QUESTION ONE

Lindy arrived at her favourite Melbourne market by car. It was hard to get parking but, as she would not be long, she decided to park the car in a parking spot that had a visible sign stating the following:

‘Private parking. Vehicles will be towed at owner’s expense.’

As she is browsing through the stalls of the market, Lindy decides to get a bubble tea which is her favourite. However, when tasting the drink, she does not like it and attempts to talk to the shopkeeper to get a refund. However, the shopkeeper refuses and says that she has received the tea she ordered and that there are no refunds.

Lindy is annoyed but her day quickly brightens up when she finds an old painting of the Yarra River by an unknown artist in a gorgeous golden frame, which Lindy plans to use to frame another artwork. Lindy pays Mac the stallholder $25 for the painting and the frame.
Lindy is quite chuffed with herself but when she gets to the spot where she parked her car, she finds that it has been towed. Lindy calls the towing company and speaks with Andrea. Lindy expresses her frustration and explains to Andrea that she had only parked there for 30 minutes and if it was not for the argument with the bubble tea shopkeeper, the car would not have been towed. Andrea advises Lindy that she will need to pay $420 dollars to get her car back.

When Lindy finally arrives home, she removes the painting from the frame and discovers that there is an early painting by the famous Australian artist, Arthur Streeton on the reverse side. This painting is valued at $750,000 and causes much excitement and publicity in the art world. Mac sees the news and wants to rescind the contract. What particularly enrages Mac, is that he had asked his friend Luc who is an art expert to examine it and Luc had assured him that it was a mere trinket of little value.

Required

Critically discuss the rights and obligations of Mac and Lindy using Australian common law principles.

10 marks TOTAL = 10 marks

QUESTION TWO

Mrs Patel and her son Ravi farm alpacas in a remote region of Victoria at Peru Farm. The herd of alpacas were purchased for a price of $8000 per animal. The fencing has become dilapidated in some parts and the alpacas tended to escape from time to time.

Mrs Patel entered into a valid contract with Fine Fences Pty Ltd (‘FF’) about constructing a fence.

The terms of the contract included the following:

1. FF will construct 1000 metres of wire fencing.
2. Mrs Patel will transfer $10,000 to FF on completion of the fence.

After Mrs Patel had signed the contract, she expressed concern that the fence may not be strong enough to prevent the alpacas from escaping. FF assured her that their fences were ‘animal proof.’

1. a) FF had completed 800 metres when it ran out of the special titanium fence posts needed for the rocky soil. FF erected temporary fencing along the uncompleted length and requested payment of $10,000, which Mrs Patel refused to pay. FF has subsequently received a new shipment of the posts, but Mrs Patel is refusing to allow them onto the property to complete the fence, as she fears the fence is not strong enough.

Required

Advise FF if Mrs Patel is required to pay FF for the fencing, and if so, how much. Refer to relevant cases and principles of contract law in your answer.

5 marks

1. b) It has been a bumper season for alpaca fleece at Peru Farm. Alpaca wool is famous for its high quality and lack of allergens. Mrs Patel entered into a valid contract to ship a container of fleece to Hans, a German buyer. Hans and Mrs Patel agreed that the container would be loaded onto a ship in Melbourne which would cross the Indian Ocean and pass though the Suez Canal on its way to Hamburg in Germany. The trip is scheduled to take three weeks, arriving in time for Hans to create alpaca fleece jumpers for the northern hemisphere winter season. Unfortunately, however, there was an unexpected surge in pirate attacks on shipping and the ship had to be re-routed around the bottom of the African continent. This has added an extra month to the trip, severely impacting on Hans’ plans for the alpaca fleece that he needs to fulfil a contract with a glove company.

Required

Advise Mrs Patel whether the delay would entitle Hans to set aside the contract. Refer to principles of contract law in your answer (and assume that Australian law applies).

5 marks

1. c) The pasture at Peru Farm has become too sparse to feed the alpacas, so Mrs Patel needed to purchase supplemental grain to feed the alpaca herd. Mrs Patel told Jumbuck Foods Pty Ltd (‘JF’) that alpacas could only eat grains with a diameter of below 3 mm. Mrs Patel entered into a valid contract with JF to supply grain with

individual particles of a dimension below 3 mm. When the grain was delivered, some grain particles were greater than 3 mm. Ravi was unaware that the alpacas could not eat larger grains and laid out the grain in the alpaca paddock. Many alpacas ate the oversized grains and, tragically, three alpacas died. Daisy, the champion female alpaca of Peru Farm, became ill and was unable to take part in the Coolibah Agricultural Show. Daisy has won many prizes in the past and Mrs Patel had high hopes of Daisy winning the $20,000 prize for Best Breeding Alpaca at the Coolibah Show.

Required

Advise Mrs Patel of any actions she may have against JF by referring to principles of contract law.

5 marks

1. d) Ravi has worked for no wages for twenty-five years at Peru Farm. Mrs Patel owns Peru Farm and has often told Ravi that ‘one day, Peru Farm will be yours.’ She also told him it would be in his best interest if the profits from the alpaca farming get re-invested back into the business, so Ravi agreed to forgo a wage on the basis of these promises. As Ravi is very skilled in breeding alpacas, he has frequently been offered lucrative job opportunities at competing alpaca farms. However, Ravi has always turned these down on the basis that Peru Farm would one day be his.

Ravi has always been unlucky in love, and he had come to believe that he would be single forever. Happily for Ravi, love finally came his way and he is now engaged to Lucy. Unfortunately, Mrs Patel has taken a violent dislike to Lucy and told Ravi ‘It’s me or her.’ Ravi chose Lucy and Mrs Patel has ordered him off Peru Farm, saying ‘you will get nothing from me, Peru Farm will never be yours.’

Required

Advise Ravi of any legal interest he may have to the ownership of Peru Farm. Refer only to relevant cases and principles of general law.

5 marks TOTAL = 20 marks

QUESTION THREE

The food manufacturer, Unicorn, sells a chewy stick product called “Snax” aimed at young children. The product’s box is labelled ‘Fruit and Veg Snax’ and has pictures of fresh apples, berries, corn, pumpkin, and an apple tree. Among the text on the front of the box were the words ‘100% fruit and veg’, ‘No preservatives, artificial colours or flavours’ and ‘Nutritious food for your toddler’. The back of the box included an ingredient list in small print that revealed that Snax contained 90% concentrated apple and pear paste, 5% strawberry puree and 5% corn and pumpkin puree, resulting in an overall sugar content of 85%.

The Parents Obesity Group (‘POG’) is concerned about Unicorn’s claims about the nutrition value of Snax and have sent an email to Unicorn to ask them to comment on the content in the chewy stick product.

Unicorn provided the following statement in a reply email:

It has always been the intent of Unicorn to provide healthy snacks for young children. It is further expected that parents do their own due diligence when purchasing food for their children and that children do not consume more than the recommended daily intake.

Required

Advise POG which, if any, actions may be taken against Unicorn. Refer to relevant legislative provisions and case law in your answer.

7.5 marks Total = 7.5 marks

QUESTION FOUR

1. a) Carl and Paul are brothers who pooled their money and bought an antique Cadillac car, with an idea that people might want to hire it out for special events. They spent many months restoring it to its former glory. After hiring out the Cadillac for several months, they had made enough money to buy and restore a second antique car. Carl is now restoring the second car, while Paul manages the bookings for the Cadillac. Most of the money earned in this way is spent on restoration costs and the brothers divide what is left between them.

Required:
What business organisation are the brothers operating under? Explain your reasons.

5 marks

1. b) Boris is a director of Fine Wines Pty Ltd (known as ‘FW’). Boris is also a director of a company Gourmet Wines Pty Ltd (known as ‘GW’) that competes with FW. Boris is the sole shareholder and director of GW. Boris has not informed the other directors of this fact. Oldi Supermarkets wish to take advantage of a change in consumer trends away from chardonnay wine towards sparkling rose wine. To this end, they have put out a tender for the supply of sparkling rose wine in all their stores. The directors of FW discuss their costings and put in a tender to supply Oldi at $50 per case. Rupert, a director of FW, does not pay much attention at this meeting, as he is furtively scrolling through his social media.

Two days later, GW puts in their tender of a similar wine at $48 per case and won the tender. The board of FW became suspicious and investigated Rupert and Boris whereupon their activities came to light.

Required

Advise FW of any actions they can take against Boris and Rupert.

CITATION