Semester 2, 2015 PACC6009 Business Law

Desk Number ________

Student Number _______________________

Student Name _______________________

Newcastle Business School

EXAMINATION
Semester 2, 2015

PACC6009 Business Law

This paper is for SYD_BATHST students.

Examination Duration: 180 minutes

Reading Time: 30 minutes

This examination has nine (9) questions.

Exam Conditions:

This is a FORMAL examination

This is a restricted Open Book Examination

Maximum of 3 sheets of notes handwritten double sided are permitted

No calculators or English Language Dictionaries are permitted

Materials To Be Supplied To Students:

5 x 4 Page Answer Booklet

Special Instructions:

This examination consists of two (2) parts, Part A and Part B

The total marks for this exam is 50 Marks. The overall weighting for this exam is 50% of the total
course. Students must answer all questions.

Part A - has five (5) short answer questions worth 10 marks. (2 marks each question)

Part B – has four (4) problem questions. Each problem question in this part is worth 10
marks.

A total of 10 marks will be allocated for Part A and a total of 40 marks will be allocated for
Part B.

Use separate booklets to answer each of the four questions attempted in Part B.

During the reading time, candidates may write on this examination paper BUT NOT IN THE
EXAMINATION ANSWER BOOKLETS.

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PART A
Answer all five (5) questions in this part. Use one booklet to answer this
part. Each answer in Part A is worth two (2) marks. Part A will account for
10% of the total marks in this subject.
Question 1 (2 marks)
In your own words, explain the rule in Hadley v Baxendale (1854).

Question 2 (2 marks)
Explain what is meant by the term ‘duress’, and distinguish it from undue
influence.

Question 3 (2 marks)
Explain the doctrine of equitable estoppel and identify the circumstances in which
a party would seek to rely on such a doctrine.

Question 4 (2 marks)
The sources of authority that may be relied on by an agent of a principal
include ‘actual’, ‘implied’ and ‘apparent’ authority. Explain what is required to
be established for each of these three sources of authority to be found.
Question 5 (2 marks)
Explain your understanding of the following terms:
(a) Parol evidence rule
(b) Vicarious liability; and
(c) Contra Proferentem.

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PART B
Answer all four (4) questions in this part. Answer each question in Part B in
a separate booklet. Each question is worth ten (10) marks. Part B will
account for 40% of the total marks in this subject.
Question 1 (10 marks)
Adam is 36 years of age. He has held a number of positions of employment
throughout his working life. Thirteen months ago Adam started work for
Environmental Recycling Services Pty Ltd (ERS). ERS are involved in the
business of recovering and recycling liquid waste. Adam’s job was to drive a truck
and pick up drums of liquid waste from various panel beaters and mechanics in
the Sydney metropolitan region. Adam then was required to transport the drums
to ERS’s recycling plant in Auburn.
Immediately before Adam began working for ERS, he was asked to sign a
document headed, “Independent Contractor’s Agreement” which included the
following clauses:
Clause 1:
“The parties to this agreement acknowledge and agree this is not a contract of
employment but an independent contractor’s agreement.”
Clause 2:
“The employee acknowledges and agrees that he/she must seek and obtain the
employer’s permission before undertaking paid employment for any other
organisation”
In his role, Adam drives a truck owned by ERS but uses his own tools and straps
to transport the drums. Because he started work in winter, ERS provided Adam
with a very smart, warm ERS jacket to wear while on the road. Adam enjoys his
job but is unimpressed by ERS’s insistence that he attend weekly safety meetings
and training courses arranged by ERS. Adam is also required to travel half an
hour back to the company’s main depot each afternoon to complete his
paperwork. Adam is paid on a weekly basis and works fixed hours from 8am to
5PM.
Last week, Adam approached his supervisor and explained that his grandmother
is gravely ill and as a result, he requires some paid time off work. Adam’s
supervisor argues that because Adam is an independent contractor he is not
entitled to this.
Is Adam’s Supervisor correct? Why?

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Question 2 (10 marks)

Kate has decided that she would like to purchase a café. While holidaying with
her family for two weeks in a unit on the beach at the coastal town of Port
Macquarie, Kate notices that the ‘two beans’ café located in Port Macquarie’s
main street is for sale. That evening, while having drinks at a social function
with some friends, Kate is introduced to Malcolm. Approximately ten minutes
into their conversation, Malcolm reveals that he is an accountant. Kate
immediately mentions that she is in need of a good accountant to check over
the financial position of the two beans café that she was interested in
purchasing. Malcolm then said:
“I buy my coffee there every morning on the way to work. Their beverages and
the quality of their food are excellent. The place is always busy so they must
be making loads of money. I do not think you will have any problems making
money by purchasing that business.”
Kate continued to talk to Malcolm for a while longer and the pair shared a
couple of more drinks before Kate left to return to her unit for the evening. One
week later, Kate engaged the services of a solicitor and purchased the two
beans café. Six months have now passed and the café is not making a profit.
In fact, Kate has discovered that the business has been running at a loss for
the past 12 months. Kate has come to see you. She wants to know whether
she can sue Malcolm for negligent misstatement.

Question 3 (10 marks)

Mr Richards purchased a pair of woollen underpants from a shop in Pitt Street
Sydney named ‘Underwear Galore’. As a result of wearing the underpants without
first washing them, he contracted dermatitis as the underpants contained
bisulphate of soda, which it was found had been left in the underpants during the
manufacturing process. The underpants had been packaged in clear cellophane
wrap but the bisulphate of soda could not be seen on a reasonable inspection by
either the retailer or Mr Richards.
Has Mr Richards any remedy/ies available to him against the retailer,
Underwear Galore or manufacturer under the Sale of Goods Act 1923 (NSW)
or Competition and Consumer Act 2010 (Cth)? If so, identify the action and
explain what Richards has to establish in order to succeed with that
action(s) and whether, in your opinion, he would be successful.
Question 4 (10 marks)
Rikki has been sold a car by Big Motors Pty Ltd showing 20,000 kms on its
odometer. In fact, unbeknown to Rikki, the odometer has been wound back by an
employee of Bulk Car Supplies Ltd, the car supplier company through which Big
Motors Ltd recently acquired the vehicle. The car has in fact done 200,000 kms.
After purchasing the car, Rikki takes it to her mechanic, Wakka. Wakka tells Rikki
that he is sure the odometer has been wound back as the engine exhibits wear
and tear consistent with a much greater travelled distance. Rikki takes the car
back to Big Motors Pty Ltd and complains about the wrong odometer reading.

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The owner of Big Motors Pty Ltd tells Rikki that neither he or anybody at Big
Motors Pty Ltd knew that the odometer had been tampered with. Subsequent
investigations reveal that the owner of Big Motors Pty Ltd was telling the truth.

Does Rikki have any action available to her under section 18 of the
Australian Consumer Law? Explain your answer.

END OF EXAMINATION

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