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MBS502 Law for Business

Unit Information
T2A, 2012

Unit coordinator: John Murphy Murdoch Business School Faculty of Law and Business

Published by Murdoch University, Perth, Western Australia, 2012 Updated March 2012, John Murphy

This publication is copyright. Except as permitted by the Copyright Act no part of it may in any form or by any electronic, mechanical, photocopying, recording or any other means be reproduced, stored in a retrieval system or be broadcast or transmitted without the prior written permission of the publisher.

CONTENTS

UNIT INFORMATION
Introduction Resources for the unit Assessment Learning guide 1 5 7 11

MBS502

Law for Business

Unit Information

This information should be read in conjunction with online learning materials.

ONE

Introduction
Unit overview
Welcome to MBS 502 Law for Business. This is an introductory course for postgraduate students who have not previously studied Australian law. The aim of this course is to provide postgraduate students with the essential general grounding in the Australian legal system and some particular areas of substantive law. This unit will focus on the Australian legal system, important rules and principles of contract law and some particular applications of it to business operations.

Prerequisites
You will need to be enrolled in a postgraduate level course.

Aims and objectives


The broad aim of this unit is to acquaint postgraduate students with some specific legal principles applicable to business in Australia. This involves introducing postgraduate students to the Australian legal system, Agency Law, Partnership Law and Contract Law. The objectives of the course are: 1 To give participants wishing to develop management and business skills the basic legal knowledge they need to conduct day to day business affairs and in particular, to identify when they need to seek legal advice. To enable postgraduate students to acquire a sufficient understanding of the law, its institutions and the manner of their operation in reaching resolution of legal disputes. To develop postgraduate students critical thinking skills in the legal context.

Learning outcomes On successful completion of the unit you should be able to: o Examine legal aspects of business relationships o Identify and manage fundamental legal issues in an objective manner o Communicate with legal advisors in an intelligent and informed manner

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Graduate Attributes This unit will contribute to the development of the following Graduate Attributes: o o o o Communication Critical and creative thinking Social interaction Independent and lifelong learning

Unit coordinator
Your coordinator for MBS502 is John Murphy. Contact details Email: j.murphy@murdoch.edu.au Phone: 08 9360 7515 Technical help For technical difficulties with the Learning Management System (LMS) online materials contact the IT Service Desk on ITservicedesk@murdoch.edu.au.

Topics
Development of the Australian legal system Doctrine of precedent and Statutory Interpretation Agency Law Partnership law Contract Law

Learning activities
The teaching program consists of a weekly 3 hour seminar.

Attendance
Attendance and participation at all sessions is encouraged.

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Study Load
This unit is a Masters level, four-point unit where you are expected to spend an average of approximately 13 hours per week on the subject over the teaching period. (This is a guide... to do well the time involved may be more than is indicated here.) The structure of postgraduate degrees at Murdoch University is based on a system of credit points. The guideline adopted by the University in determining the number of credit points represented by each unit is that the usual full-time student load in a semester is twelve points. Thus a four-point unit should engage roughly a third of a student's available time and effort. This is an inclusive estimate, including all lectures, tutorials, personal study, and assignments required for the unit. (See The Credit Point System paragraph on the Enrolment in Programs web page of the Murdoch University Handbook.) (http://wwwcomm.murdoch.edu.au/handbook/geninfo/enrolprog.html) You may be used to taking courses where you can cram just before the exam or tests, memorise some principles and facts, then regurgitate them in the exam and pass. That approach does not work well in Law, as previous students in the subject will testify. You obviously need to learn some facts, but you also need to learn how to approach legal problem solving questions from an analytical, logical and reasoned perspective. This process requires thinking time and practice rather than a cramming technique.

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Study schedule MBS502 Law for Business T2A 2012


Session
1

Reading Text 1 Ch 1, 2, 5 and 8 and other LMS material Text 1 Ch 3, 4, 6 and 7 and other LMS material Reading material placed on LMS Reading material placed on LMS Text 2, Chapters 2 & 5 and other LMS material Text 2, Chapters 3 & 4 and other LMS material Text 2, Chapter 6 & 7 and other LMS material Text 2, Chapter 14, 11, 12 & 13 and other LMS material Text 2, Chapter 9 & 10 and other LMS material Text 2, Ch 15 & other LMS material
Text 2, Ch 16 and other LMS material

Topic
Introduction to the Unit; and The Australian Legal System Its origins and development The Australian Legal System Hierarchy of Courts, Doctrine of Precedent and Statutory Interpretation Agency law an introduction to the application of Common Law principles Partnership Law an introduction to the application of legislation and its interpretation Contract Law Formation of contract: Intention to create legal relations, Contract Law Formation of contract: Offer & Acceptance Contract Law - Formation of contract: Consideration; Legal Capacity Contract Law - Formation of contract: Legality of Object: Genuine Consent Contract Law - Contents of contract: Representation, terms & warranties, exclusion clauses Contract Law - Discharge of contract: Breach & Frustration; Contract Law - Remedies & Damages Review of Course

Important dates

Assignment question posted/made available

In-Class Test

Assignment submission

10 11 12

13 14

EXAMS STUDY BREAK EXAMINATION PERIOD

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TWO

Resources for the unit


Essential unit materials
o Text 1: Ellis, E., Principles and Practice of Australian Law, 2nd Edition, Thomson Lawbook Co., 2009 o Text 2: Graw, S., An Introduction to the Law of Contract, 7th Edition, Thomson Lawbook Co., 2012

Other print references


Latimer P, Australian Business Law, 28th Edition, CCH Australia Ltd, 2009. Gibson & Fraser, Business Law, 4th Ed, Prentice Hall, 2009 Vermeesch & Lindgren, Business Law of Australia, 11th Ed, LexisNexis, 2005 Butterworths Business and Law Dictionary, Lexis Nexis, 2nd Ed, 2005

Online & library resources


The unit welcome page and LMS online unit materials are available. There are also other materials available from the Library. Electronic Course Material & Reserve info http://prospero.murdoch.edu.au/search~S1/ Past exam paper http://wwwlib.murdoch.edu.au/exams/

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THREE

Assessment
Assessment Description Value Date

In-class Test

Assignment Final exam

Multiple choice & short answer test Individual paper Extended response

20 %

Session 6

30% 50%

Session 8 Assessment period

Assessment details
In-classTest A test will be held in session 6. Students will be allowed 1 hour to complete 20 multiple choice questions and 5 short answer questions. The questions will be based on topics up to and including the session 4 topic. The test will be marked out of 20 and is worth 20% of the final unit grade.

Assignment The assignment question will be distributed to students in session 4 and will be posted on LMS following that session. The assignment will be no more than 2,000 words. Students must use a 12 size font, double spacing and default Microsoft Word margins. This assignment is marked out of 30 and is worth 30% of the final unit grade. Submit this assignment using the assignment tool in LMS. (If you have never used this system before, please check with your local administrative support or program manager for advice. The due date for submission of this research paper is the start of Session 8. Please see below for details of extension to this deadline.

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The mark for your assignment will be determined by reference to the quality of its analysis, its clarity and organisation, and its presentation, including its freedom from distracting stylistic errors (grammatical, spelling, punctuation and typographical). All references are to be cited in accordance with the Murdoch University Library citation guide at http://wwwlib.murdoch.edu.au/find/citation/.

Assignment marking guide

Identification of relevant issues Examination of the appropriate law Application of the law to the facts provided Presentation Referencing TOTAL

3 5 14 4 4 30

Due date extension for the assignment will be granted only in an exceptional circumstance. If something exceptional arises that requires an extension you should contact the unit coordinator before the due date. Only the unit coordinator can grant extensions. Late submissions which have no agreed due date extension will have 10% of the marks deducted per day of delay. Reasons which are insufficient to warrant an extension include computer failures, car failures or other transportation difficulties, work conflicts and other study commitments.

Final exam (All students) The final examination will be of 3 hours duration and held in the assessment period. It will be an extended response exam and based on lecture material and readings provided in the course of the unit. The examination is open book. It will be marked out of 50 and is worth 50% of the final unit grade. The final exam will consist of a number of legal problem solving exercises similar to those covered in the tutorial exercise covered during the semester. The final examination for MBS502 will only be related to material provided on Contract Law, that is, material provided from session 5 to 13 inclusive.

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Deferred assessment
The availability of deferred assessment is not determined by the Unit Coordinator. A central administration procedure must be followed.

Determination of the final grade

Notation HD D C P N DNS

Grade High Distinction Distinction Credit Pass Fail Fail

Percentage Range 80 100 70 79 60 69 50 59 Below 50 Below 50, did not submit any assignments after HECS census date 45 49*

S
*The

Supplementary Assessment

award of the grade of S shall be at the discretion of the Unit Coordinator.

University policy on assessment


Assessment for this unit is in accordance with the provisions of Degree regulations 4048. Check these in the current Murdoch University Handbook and Calendar.

Assessment roles and responsibilities Please refer to the University Policy on Rights and Responsibilities of Students and Staff at http://www.murdoch.edu.au/admin/policies/assessment.html#8

Academic Integrity Murdoch University encourages its students and staff to pursue the highest standards of integrity in all academic activity. Academic integrity involves behaving ethically and honestly in scholarship and relies on respect for others ideas through proper acknowledgement and referencing of publications. Lack of academic integrity, including the examples listed below, can lead to serious penalties. Find out more about how to reference properly and avoid plagiarism at http://www.murdoch.edu.au/teach/plagiarism

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Plagiarism

Inappropriate or inadequate acknowledgement of original work including: Material copied word for word without any acknowledgement of its source Material paraphrased without appropriate acknowledgement of its source Images, designs, experimental results, computer code etc used or adapted without acknowledgement of the source.

Ghost writing

An assignment written by a third party and represented by a student as her or his own work. Material copied from another students assignment with her or his knowledge. Material copied from another students assignment or work without that persons knowledge.

Collusion

Purloining

Adapted from Section 9.3 of the Assessment Policy, Plagiarism and Collusion at http://www.murdoch.edu.au/admin/policies/assessmentlinks.html#9

Plagiarism-checking software The University uses software called Turnitin which checks for plagiarism. Please note that when you submit assignments electronically to Turnitin, a copy of your work is retained on the database to check collusion and future plagiarism. The University has a legal agreement with Turnitin that it will not share or reproduce student work in any form. Also note your submission to Turnitin does not satisfy the requirements for submission.

Non-discriminatory language Please refer to http://www.murdoch.edu.au/teach/studyat/non_disc.html

Conscientious objection in teaching and assessment For guidelines on conscientious objection, see http://www.murdoch.edu.au/vco/secretariat/admin/gdelines/consciobj.html

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FOUR

Learning guide

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SESSION 1 Introduction to the Australian Legal System


Essential reading Ellis, E., Principles and Practice of Australian Law, 2nd Edition, Thomson Lawbook Co., 2009 Chapters 1, 2, 5 and 8 Essential additional reading available on LMS

Key concepts 1. Law 2. Rule of Law 3. Ethics and the Law 4. Types of Law 5. English system of Law 6. Commonwealth Constitution Terry, who lives in Brisbane, decides to open a coffee shop in Fremantle. Rather than operate as a sole trader, she registers a private company as the owner of the business. As the managing director of the company, Terry leases premises, employs waiters, gets a loan from the bank and purchases equipment. She agrees to purchase all her coffee supplies from Sam for a year. Terry gets permission from the local council to put chairs, tables and umbrellas on the pavement outside the coffee shop. When she opens for business the following things happen: Terry does not properly secure one of the umbrellas and a customer is injured when it blows over in a gust of wind. Terry finds an alternative supplier of coffee who offers lower prices. Terry wants to cancel her agreement with Sam. The owner of the neighbouring shop complains that Terrys tables encroach on his space, and pushes them away from his store. Terrys waiters complain that they are being forced to work too many hours each day. A health inspector says that Terrys kitchen is dirty and fines the

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company $1000.00. Discuss these events. In particular, do the following: (a) Identify aspects of this case that relate to the following areas of law: - Criminal law - Tort law - Contract law - Property law - Administrative law - Corporations law (b) Find examples in the case-study of how the law does the following things: Allows people to organise and plan with reasonable certainty. Lays down the rights, duties and powers of members of different classes and groups. Permits, encourages, forbids or discourages particular activities. Controls the use of force and forbids unauthorised violence. Creates rights and duties that can be enforced and provides remedies. when rights are interfered with or duties are not discharged.

(c) Why is it important to know the law? Are persons expected to know the law? Where do you look to find the law? In what different forms does the law exist?

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SESSION 2 Introduction to the Australian Legal System


Essential reading Ellis, E., Principles and Practice of Australian Law, 2nd Edition, Thomson Lawbook Co., 2009 Chapters 3, 4, 6 and 7 Essential additional reading available on LMS

Key concepts 1. Court Hierarchy 2. State and Federal Courts 3. Case Law and Precedent 4. Ratio decidendi and obiter dicta 5. Statute Law 6. Delegated Legislation 7. Statutory interpretation

EXAMPLE OF STATUTORY INTERPRETATION (taken from J Carvan, Understanding the Australian Legal System, 2005, Lawbook Co, ch 6)

In the second reading speech for the Ellenbrook National Park (Restriction of Entry) Bill, the relevant Commonwealth Minister says: We have been concerned for some time that the Ellenbrook National Park which is on Commonwealth land, enjoyed each year by thousands of bush walkers, cyclists, and family picnickers is being ruined by heavy traffic. This legislation will restrict vehicular access to the Park so that the present users of the Park will continue to enjoy it in the years to come. The Bill passes. The new Act carries the short title: An Act to restrict traffic into the Ellenbrook National Park. Section 5 of the Act reads: No vehicle shall be permitted entry to the Ellenbrook National Park.

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Mary, who has been cycling through the Park every weekend for the past 20 years, is refused entry with her bicycle by a Park Ranger the weekend after the Act commences. Discuss whether the Ranger is entitled to restrict Marys entry to the Park.

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SESSION 3 Agency Law


Essential reading LMS reading material on Agency Law found in the LMS folder Session 3 Essential additional reading available on LMS

Key concepts 1. Principal and Agent; types of agency relationships 2. Authority of the agent; actual, implied and apparent 3. Duties of the agent to the principal 4. Liabilities of agent and principal 5. Termination of the agency 6. Introduction to IRAC

Mrs. Trustie went to Retrovision Store, a reputable furniture store in the city, to purchase certain articles of bedroom furniture. Upon entering, Mrs. Trustie was greeted smartly by Joe Con wearing his name-tag with Retrovision Stores logo and name on it. Joe inquired if he could be of assistance, and Mrs. Trustie informed him specifically of the articles of furniture she was interested in. He immediately guided her to where they were and helped with the selection, offering advice where necessary. Upon confirming her selection Joe withdrew from his pocket a small pad that had the stores name and logo on it. He recorded her order and calculated the total amount to be $600. Mrs. Trustie handed him the $600, which he took away with him, allegedly, to arrange her order. He came back a little later and informed her that the articles, other than those on display, were not in stock, and that they would be delivered to her as soon as they were available. He gave her a copy of the invoice stamped paid. Mrs. Trustie waited a few months for delivery of the articles and when they were not forthcoming she contacted Retrovision Store. Mrs. Trustie was informed that there was no record of her order and Joe Con, who had issued the invoice, was not authorised to do so as he had joined the store only for work experience and had no authority whatsoever to conduct any transactions on behalf of Retrovision Store. The store also had no record of the receipt of her $600. Based solely on principles of Agency Law can Mrs. Trustie successfully take action against Retrovision Store? Give reasons for your answers

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SESSION 4 Partnership Law


Essential reading LMS reading material on Partnership Law found in the LMS folder Session 4 In particular, obtain a copy of the current Partnership Act in force in Western Australia Essential additional reading available on LMS

Key concepts 1. Essential elements of a partnership 2. Authority of partners 3. Liability of partners 4. Partnership by estoppel 5. Rights and duties of partners 6. Dissolution of the partnership

Kieran Perky, Susie O'Kneel, and Ian Tops carried on the business of swimming pool contractors in partnership but without a written agreement. Kieran Perky was the founder of the business, managed it and contributed 10% of the capital. Susie OKneel and Ian Tops were inactive partners but contributed the remaining 90% of the capital equally. The success of the firm had been due throughout its existence to the capacity and personal qualities of Kieran Perky. By an oral agreement, each partner had the right to periodically draw such sums from the profits of the firm as were necessary for his/her living expenses but each partner was not to withdraw more than 25% of the profits earned by the partnership in any financial year. There was no express agreement concerning the sharing or management of excess profits. Kieran Perky, without the knowledge of Susie O'Kneel and Ian Tops, invested excess profits of the firm of about $90,000 in investment property entirely unrelated to the business of the firm. From this investment, Kieran Perky made a profit of $200,000 that he claimed for himself. This investment in no way interfered with the operations of the partnership business and Kieran Perky did replace the $90,000 he had taken. Susie O'Kneel and Ian Tops no longer trust Kieran Perky and wish to expel Kieran Perky by making use of their majority vote. They also wish to claim an equal share of

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not only the firms profits but also a share of the $200,000 that Kieran Perky made with the firm's monies. What are O'Kneels and Ian Tops's rights?

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SESSION 5 Contract Law


Essential reading Graw, S., An Introduction to the Law of Contract, 6th Edition, Thomson Lawbook Co., 2008 Chapters 2 and 5 Essential additional reading available on LMS

Key concepts 1. Definition of a contract 2. Elements of a simple contract 3. Intention to create legal relations

Florence is a trained nurse, working and living in New York. She is employed there on most favourable terms because of her specialised knowledge and she also owns her own apartment in Manhattan. She receives a letter from her parents, pleading with her to return to Melbourne as they are both ill, asking her to return to care for them in their old age, and assuring her that they will leave to her in their respective wills, their beach house at Portsea in appreciation of her services. She sells her Manhattan property, relinquishes her job and returns to Melbourne to look after them. After their death five years later, she discovers that the Portsea house has been left in her parents wills to the Lost Dogs Home, their favourite charity. Can she claim the Portsea house from their estates?

At a party organised by Prince there were some uninvited guests. One of the uninvited guests was Cindy who Prince thought was the prettiest girl he had ever seen. Prince immediately fell in love with her. Cindy however had to leave before midnight and before Prince could get to know her. Although he tried very hard to find her again he was unsuccessful. In desperation he put up posters of a drawing of her that he had made from memory offering a reward of $500 to anyone who could provide him with information on her.

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One day Diana, who had not seen the posters, was talking to Prince and mentioned Cindy. Diana apparently knew who Cindy was and provided Prince with the information he was seeking. Later Diana tried to claim the reward of $500 but Prince refused to pay her anything. (a) (b) Can Diana bring an action to claim the reward money of $500? Would your answer be different if Diana had seen the poster before giving the information to Prince but gave the information only because she wanted to help her lovesick friend?

Cindy and Prince subsequently got married but did not live happily ever after. They separated two years later. After their separation Prince agreed to pay her a maintenance allowance of $100 per week, in part, as consideration for Cindy continuing to pay of a joint credit card account. He later defaulted on the payments. (c) Can Cindy sue Prince for the maintenance allowance he has defaulted on?

During their marriage Prince had also agreed to let her have $50 a week as "entertainment" allowance. He had not paid her this allowance for the last six months of their marriage. (d) Would she be able to claim this allowance as well?

(Consider all of the above issues solely from the point of view of Contract Law, do not allow your personal knowledge of Family Law to influence your discussion)

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SESSION 6 Contract Law


Essential reading Graw, S., An Introduction to the Law of Contract, 6th Edition, Thomson Lawbook Co., 2008 Chapters 3 and 4 Essential additional reading available on LMS

Key concepts 1. Rules of Offer and Acceptance

Jack Russell on his 18th birthday wanted to have a party for his friends but was told by his mother that there was not enough money in the house to organise one for him. His mother suggested he could raise some money for the party by selling the old boat that they had. Russell parked the boat on his front lawn with a sign "4 Sail - $1,500 o.n.o". Border Collie, who saw the sign, said to Russell that he would be prepared to buy the boat for $1,000. Russell replied that the price was too low and suggested $1,200. Collie responded by asking if Russell would be prepared to accept payment of the $1,200 in three weekly instalments of $400 each. Russell replied that he would not. Russell further added, "Anyway I am no longer interested in selling the boat to you". At the precise moment Russell spoke these words, an Australian Air Force plane flew low overhead and drowned out his words. Russell did not bother to repeat what he had just said and was leaving when Collie quickly agreed to the $1,200 suggested earlier by Russell. a) Is there a contract between Russell and Collie? b) Would your answer be different if the plane flying overhead had not drowned out Russells words? c) How would your answer be affected if Collie had not asked Russell if he would accept payment of the $1,200 in three weekly instalments of $400 each but instead said, I will pay you $1,200 in three weekly instalments of $400 each.

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SESSION 7 Contract Law


Essential reading Graw, S., An Introduction to the Law of Contract, 6th Edition, Thomson Lawbook Co., 2008 Chapters 6 and 7 Essential additional reading available on LMS

Key concepts 1. Consideration 2. Legal capacity

Bart Singhson operated a fuel service station and in January 2009 made a contract with Seagull Petroleum to sell only petrol supplied by them for the next two years. In January 2010, owing to some massive road works nearby, part of the normal traffic going past his service station was to be diverted for almost a year. Bart Singhson, who was facing financial ruin, immediately contacted Seagull Petroleum to lower the base rate at which the petrol was being supplied to him. Seagull Petroleum agreed to lower the rate by 10% while the traffic remained diverted due to the road works. In reliance of this promise by Seagull Petroleum, Bart Singhson hired a manager for the 12 months to January 2011. In June 2010 new management took over Seagull

Petroleum and one of their first acts was to cancel this arrangement with Bart Singhson. Seagull Petroleum demanded that the base price of the petrol revert to the original rate and that Bart Singhson make payment, within two weeks, of all arrears calculated from the original base rate contained in the 2009 agreement. Discuss if Bart Singhson can enforce the promise to lower the base rate by 10% while the traffic remained diverted and also refuse to pay the arrears demanded.

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SESSION 8 Contract Law

Key concepts 1. Legality of Object

Essential reading Graw, S., An Introduction to the Law of Contract, 6th Edition, Thomson Lawbook Co., 2008 Chapters 11, 12, 13 and 14 Additional reading available on LMS

Tutorial questions TBA

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SESSION 9 Contract Law


Essential reading Graw, S., An Introduction to the Law of Contract, 6th Edition, Thomson Lawbook Co., 2008 Chapters 9 and 10 Essential additional reading available on LMS

Key concepts 1. Representations Terms Warranties 2. Exclusion Clauses Terri took her husbands dinner jacket and her green silk dress to Anne Cleaners dry-cleaners, a firm her family used whenever they had cleaning to be done. As in the past, she was handed a docket and, as usual, she placed it in her purse without reading it. When she called to collect the clothing she found the dinner jacket missing and her dress badly stained. One of the assistants recalled handing the dinner jacket to a customer who had apparently lost his docket but who was able to identify the jacket when allowed to sort through the rack. No explanation was forthcoming about the stain. When Terri demanded compensation she was referred to a clause on the docket which read: "We will not be liable for any loss of or damage to clothing left for cleaning howsoever such loss or damage may be caused." The manager also pointed out that the same words were printed on a large sign at the entrance of the shop. The sign had obviously been there for some time. Terri protested that she had never read either the docket or the sign. Terri wants to sue for the loss of the jacket and the damage caused to her dress. Advise her. i. ii. Would your answer be different if there was no large sign at the entrance of the shop? What if Terri had never been to Anne Cleaners before and there was no large sign at the entrance of the shop?

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SESSION 10 Contract Law

Essential reading Graw, S., An Introduction to the Law of Contract, 6th Edition, Thomson Lawbook Co., 2008 Chapter 15 Essential additional reading available on LMS

Key concepts 1. Discharge of Contract 2. Breach 3. Frustration

Melinda owned a resort hotel, The Gorringe, at Rockingham. During the summer she contracted with George, an air-conditioning and heating contractor, to enlarge the air-conditioning and heating system of the hotel. The proposed work required moving the existing systems, adding to the present network of ducts and providing additional air outlets in various specified rooms. The total price of the work and parts required was $30,000 and the method of payment was stated as $5,000 to be paid upon signing of the contract with the balance due on completion of the work. By January 15, Georges employees had proceeded to the point where much of the relocation work had been done and the main trunk line of ducts installed. The work remaining to be done comprised about one-third of the total agreed job. On January 16, there was a thunderstorm and the building was struck by lightning. The entire hotel building and contents were destroyed. George brought an action against Melinda for $15,000, representing the value of services and parts supplied up to the time of the fire. Would George be able to succeed in his claim? answers. Give reasons for your

Would your answer (in contract law) be different if the fire was caused not by lightning but by Melindas own negligence?

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Also consider the above facts where there is no fire and George has completed the job but Melinda discovers that the air outlets have not been installed according to the plans. The cost of rectification work is estimated to be $5,000. Can Melinda refuse to pay George for the job and argue that it was a lump sum contract where she is only obliged to pay the full amount upon due completion of the work?

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SESSION 11 Contract Law


Essential reading Graw, S., An Introduction to the Law of Contract, 6th Edition, Thomson Lawbook Co., 2008 Chapter 16 Essential additional reading available on LMS

Key concepts 1. Remedies 2. Damages

Bill Late had a contract to install new computers at the Microhard Trade Centre (MTC) in Fremantle by the end of February this year. As a result of delays, primarily due to Bill Late's own lack of efficiency, the installation project was not completed until the end of April. Unknown to Bill Late, Microhard Trade Centre had also been awarded a contract to host an international conference in March on global GIS systems and satellite imagery that would have netted the company an additional $100,000 profit over and above its normal monthly profit of $10,000. The conference was cancelled, as Microhard Trade Centre was unable to provide any computer services. Microhard Trade Centre was also unable to carry out any business activity during the extra two months that it took Bill Late to complete the work. Microhard Trade Centre now claims business losses as follows: Normal business losses for 2 months at $10,000 profit/month Salaries paid to secretarial and computer staff for 2 months Loss of additional profits due to cancellation of conference Total $ 20,000 $ 10,000 $100,000 $130,000

Advise Bill Late if he is liable for all or any of the losses being claimed by Microhard Trade Centre.

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Legal Problem Solving Guidelines

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A suggested technique for legal problem solving. From session 3 of the teaching period you will be faced with legal problem solving questions. These questions will not ask you to discuss or critique a theoretical question. You will be presented with a factual scenario, a set of circumstances, that describes the interactions of two or more people that leads to some form of disagreement over the legal relationship(s) that these facts have created. It will be your task within the session time limitations to give some kind of advice to one or more of the people mentioned in the scenario. This practice in the sessions will have direct beneficial outcomes to you in preparation for the final examination in MBS502. The final examination in this unit will be based entirely on similarly structured questions. The legal problem solving model that is most commonly used is characterised by the acronym IRAC. This stands for Issue, Rule of law, Application of rule to facts and Conclusion. Step 1 List the legal issues. The issue in a case is the question of law to be decided by the court. For example, is there a valid contract between A and B? Stating the issue as a question encourages you to find an answer. It also acts to keep you focused on answering the question based on the legal problem and not to become diverted from the issue itself. Step 2 State the rule(s) of law applicable to resolving that issue. This step sets in place the foundation that allows you to more persuasively answer the question posed in step 1. In this step you will quote and explain, for example, a section of a statute or a body of case law developed by the courts over a period of time. It will often not be sufficient to simply mention the section number of a statute. It will almost always be necessary to use the case law that has been developed to give meaning to some of the words and phrases used in interpreting that statute. Alternatively, if the issue raised is one dealt with exclusively by the common law, then enough information has to be given about the cases cited to determine if the circumstances of the precedent are sufficiently similar to the question being dealt with that the ratio of the precedent applies to this question. Therefore, mention of the case name by itself is not sufficient in this part. You must give a brief statement of the facts followed by an accurate statement of the principle or rule of law that resulted from the decision in that case. There will often be conflicting precedents that you will have to state and examine. In this way you will be able to differentiate the case law to find the precedents that most accurately conform to the facts presented to you. Step 3 Apply the rule(s) of law to the facts presented This is, arguably, the hardest part of this process. This is where you have to analyse the law and determine how it applies to the issues raised and the facts presented in the scenario. This is the step that takes the most practice to achieve competency. You have cited certain statutes and cases in step 2 for a reason. You have done so because the facts presented to you have brought to mind the cases and material you have been given at lectures or you have read in your textbooks. You have already given an outline of the facts of the appropriate precedent cases in step 2, you do not need to do so again. What you must do is provide a link between the facts in the scenario and the cases cited in step 2.

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You need to state why the precedent case law that establishes a legal rule or principle should be applied to the facts presented to you. You must highlight the similarities between the precedent case and your fact pattern. Alternatively, you should highlight one or more material differences between the precedent case and the matter before you in order that you can then differentiate the cases and justify why a precedent should not apply to your particular circumstances. Step 4 Conclusion Do not forget that in Australia we have an adversarial system of solving legal disputes. This means that for every legal dispute there are at least two different points of view. This means that for any given scenario there may be more than one possible conclusion. In this step you have to select one of these possible conclusions and argue, in a summary form, the case you have prepared in steps 2 and 3 above. Whatever you do, you must answer the question posed at step 1.

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