RMIT Classification: Trusted

RMIT
Classifi
cation:
Truste
d

Week 5: Negating a Contract

Tutorial Questions

1. Ann, an accounting major at RMIT, turned 18 on February 9, 2021. Ann lives in a three-bedroom
apartment she inherited from her grandmother. In preparation for her birthday, which she celebrated
with friends in her apartment, Ann hired Home Décor on February 6, 2021 to decorate her apartment.
She agreed to pay $1000 for the service. Home Décor decorated Ann’s apartment wonderfully. On the
same day, Ann also bought on credit a number of items, including a nice pink dress, candles, sweets and
soft drinks, from Happy Supermarket. At her birthday celebration, Ann learned from her friends, some
of whom just completed a course on commercial law, that contracts may not be enforced against minors.
Now Ann, claiming that she was under the age of 18 by the time the contracts were made, refuses to pay
both the fee for the decoration service and the price of the goods she bought from Happy Supermarket.
Can Home Décor enforce the contract against Ann?
How about Happy Supermarket? Why or why not?
2. Eddie purchases a Persian carpet from Khali the Rug Dealer in High St, Prahran. On the back of the rug
is an authentication certificate that says the rug is from Baluchistan in Iran, a region noted for its fine
carpets. Khali assures Eddie that this is true, and Khali believes it to be so. On the basis of Khali’s
assurances, Eddie pays $25,000 for the carpet. Three years later when Eddie tries to sell the carpet, a
prospective buyer brings Ali Khan, a rug valuer, to inspect it. Ali says it is not a Baluchistan carpet -
“the knots are tight, but the silk is not of the finest quality. This one is from a small village near Herat in
Afghanistan - it’s nice but worth only $4,000”. Eddie packs it up and heads off to see Khali.
Please advise Eddie whether he has any legal rights against Khali under
common law.
3. Clare, Bob’s wife, has recently been diagnosed with cancer. She was undergoing intensive medical
treatment. Bob, knowing that his wife panics so easily, requested Clare’s doctor not to communicate to
Clare that she had cancer. As a result, only few people know about Clare’s health issue, Jack, Bob’s
business partner, being one of them. Jack has deep financial trouble of his own, as he was unable to
service his debt. He knew that his house could be foreclosed unless he paid his bank loan in three
months’ time. To Bob’s disbelief, betraying their longstanding partnership, Jack began to pressure Bob
to give him $40,000 or he would tell Clare that she had cancer. Bob complied with Jack’s demand and
signed a contract, according to which Bob would settle Jack’s bank loan. Meanwhile, Clare’s latest
diagnosis showed that she was now completely cured from the cancer. Bob now refuses to honour his
promise to Jack.
Was there a valid contract between Bob and Jack?
Can Jack successfully sue Bob?
4. Bill and Jeff were good friends. Bill advertised to sell the old car he recently bought. Jeff found out that
Bill was selling his car and offered to buy it because he was passionate about collecting and driving old
 RMIT Classification: Trusted
RMIT
Classifi
cation:
Truste
d

cars. Bill told Jeff that his car was almost brand new as he bought it two months ago from Ha, an old
lady who never drove the car for a long distance. Jeff looked at the odometer and in fact, it stated a very
low figure of 1000km and he thought it would be great to have an old-fashioned car with so few
kilometres. What Bill and Jeff did not know was that Xi, Ha’s grandson, used to drive the car for a very
long distance of 100,000km, and deliberately turned the odometer of the car back to 1000km. Jeff
bought the car and when he decided to inspect it he discovered that the odometer was tampered with
(changed) and the car actually drove 100,000km. Jeff is upset now and wants to sue Bill, who is himself
surprised to learn that odometer was in fact tampered.
You are a lawyer for Jeff. Advise him.
What if Bill knew that Xi used to drive the car for a very long distance of 100,000km, and
deliberately turned the odometer of the car back to 1000km ?
5. Mary owns a company called Mary’s Cheap Boats that specializes in buying and selling used boats.
Ngan is an elderly migrant who does not read and write English very well and whose husband recently
died. Ngan and Mary have known each other for many years, and Ngan always comes to Mary for
important decisions, particular those ones on financial issues.
Ngan has a lot of bills to pay and needs to come up with money quickly. Her husband left her an old
boat that he had for many years, so Ngan visited Mary’s company to discuss selling the boat. When
Mary saw a picture of the boat, she realized it is a very rare, antique boat called a Black Manta. The
average market price for a Black Manta boat is around $250,000.
Mary invited Ngan to go to lunch to discuss the sale of the boat. During lunch, Mary kept ordering
white wine and together they drank 3 bottles of wine. Over lunch, Mary said the boat is old and worth
only $1000.
Mary and Ngan then signed a contract specifying that Ngan agreed to sell the boat to Mary for $1,000.
The next day, Ngan found out that the boat is valued at $250,000. She wanted to terminate the contract
with Mary.
Advise Ngan whether she can terminate the contract with Mary.