CH01: Introduction to Law
1. Congress passed a law imposing penalties for displaying
"indecent" material online where children could see it. If
the U.S. Supreme Court subsequently rules that the statute
conflicts with the First Amendment of the U.S.
Constitution, the statute is void. True
2. In Anglo-Saxon society, men were put into groups of ten,
known as a "tithing" and were individually held responsible
for any injury caused by any member of the group. This is
the forerunner of the idea of business partnerships. True
3.A rule that establishes maximum length of work shifts for
air traffic controllers demonstrates an agency imposing a
regulation. TRUE
4.In 1994, the Arizona Supreme Court decided the case of
Hernandez v. Arizona Board of Regents and found a duty
of care to avoid furnishing alcohol to underage consumers.
If in 2008 a Flagstaff, Arizona, plaintiff brings a lawsuit
against an Arizona university’s fraternity for providing
alcohol to members under the legal drinking age, the
Hernandez v. Arizona Board of Regents case will serve as
precedent.True
5. Wilfred was driving too fast for the icy road conditions
and hit Sally's car. Sally can sue Wilfred in criminal court.
False
6. Lawyers originated in Anglo-Saxon courts, where they
were used to mediate disputes. False
7. Congress can create a statute on any topic at all. False
45. Misha, Gretchen, and Sam were stranded on a
mountainside after their plane went down in a snow
storm. They had no means of radio communication and
virtually no food or other supplies. After 18 days, Misha
and Gretchen killed Sam, the weakest survivor. Misha
and Gretchen ate Sam. This allowed them to survive
until they were rescued. After they were rescued, they
were charged with premeditated first degree murder
under the relevant state statute. Discuss the three
schools of jurisprudence and how each would influence
a finding of guilt or innocence for the two charged.
ANSWER. The three theories of jurisprudence are legal
positivism, natural law, and legal realism. The legal
positivism would say the law is the law. Therefore, Misha
and Gretchen are guilty and must pay the consequences of
the state statute. The natural law supporter would argue that
in this instance the law is unjust and need not be obeyed
because of the desperate circumstances. The legal realists
would argue that the case will be influenced by the judges'
and jury's income, education, family background, race,
religion, and other factors which they bring to the case
41 Explain the role that power, importance, and
fascination play in contemporary American law.
ANSWER: The role of "power" in contemporary law is reflected in
the fact that the strong reach of the law touches nearly everything
we do. The role of "importance" in contemporary law reflects the
fact that law is essential. Every society of which we have any
historical record has had some system of laws. The law, too, is
fascinating. For better or worse, we do expect courts to resolve
many problems. Not only do Americans litigate, they watch each
other do it. Every television season offers at
8. If the President vetoes a bill, it can still become law if both the
House and the Senate approve it with a 51% majority. False
9. The doctrine of precedent is binding on all courts from county
courts to the U.S. Supreme Court. False
10. The case called Kuehn v. Pub Zone would reveal that Kuehn is
the plaintiff, since the plaintiff is always listed first. False
11. Under the natural law theory of jurisprudence, an unjust law is
no law at all. True
12. Common law is a body of cases decided by legislatures. False
13. In order to determine if the case she was hearing broke the law,
Judge Jane referred to prior rulings on the same subject. In other
words, the judge is relying on precedent to make her decision. True
14. Door Way Computers, Inc., the trademark owner of "DoorWay,"
sought a court injunction to prevent Handyman Hardware, Inc.
from using the domain name, "DoorWay.com." A jury will decide
whether Door Way is entitled to this remedy. False
15. In the case of Panavision Int'l. v. Toeppen, the Ninth Circuit
Court of Appeals affirmed the district court's decision This means
that the Ninth Circuit Court of Appeals approved the district court's
decision and upheld the outcome in the case. True
44. Describe the doctrine of precedent and its application
to common law.
ANSWER: The doctrine of precedent, which developed gradually
over centuries, requires that judges decide current cases based on
previous rulings. This vital principle is at the heart of American
common law. Precedent ensures predictability. The accumulation of
precedent, based on case after case, makes up the common law.
42. Identify and discuss the primary sources of contemporary
US. law.
ANSWER: The primary sources of U.S. law include: (1) the U.S.
Constitution (the supreme law of the land) and state constitutions
(which establish state governments); (2) statutes, which are drafted
by the legislatures, (3) common law, which is the body of cases
decided by judges, as they follow earlier cases, known as precedent,
(4) court orders, which compea party to and prohibit it from doing
something: (5) administrative law, which are the rules and decisions
made by federal and state administrative agencies, and (6) treatites
which are agreement between us and other sovereign countries.
43. Explain the concepts of legal positivism, natural law, and
legal realism as they relate to the field of jurisprudence.
ANSWER: Legal positivisan simply means that the law is what the
sovereign says it is. The sovereign is the recognized political power
whom citizens obey, so, in the United States, both the state and
federal governments are sovereign. Therefore, whatever the
sovereign declares to be the law is the law, regardless of whether it
is right or wrong. Natural law stems from the belief that the law
must have a moral basis. Therefore, an unjust law is no law at all
and need not be obeyed. Legal realism says that it does not matter
what is written as law; what counts is who enforces that law and by
what process. Personal characteristics and biases influence this
determination.
least one new courtroom. drama to a national audience. In addition,
almost all of the states permit live television coverage of real trials.( tiếp
câu 41)
1.Strong evidence exists to show that ethical behavior within
a business enterprise maximizes profitability in the long run.
F receive a $50 voucher!” Paul sees the sign and decides to join
2.The main advantages of a sole proprietorship are that it is
easy and inexpensive to create and operate and that the owner
has limited liability for the business’s debts. F
3.Five neighbors decide to work together to improve the
recreational facilities in their neighborhood. This will be a
nonprofit venture. They have formed a partnership by their
agreement. F
4.A copyright is valid for 30 years after it is obtained and can
be renewed for another 30 years. F
5.If a trademarked name acquires a generic meaning, the
owner of the trademark loses protection. T
6.Ann, age 17, enters a contract to purchase a used car for
$2,500 from an acquaintance, Brian. If Paul then receives an
offer of $2,650 for the car, he has the right to cancel his
agreement with Ann, since she lacked capacity to enter a
binding contract because of her age. F
7.A plaintiff suing for fraud generally has the option of
rescinding the contract or suing for damages. T
8.When two parties make an integrated contract, neither one
may use parol evidence to contradict, vary, or add to its
terms. T
9.A wholesaler of coffee notifies a retailer that it cannot
fulfill its contractual obligation to deliver 1,000 pounds of
coffee at the agreed price of $2 per pound next month
because of recent price increases in coffee. The retailer may
treat the wholesaler as having breached the contract and sue
for damages even though the wholesaler’s performance is not
due until next month. T
10.Limited liability is a major advantage of a partnership as
compared to a corporation. F
11.A director who has engaged in self-dealing has violated
the duty of loyalty to the corporation. T
12.In order for a federal court to have jurisdiction, there must
be a federal question involved and at least $60,000 in dispute.
F contract signed with New Co. The construction site has been
13.When Ann asks Mark if he wishes to sell his Honda car,
he replies that he would not sell it “for less than $2,000.” Ann
replies, “I accept,” and hands him $2,000. A contract exists.
F Hints: whether Coban has the right to compensate for
14.Ann, a recent university graduate, needed a car to get to
her new job. To help Ann secure a loan for the car, Bill, a
friend, agreed to pay the loan should Ann default. Bill’s
promise to pay the loan is a collateral promise. His promise
must be in writing to be enforceable. T
15.Sandy sued her employer, New Co., claiming that she was
sexually harassed on the job. This is a criminal lawsuit. F
16.I tell you that if you promise to paint my house this month,
I’ll pay you $1,000 when you finish the job. If you accept,
this is a unilateral contract. F
17.A patent is available for an idea as well as a tangible
application. F
18.In a civil trial for money damages, either party can
generally demand a jury trial. T
19.A contracting party may transfer her rights under the
contract, and this is known as a delegation. F
Case 1 Ann puts a notice in the window of her health food
shop: “Sign up for our membership program today, and
the program. After he has filled out the membership form and
Maria has added his details to the system, Paul asks for his
voucher. Ann then realizes that she has already given out all
the vouchers in her voucher book. She removes the notice
from the window, and tells Paul that the special offer has
already finished, so he is not entitled to a voucher.
Hints:
-Which case might a court apply in deciding the dispute
between Paul and Ann? A. Carlill v Carbolic Smoke Ball Co
-Can Ann revoke the offer made in the sign? Why or why
not? (No, she cannot because the offer has been accepted)
-Predict the outcome of the case: Is Paul entitled to a
voucher? Why/why not?. (yes, Paul is entitled as Ann has
obligated to performed her offer)
Case 2 Melanie runs a business supplying furniture for
special events. She has a contract to provide 80 chairs for
Dylan’s 70th birthday garden party, for $500.
On the morning of the party, Dylan and his helpers are setting
up for the day’s celebrations. Melanie arrives, but she has
only brought 73 chairs. She first speaks to Dylan’s nephew,
Kyly. When he hears that only 73 chairs have arrived, Kyly
quickly gets into his car to go find another furniture hire
business. He finds one that will provide 7 similar chairs, for a
cost of $63.
When Melanie sees Dylan inside, and tells him she has only
brought 73 chairs, Dylan is angry. Melanie claims that Dylan
must pay her the full $500, but Dylan disagrees.
Hints: Is Melanie entitled to any payment (and if so, how
much)?
Yes, Melanie entitled to be paid for 73 chair as she has
had substantial performanced (73/80 chairs) and deserve
to be paid = ($500: 80)x 73
Case 3 D. destroy a building with dynamite to construct a
building to construct an entertainment complex under a
well covered with nets and warned of danger. However, a
concrete block from the construction site still shot outside
and injured Coban, a pedestrian on a nearby road.
damage? why?
Answer: Yes, it is strict liability, specifically it is called
construction demolition)
Case 6 John’s car needs servicing, and the tyres need replacing. He
takes the car to Paul’s workshop. The service will cost $450, and it
will cost $200 to purchase and fit each tyre.
When John returns at the end of the day, his car has been serviced,
but Paul has not had time to fit the new tyres. John is annoyed that
the tyres have not been replaced, and says he will take the car
elsewhere for that purpose.
Paul asks John to pay the $450 owed for the service. John refuses,
saying that because of the inconvenience caused to him, he won’t pay
a cent more than $350.
Hints: Paul comes to you for advice. Is he entitled to $450
for the service, despite the problem with replacing the tyres?
Answer:
The contract between John and Paul can divided into 2
contractual obligations (service, and tyre replacement).
Paul has fully performed one contract (the service was fully
done, he is entitled to the payment of $ 450 for that contract,)

Case 4
Brown agrees to transport a valuable painting from Tasmania
to Sydney for Danish, for a fee of $ 600. The painting is
required urgently, for an upcoming exhibition.
The day before the painting is to be transported, the only
airline flying from Tasmania has a problem with its jets, and
all flights will be grounded for a week. This is the first time
such a serious problem has ever happened with this airline.
The only alternative for Brown is to pay for a private
chartered flight for the painting, or transport it by road. Both
of these options will cost more than $1.300.
Danish claims that the extra costs are Brown’ problem, and
that he will sue Brown for breach of contract if the painting
is not delivered on time. Brown says that the contract has
now been frustrated, and a new contract must be negotiated.
Hints:
Who is right?
Answer
Danish is not right.
The event that all flights from Tasmania to Sydney would
be grounded for a week is unforeseen when the contract
was signed. It is quietly different from both parties’
thinking about the circumstances to perform the contract.
It is force majeure. Thus, it should be settled by signing
other contract in the new circumstance
Case 5
17-years-old Lee, a high school student, loves a parrot named
Jimi at the Pet shop that John owns but can't afford to buy
this parrot for $450.
John told Lee that he could work as an accountant at John's
shop for 3 months, until he had enough money to buy a
parrot, Lee accepted. At the end of the second month, John
saw that Lee loved Jimi very much, so he let Lee bring Jimi
home at night to take care of him.
After two week, one morning Lee found that Jimi flew away,
Lee was very confused about how to deal with John and then
quit his job at John's shop. John thought that Lee was trying
to take over the parrot, so he was very angry. John called Lee
to say Lee broke the contract because the salary Lee worked
as an accountant for John was not enough money to buy the
parrot.
Hint:Is the contract between John and Lee valid?
Analyze the elements of this contract.
1. Is there a binding agreement between Lee and Jonh,
which Jonh can enforce? Not enough to be
enforcement as the element of consideration is not
comprehensive for both.
2. Discuss each of the elements?
Answer: Analyzing the 4 elements of a contract
- Mutual consent: yes
- Capacity to contract: Legal capacity:
+ Proper age: Lee is a minor and thus has limited
capacity to create legal relations. Minors do have capacity
to enter contracts which are for necessities (Papa (a
parrot) would not be a necessity),
- Consideration: Two parties have exchanged
their promises and performance on the
benefit but do not mentioned the detriments
as the giving up of a legal right (if any
happen)
Regarding of non-performance of the other contract for the
tyres, thus Paul is not deserve to be paid for tyre replacement.
CASE 1.Maria puts a notice in the window of her health food
shop: “Sign up for our membership program today, and
receive a $20 voucher!” Tan sees the sign and decides to join
the program. After he has filled out the membership form and
Maria has added his details to the system, Tan asks for his
voucher. Maria then realizes that she has already given out all
the vouchers in her voucher book. She removes the notice
from the window, and tells Tan that the special offer has
already finished, so he is not entitled to a voucher.
Hints:
Which case might a court apply in deciding the dispute
between Tan and Maria?
Can Maria revoke the offer made in the sign? Why or why
not?
Predict the outcome of the case: Is Tan entitled to a voucher?
Why/why not?
ANSWER:
1. Carlill v Carbolic Smoke Ball Co
2. No. Usually an offeror can revoke an offer whenever they
want, but in this case, the offer has already been accepted. It
is too late to revoke it after acceptance has already occurred.
3. Yes, probably. The sign was probably an offer, and Tan
accepted the offer by carrying out the acts specified (joining
the membership program on the day). Applying Carlill v
Carbolic Smoke Ball, a unilateral contract has been created,
and Tan is entitled to performance from Maria.
CASE 2:
Anita runs a business supplying furniture for special events.
She has a contract to provide 100 chairs for Bob’s 60th
birthday garden party, for $500.
On the morning of the party, Bob and his helpers are setting
up for the day’s celebrations. Anita arrives, but she has only
brought 93 chairs. She first speaks to Bob’s nephew, Jasper.
When he hears that only 93 chairs have arrived, Jasper
quickly gets into his car to go find another furniture hire
business. He finds one that will provide 7 similar chairs, for a
cost of $63.
When Anita sees Bob inside, and tells him she has only
brought 93 chairs, Bob is angry. Anita claims that Bob must
pay her the full $500, but Bob disagrees.
Hints: Is Anita entitled to any payment (and if so, how
much)?
ANSWER
Anita has not fully performed the contract, but she has
substantially performed it – 93 out of 100 chairs is almost
complete performance, and the shortfall can be made up by
paying someone else to fix the problem, ie the problem is
easily rectified. Apply case Jacob & Young V.s Kent, Bob
must pay Anita the full contract amount, minus the cost of
getting the extra 7 chairs. This is $500 - $63 = $437.
 - Legal purpose: yes

CASE:3

A contractor used dynamite to loosen a rocky hillside. The blast from the dynamite caused a house foundation to
crack. The house was located over a half mile away from the dynamite site. The contractor was careful when using
the dynamite and no allegation of negligence is made. However, the house owner claims the contractor is liable for
damage to the foundation. Hints: Is the house owner correct? Explain.
Yes. The contractor is liable under the concept of strict liability. Generally speaking, strict liability applies
regardless of degree of care exercised if a person engages in ultrahazardous activity that results in damage to
property or personal injury. The fact that a person was very careful in carrying out the dangerous activity is
not relevant. The only issue is whether the dangerous activity was the direct cause of the property damage or
personal injury. In essence, strict liability is a trade-off allowing for people to engage in ultrahazardous
activity but at the same time being totally responsible if a person sustains damages as a result of that activity.
It is incumbent on persons to obtain sufficient liability insurance if they are going to engage in dangerous
activity so they will be able to provide proper compensation to any person damaged by the activity.
CASE4: Carlos agrees to transport a valuable painting from Darwin to Melbourne for Danesh, for a fee of $500. The painting is
required urgently, for an upcoming exhibition. The day before the painting is to be transported, the only airline flying from
Darwin has a problem with its jets, and all flights will be grounded for a week. This is the first time such a serious problem has
ever happened with this airline. The only alternative for Carlos is to pay for a private chartered flight for the painting, or transport
it by road. Both of these options will cost more than $1000. Danesh claims that the extra costs are Carlos’ problem, and that he
will sue Carlos for breach of contract if the painting is not delivered on time. Carlos says that the contract has now been
frustrated, and a new contract must be negotiated. Hints:Who is right?

ANSWER: The contract has been frustrated, something has happened after the creation of the contract (a
supervening event), which has made performance by Carlos not impossible, but substantially different from
what was anticipated (it will now cost Carlos double his intended fee, just to perform the contract). This was a
major change in circumstances, and something that was not envisaged by either of the parties while
contracting, because it is the first time this has happened. It was not deliberately caused by either party, and
it would now be unfair to hold the parties to the contract. Carlos’ and Danesh’s obligations are discharged.
They can negotiate a new agreement if they want to (but they don’t have to).
CASE5:

Tom visits his Uncle Bernard’s specialty pet store, and hears that Bernard is planning to order some exotic birds from Africa.
Tom tells him that he is interested in buying one of the expected African Grey Parrots, but as a 17-year-old high school student,
he doesn’t have much money. Bernard says, ‘I know you’re good with numbers. Why don’t you work for me after school each
day, helping with the accounts? You can pay for the bird that way.’Tom thinks about it, and says ‘That sounds good. But I’ve only
done a bit of accounting in school – I don’t know how to use the system you’ve got in the store.’ ‘I can train you,’ replied
Bernard. ‘It will be a good skill for you to have in the future.’

How long would I work for?’ asks Tom.

Bernard suggests, ‘Why don’t we say 12 weeks, with you coming for one hour each weekday. After the 12 weeks are finished,
the bird will be yours.’

‘Great. One more thing – can I take the bird home with me in the evenings, before the end of the 12 weeks?’

‘Sure’, answers Bernard. ‘That way you can learn to take care of it. These exotic birds can be a handful.’

‘Excellent!’ says Tom.

Two weeks later, Tom has been coming to help with the accounts at Bernard’s store. The bird arrives, and Tom starts taking it
home with him in the evenings and on weekends. He names the bird Smoky.

After Tom has been looking after Smoky for a month, one morning he wakes up to find that she is gone – she has escaped
through a small window. Tom is distraught, and he can’t find Smoky anywhere.
Tom is too afraid to face Bernard, so for the next three days he avoids the pet store. Bernard gets angry, and leaves a message on
Tom’s phone. ‘We had an agreement! You still owe me six weeks of work after school. And where is that bird?’

Hints:

1. Is there a binding agreement between Tom and Bernard, which Bernard can enforce? Discuss each of the elements?

ANSWER

- Capacity to contract (Do both parties have capacity? Why or why not?)

Courts normally presume capacity of both parties, but Tom is a minor (17 years) and thus has limited capacity to create
legal relations. Minors do have capacity to enter contracts which are for necessities (Smoky would not be a necessity), or
for services for their benefit, eg training – Hamilton v Lethbridge. (Learning the store’s accounting system ‘will be a good
skill…’) This is true even though not every term of the contract is for Tom’s benefit. So there is capacity here.

- Consideration (Have both parties provided consideration? If so, what did they provide?)

At the time of the agreement being created, both parties exchange only promises. Performance (actually working in the
store, or taking the bird home, or the bird becoming Tom’s) all comes later. Promises are sufficient for consideration. This
is a typical situation of a bilateral contract.

- Intention: If a party’s words or acts, judged by a reasonable standard, manifest an intention to agree in regard to the
matter in question, that agreement is established, and it is immaterial what may be the real but unexpressed state of the
party’s mind on the subject. Barnes v. Treece.

- Consensus: Need to work backwards for this one, from when agreement was reached.

Offer (When did offer occur?)

The earlier parts of the discussion may just be invitations to treat. There are several offers and counter-offers, as more
terms are specified. The final (counter-)offer would be from Tom, adding a final extra term: “One more thing: can I take
the bird home…?”

Acceptance (When and how did acceptance occur?)

When Bernard says “Sure”, because this is when no changes are made to the terms, and everything has been agreed. Both
offer and acceptance were express, and oral.

What is your overall conclusion? Is Tom bound by the agreement with Bernard? Why or why not?

Probably – the only really contentious issue is whether there was intention to create legal relations.

CASE 6:

Grant’s car needs servicing, and the tyres need replacing. He takes the car to Hao’s workshop. The service will cost $300, and it
will cost $130 to purchase and fit each tyre.

When Grant returns at the end of the day, his car has been serviced, but Hao has not had time to fit the new tyres. Grant is
annoyed that the tyres have not been replaced, and says he will take the car elsewhere for that purpose.

Hao asks Grant to pay the $300 owed for the service. Grant refuses, saying that because of the inconvenience caused to him, he
won’t pay a cent more than $200.

Hints: Hao comes to you for advice. Is he entitled to $300 for the service, despite the problem with replacing the tyres?

ANSWER:

There are 2 possible approaches to this problem. First, it could be categorized as acceptance of partial
performance, in which case payment is due on a quantum meruit basis. As in Steele v Tardiani, if Grant
accepts the serviced car, then he must pay for Hao’s labour in servicing it: here, that service is worth $300.
Second, this scenario could be categorised as a divisible contract – the contract between Grant and Hao can
divided into 2 (service, and tyre replacement). Because Hao has fully performed one contract, he is entitled to
payment for that contract, regardless of non-performance of the other contract for the tyres.
More cases:

1. Abigail agrees to let her flat to Xavier for one day for the purpose of viewing a carnival. Xavier pays her a £50
deposit with £80 due to be paid at the end of the carnival. Due to civil unrest, the government prohibits all street
entertainment and the carnival is cancelled just before Xavier is due to travel to the flat. Neither party has incurred
any costs (save for payment of the deposit) in performance of the contract. Abigail can keep the deposit and Xavier
must pay an additional £15 so that each party bears an equal loss?

- Answer: Because the government prohibits all forms of entertainment, Anigail and Xavier's contract cannot be
fulfilled; additionally, neither party must bear any costs to fulfill the contract, so Abigail must return the deposit
and Xavier does not have to pay the balance

2. Foul Foods Ltd, a company specialising in the production and sale of cream cakes on an industrial scale, bought a
large oven from Ovens & Co intending to extend their existing business to include the production of pizza bases.
The delivery of the oven was three months later than the contract date. During those three months Foul Foods Ltd
tried unsuccessfully to buy another oven. Foul Foods Ltd has claimed for its lost profits in the following two ways:
(1) Profits which would have been made from the expected increase in business following their increased capacity;
and (2) Profits which they would have made from a lucrative contract for the supply of pizza bases to a nationwide
supermarket chain for which they would have been able to bid Is Foul Foods Ltd’s claim for its lost profits likely to
be successful?

- Answer: Foul Foods Ltd purchased a large oven from Ovens & Co with the intention of expanding their business,
but oven deliveries were three months later than the contract date, negatively impacting Foul Foods Ltd profits. As
a result, while Foul Foods Ltd may be compensated for self-losing profits from Ovens& Co, only the lost profits from
the generally expected increase in trade can be recovered, not the losses incurred from a lucrative supermarket
contract.

3. A seller of a farm realizes that the potential buyer has a mistaken understanding about the deed. If the seller fails
to correct the misunderstanding, there is no misrepresentation. A misrepresentation occurs only by an actual
statement?

- Answer: Yes, it is. Misrepresentation applies only to statements of fact, not to opinions or predictions. A
misrepresentation is a material misstatement made by one party that influences the decision of the other party to
enter into a contract. If a misrepresentation is discovered, the contract may be declared void, and the adversely
affected party may seek damages, depending on the circumstances. As a result, if the farm seller's and potential
buyer's contract is misrepresented, it will harm both parties' interests.

4. When Myrtle comes home from work one evening, she finds that her yard has been mowed and trimmed. Later,
a man comes to collect for the yard work done. Myrtle refuses to pay for the work since she has never seen the
man before and did not hire him to do her yard work. The court would order Myrtle to pay the reasonable value of
the yard work because of the benefit conferred to her.?

- Answer: Myrtle will not have to pay for the yard work because she has never met the man and has no intention of
hiring him, so Myrtle will not have to pay the fair value of the yard work. Furthermore, the man will be responsible
for the inviolability of the Myrtle house's property without the landlord's consent.

5. Roberto thinks he has accepted an offer of employment from Hans for a two-year term at $55,000 the first year
and $65,000 the second year. Hans, however, thought there was an at-will employment offer and the salary for the
second year, if the employment continued, would be based on Roberto’s job performance. If Roberto takes the
matter to court, the court will try to decide what Roberto and Hans were each thinking during their employment
discussion.?

- Answer: The agreement stated that the contracts were intended to cover all of the agreed-upon terms, Roberto
had accepted a job offer from Hans for a period of two years, so Hans could not change it at will and salary for the
2nd year. If Roberto takes the matter to court, then Hans will have to abide by the contractual agreement
previously agreed with Roberto, and cannot change any terms at will.

6. Problem – based questions (50 marks)

QUESTIONS Sinclair and Roman are very good friends. They have been friends for over 20 years having met during
their undergraduate studies at La Trobe University. Sinclair and Roman try as much as possible to have lunch
together once a week to keep up their friendship. On one of those occasions, Sinclair discussed his intention to buy
a second-hand car for his 18 years old daughter, Nikola, who is now studying accounting at La Trobe University. The
family live about two hours away from La Trobe Uni and access by public transport has been extremely difficult.
Roman tells Sinclair he has an old car which could be useful for that purpose and he is happy to ‘let go’ of the car to
Sinclair. Roman invites Sinclair to his house to inspect the car. Sinclair and Nikola visit Roman’s house and were
shown a Toyota Corolla, 2010 model with registration number ANT 202. Nikola doesn’t quite like the car as all her
friends drive brand new cars, but she says nothing. Sinclair informs Roman that the car looks quite good and would
serve Nikola’s purpose. All she needs is a means of transportation to uni and when she starts working, she could
save up to buy another car. Roman replies saying he feels the same way and that he had the car checked by a
mechanic and serviced and that cost him about $2,000, so the car is in good condition and ready to go. Sinclair and
Roman discuss the market value of the car which they both agree is about $5,000. Roman presents a
roadworthiness certificate to Sinclair and hands over the key to Nikola. Roman says he is happy for Nikola to drive
the car away on the day and that himself and Sinclair would conclude the deal. Sinclair has since registered the car
in Nikola’s name. Six months later, Nikola’s 17 years old friend, Hayden tells her he needs to buy a car and that his
parents have agreed that he could buy one. Since Nikola doesn’t quite like the Toyota Corolla, she decides to sell it
to Hayden for $3,000. Hayden pays Nikola $1,000 and promises to pay the balance in 2 weeks. It’s now over two
months and Hayden has yet to pay the outstanding sum of $2,000. Nikola does not want the car back since she has
used up the initial $1,000 as deposit for a new car, and in any case, Hayden had an accident with the car, and it is
no longer in good condition. Meanwhile, Roman has been quite unhappy with Sinclair. Sinclair has also noticed a
change in Roman’s attitude and their friendship has soured. Roman claims that Sinclair has made no payment for
the car he sold to him and has in fact said nothing about it. He says he had waited as a good friend for Sinclair to
say something for months. He says on occasions, he had indirectly requested for payment, but Sinclair had always
pretended not to understand him. Roman says he called Sinclair three days ago after months of no contact and
demanded that Sinclair pay the $5,000 outstanding on sale of his 2010 model Toyota Corolla, ANT 202. Sinclair says
he does not owe Roman a cent.
1. Is there an offer between Roman and Sinclair and who made the offer? (10 marks)
- Answer: Yes, Roman made the offer when Sinclair mentioned his desire to purchase a used car for his 18-year-old
daughter, Nikola, to help with commuting. Roman informed Sinclair that he had an old car - a 2010 Toyota Corolla
with the registration number ANT 202 - that could be useful for that purpose, and that he would be happy to "give"
the car to Sinclair. An offer is made prior to entering into an agreement, there is no specific form that constitutes an
offer; it is simply communicating to another party that you intend to do something. An offer can be made to a
single person, a group of people, or the entire world (sometimes seen as advertisements, rewards ect). In this case,
the courts would recognize Roman's offer to sell Sinclair his 2010 Toyota Corolla when he told Sinclair he had a
vehicle he was willing to "let go" for the agreed-upon value of $5,000. It is possible to conclude that Roman made
an offer to Sinclair on the condition that Sinclair pay Roman $5,000 in the near future in exchange for Roman's
Toyota Corolla, 2010 model.
2. Was the offer accepted and how was acceptance expressed and communicated? (10 marks)
- Answer: Yes, After discussion between the two friends, an offer of $5000 for the purchase of 2010 model Toyota
Corolla was made by Roman. Sinclair verbally agreed to the offer, Roman had the mechanic inspect and maintain
the vehicle, present the roadworthiness certificate to Sinclair, and hand over the keys to Nikola. Roman says he is
happy for Nikola to drive the car away on the day and that himself and Sinclair would conclude the deal. Sinclair
has since registered the car in Nikola’s name.
3. Was there an intention to create legal relations? (10 marks)
- Answer: There wasn’t an intention to create leagal relations. Sinclair and Roman have been friends for over 20
years, Roman offers Sinclair his Toyota Corolla, 2010 model in exchange for $5,000 which he assumes will be paid in
the near future, Sinclair takes the car but fails to pay the outstanding amount to Roman, claiming he doesn’t owe
Roman anything The first essential element of contract formation is the existence of an intention by the parties to
create and take legal binding obligations. This intention to be legally bound is important because it allows us to
distinguish between legally enforce agreements (contracts) and agreements that are not enforceable in the
courts(non-contractual agreements). The existence of an intention to be legally bond is ascertained by having
regard to the objectively knowable facts of the case and drawing the appropriate inference. In this case it is viewed
as an agreement between friends which are not intended to be legally binding. As Sinclair and Roman have been
friends for over 20 years the court would assume the agreement which was made in setting, between the two
parties was not intended to be legallybinding.
4. Was any consideration provided? (10 marks)
- Answer: Yes, Sinclair and Roman have been friends for over 20 years, Roman offers Sinclair his Toyota Corolla,
2010 model in exchange for $5,000 which he assumes will be paid in the near future, Sinclair takes the car but fails
to pay the outstanding amount to Roman, claiming he doesn’t owe Roman anything. When Roman and Sinclair's
friendship had become strained. Roman claims that Sinclair did not pay for the car he sold him, despite the fact
that he waited months for Sinclair to respond. Sometimes, he said, he indirectly demanded payment, but Sinclair
always pretended not to understand him. Sometimes, he said, he indirectly demanded payment, but Sinclair always
pretended not to understand him. Consideration can be defined as the exchange of an object or the act of doing
something of value to the other party; what is given as consideration can be a promise rather than an actual thing.
The thing given in exchange for another person's promise, on the other hand, cannot be something previously
given. A promise must demonstrate substance in order to be considered valuable; otherwise, it is classified as an
illusory promise. Sinclair's promise is an illusory promise because it has no sound value and isn't even a promise at
all, resulting in nothing of value being exchanged for Roman's 2010 Toyota Corolla and thus no consideration being
provided. It can be concluded that no consideration was provided because Sinclair did not exchange anything other
than an illusory promise to pay Roman $5,000 for the vehicle, which was never followed through on.
5. Is there any particular reason why there might not be a valid contract between Nikola and Hayden? (10 marks)
- Answer: In order for a contract to be valid both parties must have contractual capacity. Minors have only a limited
capacity to bind themselves by contract, either to acquire ‘necessities’ or in agreements that are for their benefit.
This protects young persons from the damages of entering into contracts that may disadvantage them. - Hayden is
only 17 years old - Minors, so there is no valid contract between Nikola and Hayden. Minors have limited capacity
to bind themselves to a contract. And it can be concluded a verbal contract was made between Nikola and Hayden
for the sale of the car however, in order for a contract to be valid both parties must have legal capacity. Hayden is
still a minor meaning the contact may be invalid as minors have limited capacity. The exception to this would be if
the vehicle was a necessity to Hayden