BUSINESS LAW AND COMMERCIAL LAW COMPULSORY ONLINE TEST 2 ASSIGNMENT

BUSINESS LAW AND COMMERCIAL LAW
COMPULSORY ONLINE TEST 2
PRACTICE HYPOTHETICAL LEGAL PROBLEM
QUESTIONS AND ANSWER OUTLINES
This document contains practice hypothetical legal problem questions to help you with
your revision and preparation for your second assessment task: Compulsory Online
Test 2. Compulsory Online Test 2 is comprised entirely of hypothetical legal problem
questions, is marked out of 20 marks, and is worth 20% of your overall result in your
unit.

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Please ensure that you have read and understood your detailed test instructions
that are available on Moodle, ahead of sitting your test.
The weighting of the questions on Compulsory Online Test 2 will not necessarily be the
same as the weightings indicated on these practice questions. Please refer to your test
instructions for confirmation of the weighting of your questions on your test this
semester.
Please ensure that you have completed your tutorial questions first, as your tutorial
questions are very good practice and revision for your test.
An issues guide for each question is included at the end of this document. To get any
benefit from these revision questions, please attempt your answers before looking at
those issues guides! You will obtain limited or no benefit from simply looking at these
questions, and then reading the answer guides. Attempting these questions under selfimposed test conditions is the best way to check your understanding and to prepare for
your test in a meaningful way.
When setting self-imposed test conditions, it is recommended that you set yourself a
time limit for each question (as a rough guide, allow approximately 4.5 minutes per
mark), that you work on your own and in a quiet space, and that you use the resources
that you expect to use in the test itself.
The issues guides provided at the end of this document are intended to direct you to the
key issues and legal cases/legislation that are relevant, and to identify and briefly
explain what the main issues are. They are not model answers. You are required to write
your answers in full for your online test, and in doing so, you might find the IRAC
method helpful. You must write using full sentences and paragraphs, with your
reasoning fully explained and your conclusions justified. BUSINESS LAW AND COMMERCIAL LAW COMPULSORY ONLINE TEST 2 ASSIGNMENT
You should not use dot points for your answers unless the particular circumstances
require (eg. you are listing elements, or you are running out of time and need to get
some key points down before the test finishes). The quality of your answers will
depend upon how well you have studied and learned your course content. Ensure you
do this first. If you would like assistance and direction as to what a model answer might
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look, and how you might go about employing the IRAC method on your test, please
refer to your Skills Assistance materials under the ‘Support Resources’ tab on Moodle.
The issues guides presented here will help you to identify how complete your attempted
answers are. You may also discuss your attempted answers during student consultation
times. Your tutor can give you general feedback but cannot grade your practice answer
(ie. you will not be given a mark).
All the very best of luck with your study, and for your test preparations!
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Question 1 (5 marks)
Camilla’s financial advice firm provides you (her client) with advice regarding the
establishment of an online business supplying mail-order coffee beans to customers
around Australia. Your written (and signed) contract contains the following clause:
Camilla’s firm agrees to provide you with financial advice on the terms set out
in this contract, but under no circumstances shall Camilla be liable for any loss
or damage caused by negligence or in any other way whatsoever.
You start up your business, on the basis of the advice you receive, but it quickly fails
after incurring very large debts. The advice provided by Camilla’s firm was negligently
prepared. It turns out that Camilla had delegated preparing the advice to a very junior
(and inexperienced) colleague. When they weren’t sure what to do, they flipped a coin
to decide whether or not to advise in favour of starting up your business. You contact
Camilla seeking compensation, but she refuses, pointing to the exclusion clause set out
above. This takes you by surprise. You hadn’t read the contract before signing it (you
were in a hurry at the time), and you didn’t know that the exclusion clause was in
there.
You are concerned about the legal consequences of the situation mentioned and seek
advice from a Generative AI system regarding its contract law implications. The AI
system responds with the following advice:
‘The main issue is whether the exclusion clause in the contract is enforceable in this
situation, given that the client did not read the contract and was unaware of the clause
at the time of signing. In contract law, exclusion clauses are terms in a contract that
seek to limit or exclude one party’s liability for certain types of loss or damage. The
enforceability of exclusion clauses depends on several factors. The enforceability of the
exclusion clause in Camilla’s contract is uncertain in this case. Several factors,
including the lack of notice to the client and the attempt to exclude liability for
negligence, could weigh against its enforceability.’ BUSINESS LAW AND COMMERCIAL LAW COMPULSORY ONLINE TEST 2 ASSIGNMENT
Part A – Using the Generative AI produced response above, identify the elements of
the IRAC method that are reflected in this response. That is, identify which
sentence(s) addresses the issue, rule, application, and conclusion steps of the IRAC
process.
Part B – The Generative AI response provided is incorrect and lacks identification
of all legal issues. Additionally, it does not accurately apply the law to the facts.
Your task is to present a clear overview of the legal situation. You are therefore
required to write a new response that explains whether Camilla’s financial advice
can firm rely on the exclusion clause, according to the law of contract? Explain why
or why not. Refer to relevant legal cases to support your analysis and ensure that
you fully explain the legal position you have taken. This question is worth 5 marks.
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Question 2 (5 marks)
Sherlin is an expert in business law. She enters into a contract with you, to provide two
professional development presentations for your accounting firm. Your contract requires
each of her presentations to be one hour in length, and also requires Sherlin to provide
print- out copies of her PowerPoint slides for your staff. It is particularly important that
Sherlin’s presentations are one hour long, since this is a requirement of the Australian
Accountants’ Association for staff professional development activities. Sherlin is aware
of this.
Due to a family emergency, Sherlin needs to leave the first presentation 15 minutes
early. Her presentation only goes for 45 minutes, so does not count for staff
accreditation. In addition, she didn’t provide printouts of her PowerPoint slides, as her
local printing business was unexpectedly closed. You are disappointed that Sherlin has
breached two different terms of her contract, and you wonder whether you can terminate
the contract ahead of the second presentation.
You are concerned about the legal consequences of the situation mentioned and seek
advice from a Generative AI system regarding its contract law implications. The AI
system responds with the following advice:
‘Can the contract with Sherlin be terminated for breach in performance?In contract
law, a fundamental principle is that both parties must perform their obligations as
specified in the contract. When one party fails to do so, it constitutes a breach of
contract. In this case, Sherlin’s failure to provide a one-hour presentation as required
by the contract is a breach of the contract. You have a legal basis to terminate the
contract for breach in performance.’
Part A – Using the Generative AI produced response above, identify the elements of
the IRAC method that are reflected in this response. That is, identify which
sentence(s) addresses the issue, rule, application, and conclusion steps of the IRAC
process.
Part B – The Generative AI response provided is incorrect and lacks identification
of all legal issues. Additionally, it does not accurately apply the law to the facts.
Your task is to present a clear overview of the legal situation. You are therefore
required to write a new response that explains whether you can terminate Sherlin’s
contract for breach in performance, according to the law of contract? Explain why
or why not, in relation to both of the contract terms that have been breached. Refer
to relevant legal cases to support your analysis and ensure that you fully explain
the legal position you have taken. This question is worth 5 marks. BUSINESS LAW AND COMMERCIAL LAW COMPULSORY ONLINE TEST 2 ASSIGNMENT
Question 3 (5 marks)
Bruno operates a small suburban printing business from his home. He contacts your
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courier company as his Flexoprint high-volume multi-function printer has
malfunctioned and needs to be transported back to its manufacturer for repair. Your
contract with Bruno requires you to pick up the printer from his home office on
Wednesday, and then deliver it back to him.
(After it has been repaired) on Friday. Because you are busy with other jobs, you
don’t pick up the printer until Friday, and because of the weekend, it isn’t returned to
Bruno until Tuesday of the following week.
Although you didn’t know this when entering into your contract with Bruno, it turns out
that the Flexoprint machine is Bruno’s only printer. Because of the delay in its repair,
Bruno loses $2,000 in profits from his regular business. He also misses out on a
particularly lucrative (but unusual) contract printing high-end restaurant menus for a
global hotel chain. That contract would have generated $10,000 in profit.
You are concerned about the legal consequences of the situation mentioned and seek
advice from a Generative AI system regarding its contract law implications. The AI
system responds with the following advice:
‘Can Bruno claim damages for his lost profits due to the courier company’s delay in
transporting his printer? In contract law, a breach occurs when one party fails to
perform its contractual obligations. Damages may be recoverable if the breach results
in foreseeable losses that were within the contemplation of the parties when the contract
was formed. Bruno can likely claim damages from the courier company for his $2,000
in regular business profits lost due to the delay. This loss was a direct consequence of
the courier company’s breach, and it was reasonably foreseeable that Bruno would
suffer such damages when they entered into the contract.’
Part A – Using the Generative AI produced response above, identify the elements of
the IRAC method that are reflected in this response. That is, identify which
sentence(s) addresses the issue, rule, application, and conclusion steps of the IRAC
process.
Part B – The Generative AI response provided is incorrect and lacks identification
of all legal issues. Additionally, it does not accurately apply the law to the facts.
Your task is to present a clear overview of the legal situation. You are therefore
required to write a new response that explains if Bruno can claim damages from
you for his two sets of lost profits, according to the law of contract? Explain why or
why not. Refer to relevant legal cases to support your analysis and ensure that you
fully explain the legal position you have taken. This question is worth 5 marks.
Question 4 (3 marks)
Lisa and Ruby are sisters. Ruby is considering relocating from Melbourne to live in
Sydney. On May 1, Ruby offers to sell Lisa her houseboat on the Yarra River in
Melbourne for $500,000. They discussed all the relevant terms of the offer. Lisa accepts
Ruby’s offer on May 1 and pays her a $10,000 deposit. Ruby makes plans for her move
to Sydney and incurs costs and expenses in doing so. However, Lisa later changes her
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mind and wants her deposit back. Ruby refuses.
Advise Lisa whether she has any rights under the law of contract. Please cite
relevant cases/legislation in support of your arguments.
Question 5 (12 marks)
Ms Li Pang was negotiating the purchase of a house from Foakes. They had agreed on
all the main terms but, before signing the contract, Ms Pang enquired of the agent for
the vendor whether the house was sewered or not. The agent assured her that it was
sewered. He genuinely believed the property was sewered, but he was negligent in not
making sure. After receiving the assurance, Ms Pang signed the contract. The contract
did not mention sewerage. When she took possession of the house Ms Pang discovered
that the house was not in fact sewered.BUSINESS LAW AND COMMERCIAL LAW COMPULSORY ONLINE TEST 2 ASSIGNMENT.  She now wishes to sue for breach of contract.
(a) Please advise Ms Pang of any rights she may have under the law of contract.
Please cite relevant cases in support of your arguments. (6 marks)
(b) Assume for part (b) only that there is an exclusion clause in the contract that:
‘excludes the liability of the vendor or its agents for loss or damage resulting
from any breach of contract’. Ms Pang was unaware of the clause. Advise Ms
Pang whether this clause is likely to protect the agent. (6 marks)
Question 6 (7 marks)

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Lynda lives in Melbourne and is a world-famous painter. Her paintings are displayed at
exhibitions all around the world and are very popular with art collectors. Lynda enters
into a contract with Taylor, who runs an art gallery. The contract requires Taylor to
display Lynda’s paintings in her gallery, and to sell them on Lynda’s behalf. Taylor
receives a commission for each painting sold, and Lynda receives the rest of the sale
proceeds.
The contract requires Taylor to display at least two of Lynda’s paintings in her gallery’s
front window at all times. Unfortunately, when renovations lead to a shortage of space
in Taylor’s gallery, Lynda’s paintings are displayed on an inside wall of the gallery
instead, for six weeks in a row. Lynda tells Taylor that she is terminating the contract,
but Taylor insists that their contract should continue. Lynda is concerned that she has
lost sales as a result of her paintings not having a prominent place in Taylor’s front
window. As a world-famous artist, with an international reputation to protect, she is
feeling very distraught and deeply disappointed.
(a) Can Lynda terminate the contract? (2 marks)
(b) Assume Lynda has lost sales as a result of Taylor’s breach of contract. Is
Lynda entitled to recover damages for her lost profits, and for her distress and
hurt feelings? (5 marks)
Question 7 (12 marks)
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Justine owns and operates a successful waffle café in South Yarra called ‘Pass the
Syrup’. Customers love Justine’s famous waffles which are made with a special type of
buckwheat flour. Justine has a written contract with Priya for the supply of the
buckwheat flour, which is signed by both Justine and Priya. It is a term of the contract
that the buckwheat flour be delivered every Thursday.
Priya calls Justine on Thursday morning and explains that she is unable to supply the
buckwheat flour that week. The reason for her inability to deliver the buckwheat flour
was due to temporary main road closures around her factory and detours in place
through small suburban streets. To deliver the flour, Priya would need to hire small
vans to transport the buckwheat flour to South Yarra, as her usual trucks were too big
to travel on the small suburban streets. Priya had received several notifications about
the road closures. Priya decided that the hiring of the small vans, and extra people to
drive them, would result in too many additional costs being incurred by her.
Justine is unable to make and sell her normal quantity of waffles without the flour
delivery and suffers a loss of profit. She wants to claim her losses from Priya and sue
Priya for damages for breach of contract. However, there is an additional term in the
written contract between Justine and Priya: “Under no circumstances will Priya be
responsible for any loss or damage unless the loss or damage could be foreseen and
avoided by the exercise of due diligence by Priya.”
Justine argues ‘there is no way that this term applies to our situation. If I didn’t read it
before I signed it, how can I possibly know about it?’
(a) Can Priya rely on the term in the contract to avoid liability? (5
marks) (b) Does Justine have the right to terminate the contract? (2
marks) (c) Does Priya have a legal excuse for not performing the
contract? (5 marks)
Question 8
Melbourne Movers operates a business hiring bikes to members of the public. It is
especially popular with tourists. While on holiday, Mike hired a bike from Melbourne
Movers to ride along the Yarra River and around the Royal Botanical Gardens. He was
also hoping to ride to Williamstown for lunch. Unfortunately, the brakes failed, and he
fell, breaking his arm. When he hired the bike, he was given a ticket after making his
payment, which he put in his pocket without reading it. On the back of the ticket, it
states:
“Melbourne Movers will not be liable for any accident or damage arising
from the hire of bicycles, whether caused by the negligence of Melbourne
Movers or otherwise.”
Can Melbourne Movers rely on the statement on the ticket to avoid
liability? Question 9
Melanie is an enthusiastic rock climber and is keen to practise. She has found an indoor
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rock-climbing centre, Cliff Climb, and is excited to try out their impressive facilities.
When Melanie arrives at the centre, she is asked to complete and sign a form, which has
the following statement above the space for her signature: “Please read Conditions of
Climbing (overleaf) prior to signing.” Melanie did not read the Conditions of Climbing
before signing the form. While climbing, Melanie falls and breaks her shoulder. Her fall
was caused by another climber who panicked and grabbed on to Melanie, causing her to
lose balance and fall.  BUSINESS LAW AND COMMERCIAL LAW COMPULSORY ONLINE TEST 2 ASSIGNMENT.When Melanie tries to ask for a refund for her session and
reimbursement of her medical expenses, Cliff Climb refers Melanie to the clause on the
back of the form which states:
“Cliff Climb will not be liable to any person whether in contract, tort, under
statute or otherwise for any injury, loss, damage, death, or economic loss,
whatsoever suffered by you by participating in the rock-climbing activity,
whether resulting from your actions or the action, omission or negligence of
others.”
Can Cliff Climb rely on the statement on the form to avoid
liability? Question 10
Smoking Grill is a gourmet barbeque restaurant that specialises in organic, grass-fed
beef, which is extra flavoursome. The menu includes burgers and steaks. Smoking Grill
is open for lunch and dinner. Smoking Grill has a contract with Farm Meats under
which Farm Meats is to supply 100 kilograms of organic, grass-fed beef. Unfortunately,
after the beef is delivered, it is discovered that the beef is not organic, grass-fed beef,
and Smoking Grill is unable to serve it over the busy weekend period. Smoking Grill
tries to arrange supplies from four alternative suppliers but is only able to have 40
kilograms delivered at such short notice. As a result, Smoking Grill, while able to open
on Saturday, is forced to close on Sunday, and loses a total amount of profits of $2,400
for the two days.
What damages, if any, can Smoking Grill recover from Farm Meats in relation
to this breach of contract?
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ISSUES GUIDE
Question 1
Addresses exclusion clauses: need to address both steps, incorporation and
interpretation.
Incorporation by either signature or reasonable notice. Contract is in writing and
signed so signature rule (and not reasonable notice rule) applies here. Term
incorporated into contract because it is part of a signed contract: eg. Toll.
Even if incorporated, exclusion clause needs to be interpreted to determine whether it
covers events that have actually occurred. Exclusion clause is broadly worded, but
actions of the junior employee were highly unusual. Broadly worded clauses can be
effective (eg. Securicor case) but exclusion clauses will also often be interpreted so as
not to cover events outside of the scope of the contract (eg. Council of the City of
Sydney v West). Two approaches to be balanced and conclusion reached on the basis of
either view, provided properly explained.
Question 2
Termination for breach in performance requires breach of condition (eg. Associated
Newspapers v Banks) or serious breach of innominate term (Hong Kong Fir Shipping v
Kawasaki Kisen Kaisha) but is not allowed where only a breach of warranty (Bettini v
Gye).
Duration term: Probably a condition. Goes to the heart or root of the contract
because duration is important (and Sherlin knows this) as a result of professional
accreditation requirements. Breach allows termination.
Print-outs term: Probably a warranty. Still legally binding but a term of lesser
importance. Does not impact upon the main point of the contract, ie. the actual
presentation or its qualification for accreditation status. Breach does not allow
termination.
Question 3
Four steps of the damages process required: measure, causation, remoteness, mitigation.
∙ Measure: Expectation damages. Damages are to put the innocent party in the
position they would have been in had the contract been performed. Expectation
damages are the lost profits (both types).
∙ Causation: Breach must cause the loss, ‘but for’ test. Both types of lost profits
pass this test; need to explain why.
∙ Remoteness: Apply the two-limbed test from Hadley v Baxendale and can draw an
analogy with Victoria Laundry. Regular lost profits might fall within first limb
of Hadley v Baxendale but note facts of Hadley itself where regular lost profits
couldn’t be recovered allowing for the possibility of spare parts. Special lost
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profits do not fall within the first limb, and also don’t fall within second limb, as
the unusual contract wasn’t drawn to attention at time contract formed.
∙ Mitigation: Need to take reasonable steps to mitigate damage. Purchasing a new
printer likely unreasonable but need more information to see if there are any
other alternative reasonable steps that could have been taken to reduce or
eliminate the loss.
Question 4
Important fact here is that Lisa and Ruby are sisters – there is a family relationship
between them. This raises the issue: was there was an intention to create a legal
relationship? Need to discuss the presumption that applies in personal, family or private
matters – no intention to be legally bound (Balfour) and then discuss the circumstances
when the presumption can be set aside (Merritt, Todd, Ashton).
Can the presumption be rebutted in the circumstances? The presumption can be
rebutted by evidence which might include the specificity of the agreement (compare
Ashton v Pratt) and also cost and inconvenience (Todd v Nicol).
Taking everything into account, it is likely that a reasonable person may decide that there
was an intention to be legally bound and that there is sufficient evidence to rebut the
presumption, including:
∙ such a significant transaction ($500,000)
∙ all terms agreed upon.
∙ a $10,000 deposit paid (supporting seriousness)
∙ the inconvenience that it would cause to Ruby – she has incurred cost
and inconvenience in planning her move to Sydney.
As a result, a binding contract would exist. Lisa is not entitled to her deposit back and
must go ahead with the purchase.
Question 5
Part (a) (6 marks)
This question involves a written and signed contract, accompanied by an oral
statement. The key issue is whether or not the oral statement is legally binding.
Position under the parol evidence rule? The parol evidence rule provides that where a
written contract appears to be complete, oral evidence cannot be given to show that the
agreement of the parties was different to what is contained in the written contract. If
this rule is applied, then the oral statement is not part of the written contract, so can’t be
legally binding. BUSINESS LAW AND COMMERCIAL LAW COMPULSORY ONLINE TEST 2 ASSIGNMENT
11

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Would an exception be made? Is there a collateral contract? However, the oral
statement might form a collateral contract – a separate contract containing just one term
(the statement about the sewerage). The case is quite similar to Van Den Esschert in
which a collateral contract was found. For a collateral contract to exist, there must be a
promissory statement, which is not inconsistent with the main contract, and
consideration must be provided (usually entering into the main contract).
Apply the reasonable person test to see whether the statement would be classified as
promissory or not – consider timing of the statement relative to when the contract is
made (Van Den Esschert), the importance of the statement (Van Den Esschert), the
skills, knowledge or expertise of the person making the statement (Oscar Chess; Dick
Bentley). It is likely that the statement about the sewerage will be a collateral contract,
and so legally binding. Ms Pang may sue for damages for breach of collateral contract.
Part (b) (6 marks)
To be effective, exclusion clauses must be incorporated into the contract, and
interpreted so as to cover what has occurred.
Has the exclusion clause been incorporated in the contract? The exclusion clause is
validly incorporated – it is included in a written and signed document – and Ms Pang
will be bound by her signature even though she is not aware of the clause / did not
read it (Toll v Alphapharm). Document here is clearly contractual in nature: LeMans.
Does the exclusion clause protect against the event that occurred? Courts tend to
interpret exclusion clauses narrowly especially in consumer contracts (eg. Insight;
Alameddine; contra proferentum rule). Here, the exclusion clause specifically protects
against liability for breach of contract – however, what happened here is a case of
negligence.
While the exclusion clause is part of the contract, it probably does not cover the
events that have occurred – need clear words to protect against negligence:
Alameddine, so will not protect the agent. The agent may be liable for damages.
Question 6
Part (a) (2 marks)
How would the term breached be classified? Condition or warranty? Discuss
classification of the term – apply the test from Associated Newspapers v banks – likely a
condition – breach gives rise to a right to terminate the contract and claim damages.
Part (b) (5 marks)
When discussing an entitlement to damages, the following steps must be considered:
1. What is the measure of damages? (Robinson v Harman)
2. Was the loss caused by the breach? “But-for test”: Reg Glass
3. Is the loss caused too remote from the breach? Identify and consider the two limbs
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of the test established in Hadley v Baxendale – does the loss come within either of
these?
4. Is the loss one that the innocent party should have taken steps by way of
mitigation? (Payzu v Saunders)
Explain the aim of an award of damages. The loss of profits is an expectation loss,
that was caused by the breach, and comes within the first limb of Hadley v
Baxendale, so is reasonably forseeable and not too remote. Terminating the contract
would prevent further losses, but is this enough to mitigate the losses? What else
could Lynda have done?
Damages for distress and hurt feelings would not be recoverable: Baltic Shipping;
Falko.
Question 7
Part (a) (5 marks)
Is the exclusion clause a term of the contract? Consider – written contract between the
parties and signed – terms in a signed contract are binding even if they have not been
read (Toll v Alphapharm). Incorporated by signature (and no need for reasonable
notice). Exception in Le Mans case not applicable here.
Does the exclusion clause cover the breach? Courts tend to interpret exclusion clauses
narrowly, especially in consumer transactions (eg. Insight; Alameddine). The exclusion
clause here is quite similar to the one in Photo Productions v Securicor. In Photo
Productions the event could not have been foreseen or avoided by due diligence,
therefore the exclusion clause applied to protect them, even though there was a
fundamental breach of contract. However, the circumstances are different in this case –
the loss or damage could be foreseen (Priya had advance notice of the road closures)
and could be avoided by the exercise of due diligence (hiring smaller vans to deliver the
flour).
In conclusion, while the exclusion clause is likely to be incorporated into the contract,
it will probably not protect Priya due to its interpretation. Priya would still be required
to pay damages for breach of contract.
Part (b) (2 marks)
What type of breach of contract has occurred and what rights exist? Identify express
repudiation of the contract and explain what this means (Shevill). There is a choice to
ignore the breach and insist on performance or terminate the contract immediately and
claim damages for breach.
Part (c) (5 marks)
An answer to this question should step through each of the elements of
frustration, as illustrated by Davis Contractors v Fareham. BUSINESS LAW AND COMMERCIAL LAW COMPULSORY ONLINE TEST 2 ASSIGNMENT
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First – there must be an event occurring after the contract was made. This is satisfied
– the event is the road closures and occurs after the contract was signed.
Secondly – it must cause a fundamental change in the nature of the contract and the
obligations of the parties. This is probably not satisfied – there is extra cost and
inconvenience, but those circumstances are not circumstances that cause a fundamental
change in the nature of the contract (Tsakiroglou). Note also that the road closures are
only temporary, whereas the contract is an ongoing contract calling for the delivery of
flour every week.
Thirdly – the event must not be the fault of either party. This is not an issue here –
Priya is not at fault for the road closures.
Fourthly – the event must not be foreseeable by either party. While Priya had notice of
the road closures ahead of time, what matters is foreseeability at the time of entering
into the contract (and there is no suggestion that the parties would have been able to
foresee the road closures at that time).
Fifthly – it would be unfair in the circumstances to enforce the contract. In
conclusion, it is unlikely that frustration can be argued, as the second element is
not satisfied.
Question 8
Exclusion clause question: need to address both incorporation and interpretation.
Incorporation: Can be by signature or by reasonable notice. Contract is not written and
signed so reasonable notice rule (and not signature rule) applies. Reasonable notice
necessary before or at time contract concluded. Ticket not issued until after contract
formed, so no reasonable notice (eg. Olley, Alameddine, Thornton cases). Also, ticket
may not appear to be a contractual document (eg. Causer v Browne). For both of these
reasons, exclusion clause likely not incorporated, but either one sufficient to prevent
incorporation.
Interpretation: Exclusion clauses in consumer contracts typically interpreted narrowly
(eg. Insight Vacations v Young), but still, words are broad and clear here. Injury
would be the type of accident or damage referred to, and clause is worded so as to
exclude negligence and breach of contract. If incorporated, would be effective.
Question 9
Exclusion clause question: need to address both incorporation and interpretation.
Incorporation: Can be by signature or by reasonable notice. Form is written and signed
here, so signature rule (and not reasonable notice rule) applies. Provided form is
contractual (no issue here, unlike in Le Mans), will be bound by all terms whether or
not they are read and understood (eg. Toll). Here, form is signed so exclusion clause is
incorporated.
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Interpretation: Wording of clause refers to actions, omissions, and negligence of others.
Similarly worded to clause in Alameddine. Reference to ‘others will therefore likely
refer to other participants, and not Cliff Climb itself. However, unlike in Alameddine,
the injury here was caused by the negligence of another participant. Same interpretation
applied as in Alameddine, but different outcome; clause covers events that occurred.
Question 10
Need to address all four steps of the damages process: measure, causation,
remoteness, mitigation.
Measure: Expectation damages, to put innocent party in the position they would have
been in had contract been performed. This is the lost profits.
Causation: Apply the ‘but for’ test, showing that the losses are caused by the
breach of contract.
Remoteness: Need to apply the two-limbed test in Hadley v Baxendale, noting that
either limb is sufficient. As in Victoria Laundry, these ordinary lost profits probably
fall within the first limb, so remoteness requirements are satisfied.
Mitigation: Reasonable steps to mitigate the loss were taken, as alternative beef was
sourced, and four alternative suppliers were approached, however the full amount
couldn’t be obtained. The lost profits remaining after this alternative beef was used (the
$2,400) are the appropriate damages. BUSINESS LAW AND COMMERCIAL LAW COMPULSORY ONLINE TEST 2 ASSIGNMENT