business owner Mitchell makes an offer to the sales manager. Fred does not accept literally, but his actions reveal that he has accepted the offer.

d) Based on this information, if Fred sues Michelle for breach of contract, will he win in court? What is your answer – Yes? or No? Explain your answer. (3 marks) NB – restrict your answer to contract law (common law) issues.
One of the cases relating to this is the Pharmaceutical Society v. Boots. In this case, the court considered the display of boots and goods inside a supermarket as an invitation to treat rather than an offer. Relative to this, promising a salary increase to Fred was simply an invitation to treat rather than an offer.
c) What is/are the main case/s related to this problem?
A mere offer does not necessarily amount to a contract. In this case, what Mitchell did was simply an invitation to treat in which case, Fred had not officially accepted the offer, he only showed interest. This does not amount to offer.


If Fred sues Mitchell in the court of law, there are possibilities that he will not win. The court would use the judicial precedent of the Pharmaceutical Society v. Boots to make decision. In addition, the decision would be that a mere invitation to treat does not constitute an offer, hence agreement arising from such cannot be considered a legally binding contract. Problem 3 (6 marks)
one of the most obvious issues in this case is the failure of conditions through which the contract was based. Bob sells a 1999 bike to Bonnie under pretence that it was 2008 model. This contract is therefore based on the condition of the bike and any non compliance to this condition terminates the contract.
a) What is/are the issue/s you need to consider? (1mark)
Bob, a motor mechanic, agrees to sell Bonnie a motorbike for $2000. In their discussion Bob tells Bonnie that the bike is a 2008 model when, in fact, it is a 1999 model which should normally sell for only $1000. Bonnie buys it for $2000 and later, when she discovers the true age of the motorbike, she sues Bob.
b) What is/are the relevant legal rule/s relating to this problem?
No, this is because the failure of conditions renders the contract null and void. Because of the misrepresentation in the information given during the offer, the contract becomes null. However, Bob may be charged on the basis of damages caused by the contract. Bonnie can cite damages both psychological and social on the case and the court would award.
d) Based on this information, if Bonnie sues Bob for breach of contract (common law), will she win in court? What is your answer – Yes? or No? Explain your answer. (3 marks)
One of the main legal cases relating to this problem is the Financings Ltd v Stimson. In this case, Stimson saw a car and offered to make a purchase through dealers who were acting on behalf of the car owners (Financings). Both the parties were under the false impression that Financings were the main signatories while all along it was the dealers. Two days after purchase, Stimson returned the car on claims that he did not like the condition. Financings did not accept the move, and when they went to court, it was ruled that the dealers were not in capacity to accept or reject the offer hence making it void.
c) What is/are the main case/s related to this problem?
The general rule in this problem is that a contract can become null if the condition of the contract subject fails to materialize. In this case the two parties enter a contract and then the offeror realizes that the actual conditions prescribed in th contract are actually non-existent. The contract is therefore rendered null on this basis.
Problem 4 (6 marks) a) What is/are the issue/s you need to consider? (1 mark)
Eagle Eye Security shall not be responsible, under any circumstances, for damage or injurious acts caused by an employee of the company unless such act could have been foreseen and avoided by the exercise of due diligence on the part of the Company as his employer.
Theo sells second hand motor vehicles from his Sydney car yard. Theo enters into a contract with Eagle Eye Security whose guards are required to patrol his premises every night. One night Serge, the security guard on patrol, lights a cigarette and throws the match into what he thinks is a puddle of water but is, in fact, oil which catches fire and then causes an explosion that destroys the car yard and all the vehicles contained therein. The contract between Theo and Eagle Eye includes the following clause:

(3 marks)
If Theo sues the security firm, he would not succeed in getting any compensation. This is because the clause in the contract protects the guard and makes him not be liable. The court makes an assumption that prior to entering the contract, Theo had gone through the entire contract and clauses and was aware of the entire elements.
d) If Theo sues the security company for breach of contract (common law) will he win in court? What is your answer – Yes? or No? Explain your answer.
One of the cases relating to this problem is that of a bus ticket and passengers. The bus company makes an assumption that passengers often read all the information on the ticket and does not take liability on any loss that occurs to the passengers relating to such a clauses.
c) What is/are the main case/s related to this problem?
In case of a hidden clause in a contract, it is upon offeree to read all the terms in the contract before accepting the contract. Failure to comply with these does not transfer the liability to the offeror. It is therefore not the responsibility of the eagle security to make compensation for the same.
b) What is/are the relevant legal rule/s relating to this problem?
The issue to be considered in this case is the hidden clause. The presence of the clause makes the contract legally binding and the two parties must comply to the clause.
Problem 5 (6 marks)
The relevant statue in this case is the doctrine of ultra vires. In this case, Stuart is tricked into buying products that are faulty and not functioning perfectly. The misrepresentation in this case renders the contract void and null.
b) What is the relevant statute and section relating to this problem?
The issue in this case revolves around misrepresentation of facts during the offer. Stuart makes a purchase in good faith, and this contract becomes valid.
a) What is the issue you need to consider? (1 mark)
Stuart owns a shop on the Gold Coast that sells a wide range of sports equipment. He has recently purchased 50 cricket bats from Sweet-Spot Cricket Bats, a large manufacturer based in Brisbane. He commenced selling the cricket bats and, very soon after, many customers were returning unhappy, complaining that the bat handle broke on the first or second occasion they were used in a cricket match. He has contacted Sweet-Spot but they deny any liability and refuse to compensate him. Stuart now wishes to sue the manufacturers.
The case of d) Based on this information, if Stuart sues Sweet-Spot will he win in court? What is your answer – Yes? or No? Explain your answer with reference to statute law only. (3 marks)
The main case related to this is the Derry v Peek (1839) in which it was ruled that since the company had not disclosed all the pertinent facts about the contract. Failure to disclose all the elements of the offer to the offeree mounts to breach of the contract and makes the contract null and void.
c) What is (or are) the main case (or cases) related to this problem?
Derry v. Peek (1839) provides a legal precedent for this case, in which a company sells items to an individual without informing the individual of the faults. As a result, the contract becomes void and the company must pay for damages.

If Stuart goes to court, he will win. This is because the court would take a stand basing on the Derry v Peek (1838). According to this, failure to reveal all the components of a contract renders it null and void. The company will therefore have to compensate Stuart for damages such as loosing customer trust.

References

Sweeney, B., & O’Reilly, J. N. ,2007., Law in commerce. Chatswood, N.S.W., LexisNexis Butterworths.