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Business Law

Business Law 100

Assignment 2 Semester 2 2012

Bill and Ben are best mates and love to sail together. They want to turn their sporting interest into a business. They decide to start their own company called Sensational Sails Pty Ltd (Sensational Sails). Bill and Ben design and manufacture sails for all size yachts and supply wholesale to retail outlets. Their company becomes very successful and soon they need more sophisticated machinery to ensure that their business is profitable.

Ben’s cousin Marc is also in the manufacturing business, supplying plant and manufacturing equipment to factories. Marc is the sole director and marketing manager for the company EquipU Pty Ltd (EquipU). On Monday Marc approaches his cousins and offers to sell Sensational Sails new sail making machinery that has just been developed in Italy. Marc claims that the equipment will improve output and efficiency in the sail making factory by 20%. He says he is prepared to sell the equipment to them for only $50,000. Marc says the offer will end on Friday at 5pm, and acceptance could be via email, fax or post.

Bill and Ben think that Marc’s offer is a very good and one which would enable Sensational Sails to increase production and profit. Bill and Ben are keen to accept Marc’s offer, but feel that they really should try to negotiate better terms. On Tuesday Bill sends Marc an email on behalf of Sensational Sails which states:

Sensational sails is very interested in your offer, however we believe that the new equipment will only deliver a 15% Return on Capital, so we are only prepared to pay you the amount of $30,000 for the machinery”

Marc is at a three day conference on Tuesday, Wednesday and Thursday, so has not read his email. Meanwhile Bill and Ben have reconsidered their position and are feeling nervous that they may have missed the deal because they haven’t heard back from Marc. They decide to accept EquipU’s original offer and on behalf of Sensational Sails post Marc a letter on Friday morning agreeing to purchase the Italian machinery for $50,000. Just to be sure, at the same time they email Marc. Due to problems with Sensational Sails ISP, the email is not received into EquipU’s system until 6pm Friday.

Over the weekend Marc meets with his old friend Pauli who just happens to be in the market for the same Italian sail making machinery. Marc owes Pauli a favour so wants to give the machinery to Pauli instead of selling it to Sensational Sails. On Monday morning Marc reads his emails and opens the post. He calls Bill and Ben and says the deal is off. Bill and Ben are very upset and want to force Marc to sell them the Italian machinery.

Question (a) 10 marks

Using the four-step process, discuss the element of agreement required for the formation of an enforceable contract. Have Sensational Sails and EquipU reached ‘agreement’ in relation to the sale of the Italian machinery?

Marc and his cousin Ben and friend Bill go for a sail on Saturday afternoon and manage to resolve their differences. They also conduct cordial negotiations regarding the sale of the machinery and the price. Bill and Ben agree on behalf of Sensational Sails to pay to EquipU the sum of $39,000 for the Italian machinery. Marc proceeds to import the sail making machinery from Italy and has it delivered to Sensational Sails factory for installation. He hands the invoice to Ben who says:

Thanks Marc we really appreciate this and are very excited about the new machinery. We will organise the bank to transfer to you the amount of $30,000. We have deducted $9,000 because we did the catering for your wedding six months ago”.

Marc is furious and says to Bill and Ben that that is not the arrangement they came to and Sensational Sails has to pay EquipU the full amount of $39,000. Bill and Ben say that they don’t need to stick rigidly to the terms of the agreement as it is all between family and friends anyway.

Question (b) 10 Marks

Assume that the parties have reached agreement as required by the law. Using the four-step process, consider whether the other elements required for an enforceable contract are present. Can Marc enforce the contract against Sensational Sails Pty Ltd?

PART B – Short answer question (5 marks)

Why are terms of a contract sometimes called “conditions” and sometimes “warranties”? What cases do you rely on for your answer?

The above is an example of a typical of short answer question you could be given in the final examination (albeit on a different topic). In the past we have found that students have answered the short answer section of the final examination very poorly, even though it is worth the same amount of marks as the four step process question. This is an opportunity for you to attempt this type of question to receive feedback on what you did well and how you might improve next time. In this question the marker will be looking for more than just “yes” or “no” answers. For example, to answer this question well you will need to explain the difference between conditions and warranties and give some examples of both. You will need to consider what else will need to be included.

Instructions to students

Note the facts scenario used in this example are fictitious. Students are to focus on answering the questions with reference to the relevant issues raised by the question as they arise from topics 3 to 5. Not all topics 3 to 5 are necessarily assessed by this question. Students will need to identify the relevant areas.

Students do not need to (and should not) undertake any additional research. The level of detail and information contained in the course materials is sufficient to answer the assignment.

Note the four step process requires students to refer to case law or legislation as authority for the rules of law explained in step two. Where appropriate you will need to refer to any applicable legislation or case authorities contained in the materials for topics 3 to 5.

Late submission of assignments

Please refer to the Unit Outline for the procedure for requests for an extension and penalties for late submission.

Guidelines regarding format and word limits (and penalties for going over the word limit) and submission procedures are set out in the Unit Outline and on Blackboard.

The marking matrix is as follows. It is also provided in the unit outline and on Blackboard under the assessments tab.

In relation to the marks allocated for the overall use of the 4 step process and structure of the answer, regard will be had to not just whether the answer is “set out” in the 4 steps. Consideration will be given to the clarity of the explanation of the law with regard to applicable authority where relevant. Students will be rewarded here for a detailed application of the facts to the law explained. For example, a very good use of the 4 step process would be the application of the facts specifically to every principle of law explained.

Consideration will also be given to the logical presentation, coherency and consistency of the explanation of the law, application of facts and subsequent conclusion.

As a general guide, a student who has used the 4 step process correctly for each question (a) and (b) (Has identified the relevant principle(s) of law, explained the rule(s), applied the facts and come to a logical conclusion), but the explanation of the law or application of the facts is not as detailed as it could be, or the conclusion is not a logical progression of what has gone before would be awarded a pass mark for this part of the assignment ( 2.5 – 3 marks).

Referencing and appropriate acknowledgement of sources

Most often errors in referencing are incidental or clearly inadvertent. In the event of a level one incident of plagiarism occurring, a student may be contacted by the University and required to undertake further training or remedial work in relation to referencing. Where the lack of correct referencing appears to contravene the University policy on plagiarism, the student’s paper will be referred to the Unit Coordinator and dealt with according to University policy. This may amount to academic misconduct.

An important aspect of the University Plaigiarism Policy is recognition that not all plagiarism is intentional or involves cheating. If students are not learning as expected, they will be made aware of their difficulties and helped to improve. Those who deliberately choose to cheat by way of plagiarism, however, will be identified and dealt with accordingly.

Students are strongly advised to understand their responsibilities in relation to correct referencing and should consult the Unit Outline and vodcast on Blackboard for more information.

Tutor/Teaching Assistant feedback on assignments

All of the teaching staff are available to assist you with your learning in this unit. You should contact your allocated teaching assistant/tutor in the first instance if you need help understanding the course material or issues arising in the assignment. There is also a staffed discussion board available for students. It is often helpful to share ideas and problems with other students using this forum. You can also contact the Unit Coordinator if you are still unable to get the answer you are seeking. Please allow 48 hours (working days) for a response to your query.

Unfortunately it is just not possible for teaching assistants/tutors to review draft assignments for comment before submission (in effect double marking). If you require help with your assignment narrow the question or section of work to specific questions.

If you have questions relating to your writing style (grammar etc) we suggest that you make use of the resources available at the CBS Communications Skills Centre. Their contact details are available under “The Learning Hub” tab on Blackboard.

Teaching assistants/tutors will mark and return assignments within ten working days of their submission. Students will be provided with an answer guide and individual comments on what a student had done well and suggestions for improvement in the future. This will include specific feedback on the use of the 4 step process.

Assessment submitted early will not be marked before the due date.

Your assessment will be returned to you via your grades on Blackboard.


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