Business Law Quiz: Case Studies and Problem Questions

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Law00150: Introduction to Business Law
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Table of Contents
Q 1 Short answer........................................................................................................................3
Q 2 Short answer........................................................................................................................4
Q 3 Problem...............................................................................................................................5
Q 4 Problem...............................................................................................................................6
Q 5 Problem...............................................................................................................................7
Q 6 Short answer........................................................................................................................8
Question 7 Problem....................................................................................................................9
References................................................................................................................................10
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Q 1 Short answer
Ermogenous v Greek Orthodox Community of SA Inc. (2002) 209 CLR 95
Overview of the Case: This is a leading case which has set the rules in deciding the case
where the issue is related to the intention to create legal relations. The case plays a guiding
role. The issue between the parties was whether or not the contract between Archbishop
Spyridon Ermogenous and the Greek Orthodox community has the intention of being liable
to the contract. The initial decision made by the Industrial Relations Court was in favor of the
archbishop. But the appeal to the High Court was allowed. It laid down the following
presumptions in the case related to social or domestic and commercial agreements.
While deciding such cases, the following must be examined correctly:
 Intention: The presumptions related to intention should not be merely “used”, it
depends upon the circumstances of the case, therefore, it must be “proved” by an
objective test.
 Circumstances: A case must be investigated and examined on the basis of situations
and circumstances surrounding it. For example, in the case related to contract the
circumstances that surround the contract must be considered instead of making a
decision by finding the relevancy of single fact.
 Contracts with the religious minister: The contract with the religious minister is
legally non-binding. But the exemption is that when a non-religious community
makes an agreement then the religious minister is liable for monetary compensations.
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Q 2 Short answer
These are few of the clauses that are defined in a contract. But there is a difference between
the two:
a). By agreeing to the first clause the parties prevent each other from proclaiming a breach of
fiducial obligation, the obligation of care, etc. In some of the courts, the Judge has decided to
repugnant the contract having this clause stating the reason that it is against the public policy.
And sometimes the contracts were declared enforceable that this particular clause was
declared unbinding. Formulation of such type of agreement does not build a legal
relationship. And parties to this type of contract are not legally bound. The clause restrains
the parties from taking any legal action in case of any dispute regarding the terms of the
contract. Sometimes the parties do not prefer to take legal action in the court of law but
another option available to them is to take the dispute to the arbitration. The clause shall
affect in a such a way that in case of any dispute the dispute shall not be brought in any court
of law.
b). And the second clause precludes the parties from pursuing arbitration. Because in some of
the contracts the parties to contractually agree to the term of resolving a dispute through
arbitration. By stating the second clause the parties prevent each other from resolving the
dispute through arbitration. But the court system as a whole is not precluded from having the
power to resolve this dispute (Trakman, 2018).
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Q 3 Problem
The rule applied here is “Covenant not to sue”. It is an agreement between the parties not to
sue the person from whom the damages are to be claimed. It directs that the claimant shall not
sue the party at default for the perpetuity or postpone to file the suit for a fixed period of
time(Everton and Hughes, 2017).
In the present issue, Mr. Donald may make the arrangements with the company and the
company may accept payment of $2000 and make an agreement with Mr. Donald to not sue
or postpone to sue Mr. Donald until he finds the Job.
a). A covenant not to sue is different from the release of liability. If the company makes an
agreement with Mr. Donald of not suing, but it does not mean that the company cannot sue
him later. The company has agreed to not to sue him but there is no formal contract between
them for not suing, the company has not waived its right to sue. The option available to Mr.
Donald is to make settlements or negotiate with the company again. The company has broken
the promise but the company is not liable to pay back the settlement amount. The agreement
does not preclude the company from suing Mr. Donald. But he can bring the suit for the
enforcement of the agreement against the company.
b). In the present case, if Ivanka pays the amount of loan with the agreement of not suing her
father. The aim of the covenant is to settle the issue out of the court. Therefore, Ivanka can
assure the company for payment of a loan. Later the compensation can be claimed from her.
Again a suit against the company can be brought against the company for enforcement of
“Covenant not to sue”. But this does not mean the company cannot sue because the right to
sue is not waived.
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Q 4 Problem
Within the legal system of the nation, the Contract Law is regulated through the Sale and
Supply of Goods Act. A contract is a formal agreement between parties which can be
expressed or implied. But one of the major element for enforcement of a contract is
“consideration”. Consideration is paid at the time of making an agreement and it is not paid
for the previous acts. It must be adequate and reasonable. This means there should be an
exchange of something in value. The consideration should be adequate, a promise without
consideration do not form a valid contract and hence not enforceable by law. Though a
promise made on account of love and affection is enforceable but for its enforcement, it needs
to be formally registered.
In the present case, Bill promises his daughter to buy her Ferrari, instead buys her used
Mazda, Chelsea cannot sue bill as there is no consideration and a contract without
consideration is unenforceable by law. Though for forming a gratuitous contract is
enforceable by law it is subject to some conditions which need to be fulfilled. Furthermore,
here Bill just promised Chelsea to buy her Ferrari and mere promise is not enforceable law
(Fried, 2015). Hence, no ground exists for filing of a lawsuit against the Father for not
fulfilling the promise.
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Q 5 Problem
a) Is Bob bound by the clause on the ticket?
Accepting a parking receipt implies that there has been a contract between the owner of
the car and the owner of the parking area. The receipt clearly states that the parking is at
the owner’s risk which implies that Bob himself is liable for the damage occurred to his
car. As the part of the Torts, it is a volunteer agreement; which enacts that the party to the
agreement is agreeing for any loss that may occur to him. In the present case, Bob is
bound by law and is himself liable for any damage occurred. But Bob can claim the
damages from the Insurance company.
b) No, the answer would remain the same because it does not matter how many times the
person has been to a place. The condition of the receipt would remain the same.
Therefore, Bob would be bound by the clause on the ticket no matter how many times he
had received the ticket.
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Q 6 Short answer
There are certain statements which are made during negotiations which may be called terms
of contract or representation. In order to determine the cause of action, it is important to know
if the statement is a term or representation. An action of misrepresentation can be brought in
the case where the statement is representation which turns out to be untrue (Senzee, 2016).
And if the term of the contract remains unfilled then the claimant can bring the suit for breach
of the contract.
Following are factors which are considered by the court in deciding whether the statement is
a term or mere representation:
 When there is a written contract between the parties then the written statements are
the terms and the verbal statements are a mere representation.
 A person who represents the contract has greater knowledge then chances are that
those are the terms and if the other party has more knowledge then it is a
representation.
 If there is a major time gap in formulating a contract and in entering into the contract,
then it is said to be a representation.
The landmark case of:
“DICK BENTLEY PRODUCTIONS, LTD. AND ANOTHER v. HAROLD SMITH
(MOTORS), LTD.”
Justice Windeyer stated the difference between the two statings, “A statement passed
between the parties to the contract is representation whereas, the term is the representation
which continues”.
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Question 7 Problem
According to the Section 19 of the Goods Act (1958), “Implied conditions as to quality and
fitness”, if the buyer buys goods relying on the description made by the seller of the goods
based on his skill and judgment then there is implied warranty as to the quality of the product.
And according to section 16 of the Act, if there is any breach related to the contract of sale of
goods then the buyer may file the suit.
In the present case, Bob may sue the owner of the store as there was a mistake on the part of
the employee. It is advisable to Bob to claim for compensation for the damages.
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References
 Adriaanse, M.J., 2016. Construction contract law. Macmillan International Higher
Education.
 Everton, A.R. and Hughes, D.J., 2017. Studies in public law and the retail sector.
Routledge.
 Fried, C., 2015. Contract as promise: A theory of contractual obligation. Oxford
University Press, USA.
 Senzee, T.A., 2016. Automated Contract Terms Negotiating System and Method. U.S.
Patent Application 14/570,892.
 Šírová, L., 2016. Misrepresentation under English Contract Law and Its Comparison
to Slovak Contract Law. International and Comparative Law Review, 16(2), pp.197-
208.
 Trakman, L., 2018. The Reform of Commercial Arbitration in Australia: Recent and
Prospective Developments. The Developing World of Arbitration,(Hart, 2018) ch, 12,
pp.18-17.
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