Legal Studies (Unit 2)

Question 1

Explain the conditions that establish a contract

Answer 1

1. Intention to create legal relations
2. Offer (proposal for contract)
3. Acceptance
4. Consideration

Question 2

Whats the difference between offer and invitation to treat?

Answer 2

An offer is a proposal to enter a legally-binding relationship with another, which requires acceptance. An invitation to treat is when a seller advertises their products to invite consumers to make their offer. For example, goods on display at a store are an invitation to treat, while taking these products to the checkouts is an offer.

Question 3

What are factors that influence capacity?

Answer 3

• under 18
• intoxicated
• mentally impaired

Question 4

What is the difference between terms and representations?

Answer 4

Terms are the specific details of a contract, conditions being the essential terms that define the contract (ie product) and warranties being the lesser important terms (ie. year of product manufacturing).

Representations are often referred to as ‘sales talk’, promotional promises not included in contracts

Question 5

What is the parol evidence rule?

Answer 5

Common law that prevents secondary interpretation of a term (you can’t explain what you meant outside of the objective wording)

Question 6

What is the function of exclusion clauses?

Answer 6

Limit or exclude liability of one party (ie for negligence on their part)

Question 7

What are circumstances where contracts cannot be enforced?

Answer 7

1. Lack of capacity
2. Lack of genuine consent
3. Legality of object

Question 8

What is the difference between mistake of fact and misrepresentation?

Answer 8

Mistake of fact regards is an honest factual error, whereas misrepresentations can be innocent or fraudulent. These involve untrue statements of fact within the contract terms.

Question 9

Explain how a misrepresentation of fact can be used to terminate a contract?

Answer 9

The misrepresentation must be fraudulent, acted upon, and responsible for damages

Question 10

What are factors that inhibit genuine consent?

Answer 10

• misrepresentation
• duress
• undue influence (eg. doctor/patient)
• unconscionability
• unreasonable contract terms

Question 11

Explain unconscionability with examples

Answer 11

A contract cannot be legally enforced against an individual deemed socially or culturally disadvantaged, eg. poverty, sickness, age, education, language, race, ect., according to s20-21 of the ACL

case law: Commercial Bank of Australia v Amadio [1983]

Question 12

Explain the difference between void and voidable?

Answer 12

When a contract is voidable, the injured party can decide if they want to continue, however when the contract is void, it is fully terminated.

Question 13

What are methods of incorporation for exclusion clauses?

Answer 13

• signature
• reasonable notice
• ticket case
  (incorporation must be explicit)

Question 14

List ways a contract can be discharged?

Answer 14

• performance (both parties complete terms)
• mutual agreement
• operation of law (one party becomes bankrupt)
• frustration (external circumstances)
• discharge by breach

Question 15

explain rules regarding damages:

Answer 15

• damage must result specifically from breach
• person claiming damage must have reasonably acted to prevent damage
• damages must concern financial loss

Question 16

What legislation protects consumers in Australia and how?

Answer 16

The Australian Consumer Law (2011) provides a system of consumer protections and remedies for defective goods and services, protects against unfair contract terms, and provides enforcement of these codes

Question 17

What was the precedent established by Adams v Lindsell (1818)? And Entores Ltd v Miles Far East (1955)?

Answer 17

Acceptance through post is established at the exact moment the parcel is sent

Acceptance through email is established at the moment the email is received

Question 18

What is the function of the ACCC?

Answer 18

The Australian Competition and Consumer Commission acts as a consumer watchdog, ensuring the conduct of business does not compromise the safety, fairness and efficiency of the competitive free trade market

Question 19

What legislation establishes consumer rights to good service?

Answer 19

s52: undisturbed possession of goods
s54: the goods are of acceptable quality
s56: the goods match their description

Question 20

What are remedies if a good is of broken or unacceptable nature?

Answer 20

• a repair, replacement or refund
• cancellation
• compensation

Question 21

What is the precedent established in Carlill v Carbolic Smoke Ball Co [1893]
(Acceptance)

Answer 21

An ad was placed in the papers offering a reward for any that tested the newly released carbolic smoke balls. However, a lady was denied the reward after meeting the terms, as they argued she never accepted.

The outcome established that she accepted by meeting the contract terms, and that acceptance is unconditional and does not need to be communicated to

Question 22

What is the precedent established in Felthouse v Bindley (1862)?
(Acceptance)

Answer 22

Silence does not constitute acceptance

Question 23

What do the cases Roscorla v Thomas (1842) and Folkes v Beer (1894) say about consideration?

Answer 23

If further promises are made after the contract is accepted, these additional promises require consideration.

However, additional promises are not consideration within themselves

Question 24

What are terms implied by statute (include examples)

Answer 24

Implied terms are details of the contract assumed to be reasonably expected, ie. a service is carried out with skill, or a good will be provided within a reasonable amount of time

Question 25

If a contract is breached, what is one common law and one statute (ACL) remedy?

Answer 25

In common law, the contract could be considered voidable, for the injured party to decide whether to continue or not. Under the ACL, the injured party can pursue legal compensation, if certain conditions are met (ie the breach caused financial loss)

Question 26

What is the function of s18 of the ACL?

Answer 26

Seeks to regulate misleading or deceptive conduct, which is identified by the ACL