RMIT Classification: Trusted

RMIT
Classifi
cation:
Truste
Week 6: Term, Representations, Puffery, and Incorporation
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Tutorial Questions

Question 1

Miles, who had recently retired as a professional triathlete, decided to organise his own triathlon race series.
To that purpose, he contacted the local council to license an area of parkland near the beach to hold the races at
weekends. When he inspected the area, he knew that it was the perfect location.

However, there was a fence preventing direct access from the licensed area to the beach and the water. The
agent told him that the council would remove the fence before the first race. Miles was also concerned that the
beach was used by drug addicts at night and there might be syringes buried in the sand. However, the agent
stated that the council cleaned the beach with special equipment before each weekend. Miles promptly signed a
basic licence agreement relating to the parkland, requiring payment of $1,500 per race for 10 races.

On the day before the first race, Miles discovered that the fence had not been removed and participants had
great difficulty getting into the event. When he called the council, they denied that it was their obligation. The
licence didn’t say anything about removal of the fence and it cost Miles $500 to remove and store it. In
addition, the council has told Miles that he must return the fence immediately after each race.

The response to the series has been a disaster and in the first race 2 competitors were injured when they stood
on discarded needles on the beach. In fact, the council now only cleans the beach once a month. Miles wants
to cut his losses and cancel the series.

Required: Advise him in relation to his rights against the council.

ANSWER:

Key legal issue: Whether the council breached the contract?

Sub-legal issue:

- Any breach of the written contract? NO

- Any breach of incorporated terms (which should be discussed, which legal rules should be cited: reasonable
notice and reasonable notice was given before the formation (case?)): 2 incorporated terms and they are
condition
 Any outside statement? 2 outside statements look important and verifiable -> so, we can consider
to incorporate them inside the contract (Note: If there is a puffery, mention it in here, before
considering the reasonable notice (say it like, that statement is a puffery, should not consider it and
should not be incorporated as a term into the contract because there is no remedy for it)
 Are the conditions for incorporation by reasonable notice satisfied?
o Apply the rule reasonable notice and reasonable notice was given before the formation
(case?)
o Prove those 2 conditions
 The outside statements are terms now, and those terms are broken
 Condition or warranties?
Those two outside statements are condition -> He can terminate the contract and claim damages
(money compensation, e.g., if he had lost some money for organizing the series such as he had to
pay for the participants who suffered the injuries -> He can claim money compensation for those
things.
 RMIT Classification: Trusted
RMIT
Classifi
cation:
Truste
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Question 2

Minh has just arrived in Australia from Vietnam. He speaks little English and has little experience of the
Australian educational culture. He has two small children who were about to enter primary school. One
evening, George, a salesperson working for Mannys Musical Superstore (Mannys), visited Minh and asked if
he could talk to Minh and his wife. After chatting for some time, George has successfully persuaded Minh of
the need to have a Yamaha Piano for his children. To encourage them to buy the piano he has repeatedly told
Minh and his wife falsely that having a piano was an essential requirement for their children to enroll in a
primary school in Victoria.

During the discussion, Minh also told George that he wanted a reliable and high quality piano which could last
for at least 5 years. George assured Minh verbally that “Well, we are selling the best pianos in the world. They
are all made in Japan, and could last for at least 10 years”.

Minh was very excited. He then signed a contract to buy the Yamaha Piano from George for $25, 000 without
reading the contract and without consulting anyone.

The piano was delivered to Minh the next day. When Minh first saw it, he touched the middle C Key on the
keyboard, and the whole piano was broken down and separated in two piles: timber and metallic components.
A small fire broke out. The guest room and the furniture in there were partly damaged. Minh suffered severe
injuries, including third-degree burns, to his head, face, arms and hands as a result of the fire.

An independent enquiry found out that the piano was not made in Japan but Mannys imported cheap
components from a developing country in Asia and assembled it in Melbourne. The price that Minh had to pay
was also four times higher than normal market standards.

Advise Minh if he has any legal arguments against George under common law?

ANSWER:

What should Minh argue?

Key legal issue: Did George breach the contract?

Sub-legal issues:

- George had a misrepresentation?

+) Misrepresentation: George said: “They are all made in Japan, and could last for at least 10 years”. In
fact, having a piano was not an essential requirement for their children to enroll in a primary school in
Victoria. Also discuss about the material facts mentioned afterwards based on the real-life problem.

- George engaged in an unconscionable conduct?

+) Unconscionability (about fairness): Minh speaks little English and has little experience of the Australian
educational culture
-> George took the advantage from that to induce Minh to sign the contract

- Minh made a unilateral mistake?

+) having a piano was not an essential requirement for their children to enroll in a primary school in
Victoria.
 Breached of incorporated terms -> Breached of a contract -> The incorporated terms is a
condition -> Minh can terminate the contract and have money compensation
 RMIT Classification: Trusted
RMIT
Classifi
HOMEWORK cation:
Please practise the question in your own Truste time.
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Question 1

John signed a contract with his friend Hanh for buying her bakery shop in HCMC. The parties met, negotiated
and John agreed to buy Hanh’s bakery shop for $100,000. They signed an agreement as follows:

“John will pay Hanh $100,000 for the bakery shop at the address 123 Nguyen Hue Street, and Hanh will give
John complete ownership of the bakery and its contents. The parties will transfer ownership on Saturday, 16
December 2014”.

During negotiations John asked Hanh if she could include a pizza oven and bread slicers in the agreement and
she agreed. They did not put that sentence in the contract. John was very excited about buying the bakery shop
and because he was in a hurry and trusted his friend Hanh, he signed the contract without reading it.

When he got a hold of the bakery shop, he discovered that there were no pizza oven and bread slicers. He called
Hanh and asked her to deliver a pizza oven and bread slicers. She refused.

Required: John is very unhappy and wants to sue Hanh. Will he be successful?