Past exam papers Essay Example

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Question 1:

  1. In accordance with Australian Consumer Law, there are different consumer guarantees that John must include in the contract. However, the following will apply in this case

  • First, the supplier will guarantee John that the description of the cars as advertised is accurate.

  • Secondly, the contract should compel the supplier to prove that the motor vehicle John has settled on match any demonstration or sample model.

  • Thirdly, the contract should guarantee that the supplied vehicle satisfy any unforeseen or extra promises or express warrantees that were made about the vehicle on the website.

  • The seller should guarantee John that they have the right to sell the advertised car (which can contracted as clearing title), unless they alerted John before the sale that they were working under ‘limited title.’ In such cases however, John must be aware that some territories may need the company selling to guarantee clear title.

  • The seller will have to guarantee John of undisturbed possession. That is, no one will make attempts of repossessing John’s car or prevent him from using the car unless under certain circumstances.

  • The motor vehicle should be free from any charges or hidden securities and should remain so unless other circumstances come in.

  1. In this case the motor vehicle has failed to meet what John expected or terms that were specified in the contract as advised above. In this case, John has the right and obligations as this can be considered a major failure in accordance with ACL. As a reasonable consumer, John would not have bought the car if he had been told the extent to which chassis was damaged; regardless of whether he signed the abiding contract form. Secondly, the car is significantly different from the description provided by the Shifty’s Autos. Thirdly, the vehicle is unfit for normal purpose and chances of making it normal within a reasonable time are unclear. John has two options as provided by the law; he can reject the car and ask for identical replacement or refund. Secondly, he can keep the motor vehicle and ask Shifty’s Autos for compensation.

Question 2:

The nature of business as described is still exploratory in the sense that neither Mary nor Frieda is aware of the business challenges they need to venture in. To such extend, it would be advisable that both parties try their hands separately and later on consider reasons why they should partner. Additionally, sole trading/partnership will ensure that both parties are having the ease of setting up their business provided Mary and Frieda register with Australian Securities and Investment Commission (ASIC). In as much as either party will be fully liable for debts and actions the business meets, the following reason make it prudent for sole proprietorship rather than partnership.

First, Mary will entirely depend on friends she has made for the 20 years and the implication of this is that ‘new business selling dolls’ may attract only these friends. This will make it difficult for them to provide legal documentation on how names of new partners will be added with time. Additionally, Mary and Frieda clearly have different interests. For instance, Frieda will be providing the capital and management skills. On the other hand, Mary will be acting as the sales person and doing doll repairs in her spare time. Based on the manner they will be sharing their duties, it will be difficult to outline their business. It is required that when outlining business, duties and responsibilities be ascertained. The fact that Mary will only act on some duties during her spare time makes it difficult to ascertain clear roles.

If they decide to partner then the partnership formed will not be a separate legal entity from its owners. This will make Mary and Frieda liable for debts and obligations. This is not possible at the moment as they have not shown how profits, liability and investment can be shared by each partner. Additionally, selection of the right partner is not based only on the duration one has known the other or the willingness of the either party to sponsor the establishment of the business. The key factor is to be ready to cater for debts and actions that are incurred by the other party and to be ready in case the business is dissolved.