F N If nl-ll plArloNAL uNlvERslrY

occ'
COLLEGE OF BUSINESS, HOSPITALITY AND TOURISM STUDIES
Department of Accounting and Law

Trimester L, 20L"t'
LAWS0L Commercial Law - 50%
FINAL EXAMINATION - QUESTION PAPER

Date: 24May 2A11 Time: 2.00- 5.10pm

Duration: 3 HOURS L0 MINUTES

TNSTRUCTIONS TO STUDENTS:

1. You are allowed 10 minutes extra reading time during which you are NOT
allowed to write.
2. use the answer sheet provided to answer all your questions.
3. Write your candidate number at the top of any additional sheet used'
(10 pages)
4. There are three (3) sections A, B and C in this PaPer'
5.AnswerALLSections.NoteforoptionsinSectionC

Exam Outline:

Sections:
t
i Content: i
i
Marks:
r :

i
T

i:tl, A
e :*- tiple-Choice Questions
tvtultiple-Choice
lZOUuttil
F ZO
-B
ic;;
F .^
Comprehensive Case Stu dy,
(Compulsory)
(Loml
:
:

i
Case Studies
t
i 60
J
I
I
Choose 6 out of 8 cases

Total Marks: 100

 (Circle the best option in your answer paper to indicate your answer)

1. \Atrhich of the following are the objectives of the Commerce Commission

Deree in Fiji?
a) to promote the interests of consumers
b) to promote effective and efficient development of industry, trade or
commerce
c) to promote effective competition in industry, trade or commerce; and
d) all of the above

2. Genuine consent is lacking if one parry to the ccntract uses their stronger
position over another to persuade them to enter a- contract. This action is
known as:
a) UnconscionableConduct
b) Duress
c) Undue Influence
d) Misrepresentation

3. Contracts that contain the restraint of trade clauses are reasonable if it is 1n

the public interest. The court will examine the clause in regards to which of
th.e following:
a) The time duration
b) The geographical extent
c) The type of trade or business
d) All of the above

4. "To be indemni{ied against losses and reimbursed for lawful expenses" is:
a) An agent's liability to a third party.
b) A duty of an agent in an agency
c) A right of an agent against i.ts principal'
d) A means of terminating an agency

5. The transfer of the title to goods from the seller to the buyer takes place:

a) \Alhen the goods are delivered.

b) When the goods are in the buyers possession.
c) When the contract of sale is complete.
d) \Alhen the buyer places an order for purchase of the goods.
6. Comparative adveriising are advertisements that claim:
a) One business's goods are superior to others.
b) One business's reputation is unmatched.
c) To provide best customers services.
d) To sell at tire cheapest price.

7. Consideration can be in one of these forms except,

a) Forbearance.
b) Performance of existing contraciual duty
c) An Act for a promise
d) A promise for a promise.

8. Contracts with minors is void if the contract entered is for,

a) Business or trade
b) Cash
c) Necessaries
d) Beneficial contracts of service

g. A faise statement about a past or present fact that is given with the intention
of inducing/persuading someone to enter a contract is a factor that will be
considered when the injured party to a contract seeks remedies for which of
the following;
a) Common mistake.
b) Fraudulentmisrepresentation.
c) Innocent misrepresentation.
d) Negligent misrepresentation.

10. Krishna soid his goat to Lalita. After the sale was completed Krishna
promised that the goat was free from vice. It was in fact vicious. Court held
that the sale was no consideration for the promise by Krishna and was
therefore unenforceable. This example best illustrates:

a) Executed consideration
b) Past consideration
c) Promissoryestoppels
d) PresentConsideration
 L1' It's an acfual or threatened violence to a contracting
party that forces the
patry toenter into a contract? This definition best
describes:
a) Compensation
b) Remedy
c) Duress
d) Injunction

12' A mistake which occurs when the parties to an apparent

contract
misunderstand each other regarding ur,
fact urrd whe.e both parties
are asserting that a contract exists, but on"rr".,tial
different terms is:
a) Unilateral mistake
b) Common Mistake
c) Mutual mistake
d) Same mistake

13. The termination of an agency may come

about when:
a) The agent exercise reasonabie care and skill
b) There is death of either parry
c) The agent makes fufi disclosure of any personal
interest
d) The agent act in good faith

14' \Mhich of the following are the tests required

to be proven on the baiance of
probabilities for negligence:

I. Did the defendant owe the plaintiff a duty of care?

IL Did the defendant breach the duty of care?
iII. Did the breach cause loss or harm to the plaintiff?
IV" Was the damage or loss too remote?

a) Both I and III

b) I, II and III
c) Only I and II
d) All of the above

15' Julie is movingto a better job in a different city and offers to sell her home
entertainment sound system to Marcia for $900. Marcia
says she will pay
$800. Julie says that it is not enough. Marcia then says she
will pay the
original asking price of $900. Julie has since discovered that
similar systems
are selling for a lot more. Advise
Julie.
 a. Julie is not obliged to sell, however she may accept or reject Marcia's offer
b. Julie cannot sell it anyone other than Marcia since Marcia's counter-offer
had indicated that acceptance took place
c. Julie cannot accept or reject Marcia's offer because Marcia's counter-offer
had indicated that the first offer was rejected
d. Julie has no option to sell, since Marcia had accepted her offer and there is
an agreement - therefore, a contract.

16. Refer to the following statements:

I. The offeror must respond to and rely on the offer

II. Acceptdflc€ IrLuSt be unconditionai
III. Acceptance can be implied or expressed
IV. Acceptance by post letter is valid fron, the date received by the offeror

\Alhich of the above statements are correct?

a. I, II and IV
b. I, II and III
c. II and III
d. I and II

17. Brent is a very talented. accountant with ambitions to become general

manager of his firm. The directors advise Brent that he will be promoted soon
as soon as he obtains a Master of Business Administration degree at his own
expense. Brent spends a considerable sum of money and every Spale minute
of his life studying and manages to finish the qualification within two years.
Although the directors knew about Brent's graduation they appointed
someone else as general manager. Explain whether Brent would succeed in a
legal action.
a. Brent will not be successful because there was no consideration provided
in return for the promise made by the directors'
b. Brent wiil be successful provided he had paid some "forrn" of
consideration to the directors of the comPany in written
c. Brent will be successful on the doctrine of promissory estoppels as it
would be grossly unfair on Brent if the promise is not fulfilled
d. Brent will not be successful on the doctrine of promissory estoppels as it
would be gross unfair on Brent if the director appointed someone else as
the manager. He is just doing what he had been contracted to do.
18. Stephen, who had a criminal record, was near a bank when it was robbed and
recognized the bandit. The bank posted a reward. When the police charged
Stephen with the robbery he was able to help them catch the real bandit. He
then learnt about the reward and claimed it. Expiain whether Stephen would
be successful.
a" No, based on the case law: Stilka Myrick
b. No, based on the case law: Roscorla a Thomas
c. No, based on the case law: Crown a Clarke
d. No, based on the case law: Masters a Cameron

19. An elderly Perth widow invited her niece to leave the Philippines to come to
Australia. The plan was for the niece and her husband to move into the
widow's mansion to keep the widow company for the remainder of her life.
The niece left her lucrative acting career, and her husband resigned from a
high government position, to make the move. After a few months of sharing
the house, the widow became annoyed, ordered the niece and her husband to
leave and changed her will,leaving everything to various charities'
a" The domestic presumption is less likely rebutted in the above scenario
b. The domestic presumption is not likely rebutted in the above scenario
c. The domestic presumption for surely is guaranteed to be rebutted in the
above scenario based on-the case law: Balfour a Balfour
d. The domestic presumption is more likely rebutted in the above scenario

20. The Carbolic Smoke Ball Case [1893] proved that:

a. The advertisement was an offer in an unusual circumstance like this, and
it was made to Carlill onlY
b. The advertisement was not an offer, but an invitation to treat, and it was
made not only to Carlill but to the whole world
c. The advertisement was an offer in an unusual circumstance like this, and
it was made to the whole world
d. The advertisement was not an offer, but an invitation to treat, and the
invitation was made to the whole world
 (This Question is Compulsory)

Rhonda saw the following newspaper advertisement on 5 December. BING ZING is

selling new Toshiabe multi-media computers on 6 December for only $AUS900 eacir on
6 December only!

. All computers are made in Japan.

. The first fifty people who walk into our store and enquire about these computers
'will be placed in a iottery draw for a five-day holiday in a luxury resort in Fiji.
. We open- for business at 9 AM.

\AtrhenRhonda phoned BING ZING at 9.L0 AM on 6 December and asked about the
computers she was told: "We have sold all the computers we adveit'rsed. But we have a
better Toshiabe model, aiso made in Japan. You can buy it today for only $AUS1 400."
Although Rhonda was not interested in a computer at that price the salesperson
promised to enter her name in the lottery draw.
Rhonda has now learnt that:

. BING ZING did not have any computers for sale $AUS900 or organize the
lottery.
I The computers were made by Toshiabe, not Toshiba, and
t Toshiabe computers are manufactured in Myanmar (Burma)

1. List and briefly explain any consumer protection provisions of the Trade
Practices Act that have been breached by BING ZING. (10 marks)

Rhonda did not buy anything from BING ZING. Wiil this prevent her from
taking legal action under the Trade Practices Act? \AIho else could take legal
action against BING ZING for breaching the Trade Practices Act? (5 marks)

3. \Alhat remedies and penalties could apply for breaches by BING ZING? (5 marks)
(This Section has options; answer any 6 out the 8 Questions 10 marks per question)
-

Question L

Cindy hired Jake, a real estate agent, to sell Cindy's block of land. Cindy wanted at least
$100000. A few weeks later Jake told Cindy his wife Rebecca would buy it at that price.
After Jake sold to Rebecca he found out that Jake had not made any real effort to sell the
property and Rebecca haci resold it for over $133000. What rights and remedies does
Cindy have against )ake?

Question:2

The sales manager at Payal Cars Pty Ltd advertised a 2005 Toyota Camry'in excellent
condition' for $10000. The ad also included the statement that a number of 'good
quality' cars from 1998 to 2000 were being sold for prices ranging from $8000 to $16000.
In fact, the Camry advertised at $10000 required considerable body repairs and a
complete paint job, and the next cheapest car was priced at $14000.
(a) State and briefly explain which provisions of the Trade practices Act have been
breached.
(b) What remedies would be available?

Question 3

Jack and Barbara Euston had owned and operated their banana and pineapple
plantation on the outskirts of Coffs Harbour for many years. Barbara's elderly parents
in Canada were in need of attention, so the Eustons decided to sell up and spend a few
years in Canada.Th"y knew a local real estate agent named Marty Pendall and decided
to give him an exclusive agency. By the time they wanted to leave for Canada,Marty
indicated he had no concrete offers and offered them $300 000 ($50 000 below the listed
price). He would also be paid his 4% commission on the sale. The Eustons decided this
was still a substantial capital gain and, to avoid delays, accepted the offer.

The Eustons discovered through discussions at their farewell party that Marty had
negotiated a large deal with a Sydney-based developer that included a number of
properties, including the one he had just purchased from the Eustons. Further inquiries
revealed that the developer had promised Marty $400 000 for the property while he was
still engaged as an agent for the Eustons. The Eustons decide to sue Marty. Will they be
successful?
8
Question 4

Robert was the head of a fast-growing pseudo-Christian church that raised most of its
funding from commercial plant nurseries staffed by church members who include Mr
and Mrs. Hooton. Th"y asked if they could be excused from the nursery work because
of their age-both are 75 years old and suffer from bad backs. Robert agreed on
condition that they transferred ownership of their house to the church. Two years later
the Hootons left the church. Now they wish to reclaim their house. Identify and
briefly explain the possible legal actions the Hootons could take and whether they
are likely to be successful.

Question 5

Tim, a motcr mechanic, spilt some engine oil near the open entra::.ce-way to his
workshop. He immediately scrubbed it with detergent, but the surface remained
slightly oily. Tim then went to get some sand from the back of the workshop to throw
on the oil, but the phone rang. Not wanting to miss a customer, he refurned to answer
the call. His back was Lurned for 30 seconds whilst answering the call. During that time
Nancy, a customer, entered. She slipped and broke her Ieg. Advise Tim of his liability.

Question 6

Arti and Yash arrange to spend a week together at Coral Coast over the Christmas
break. Yash tells Arti that he will hire a sports car and drive them to Coral Coast if Arti
books and pays for the accommodation. Arti takes the week off work and books and
pays for the accommodation. On the day of departure, however, Yash tells Arti that he
has decided to spend the week in Taveuni with his friends.

Is there a contract between Yash and Arti?

Question 7

Joanne sa\ / an advertisement from Beauty Products Ltd in the local paper for a cream
which would remove face pimples. The advertisement promised the follorving:
i) That the cream only need be applied each morning and evening for 5 minutes
by gently rubbing onto the affected areas; and
ii) That if you did not have a "pimple free face" within 2 months of using the
cream as directed then Beauty Products Ltd would give you $1,000.00 on
return of the unused portion of the cream.

it as directed for the entire 2

Joanne immediately ordered the cream and started to use
months, but at the end of this -fime she did not have a "pimple free face" as the
advertisement promised. She just encied up with large red marks all over her face.
Joanne returned the unused portion of the cream to Beauty Products Ltd but ihey
refused to give her the $1,000.00 as was promised in the advertisement.

Does Joanne have a valid contract with Beauty Products Ltd with reference to the
definition of a contract?
What legal rights, if any, does Joanne have under contract law in this case?

Question 8

Isireli is the president ap.d Mereani is the secretary of. a labor union that was involved in
a bitter and highly publici.zed labor dispute with City and Mayor. An unknown Person
surreptitiously recorded a conversation between Isireli and Mereani, which took place
in the corner booth of a coffee shop during a break in the contract negotiations with
City. During the conversation, Isireli whispered to Mereani, "Mayor is a crook who
voted against allowing us to build our new union headquarters because we wouldn't
pay him off."

The unknown person anonymously sent the recorded conversation to Mirchaa radio
station in City. Knowing that the conversation had been surreptitiously recorded,
Mirchaa broadcast the conversation immediately after it received the tape.
After the broadcast, Mayor sued Isireli and Mirchaa for defamation.

Is the Mayor likety to succeed in hislher suit against Isireli and Mirchaa Station? (Use
appropriate case laws)

* End of Examination --
10