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Exam Preparation Business Law exam is an open-book exam.

How do you prepare for an open-book exam? • Prepare a set of detailed revision notes which include materials from lectures, tutorials and textbooks These notes should include:• each topic of the law studied in the subject • definitions of key concepts • brief outline of the key principles/rules of law • relevant cases (include key facts, decision and reasoning) • past exam questions on each topic • possible answers to these questions prepared by you under exam conditions • flowcharts

• make sure your notes and text are easily accessible: * colour-code * tab each topic * use headings, sub-headings * index clearly


• attempt to identify the issues in the questions. • check all marks allotted to each question and allocate your time accordingly. • if you run out of time on a question.During the exam: • read the questions carefully. • make sure you understand what the questions are requiring you to do. 3 . map out a plan of the answer.

Offer. date and time of posting of acceptance unless Notice of Revocation received before posting * Note that the Postal Rule only applies to acceptance.Example of Flow Chart Agreement Does an agreement exist between the parties? Is this an invitation To treat? (announces availability for sale to public at large) Is this an offer? How was the offer made? By instantaneous communication Was an offer made in response? Was offer communicated? Was the offer accepted? Yes Agreement No No agreement Same form as offer or as stipulated or in equally advantageous manner In writing invoking Postal Rule* How was acceptance to occur? Was a counter offer made? Was it a mere request for information? In writing When does acceptance occur? General Rule On receipt of acceptance by offerer unless Notice of Revocation received before acceptance Postal Rule At day. 4 . You should now add any relevant cases in support of ‘agreement’. revocation of offer or rejection of offer all must be communicated.

money agreement .] A. FRIENDS (agreements between) = Social presumption applies Motor Insurers Bureau) [lift to work and sharing expenses]. REBUTTAL.An example of how your notes could look after summarising a topic ready for exams.[even in the use of family assets left under administration under a will] (Murphy v Simpson) = Social presumption applied CLUBS. b) If separated at time agreement made = Social presumption rebutted [particularly maintenance agreements] (Merritt v Merritt) FAMILY ARRANGEMENTS -. (In the exam it is rare that you will need to state the facts of the case.later separated] (Cohen v Cohen) [dress allowance] BUT 2. 3. COMMERCIAL) [Aim: To take the cases as set out (in any textbook) and reclassify them so that your notes make a series of statements or law that you can apply / copy in an exam situation with the case names noted after each proposition of law. A DOMESTIC/SOCIAL (i) FAMILY 5 .Domestic assumption applies in these circumstances: 1. (means contrary result) (Clarke v Dunraven) [Club Rules may be contractual].INTENTION (from Parker & Box) (After noting definitions of PRESUMPTION. page 5 ELEMENTS OF CONTRACT -. DOMESTIC / SOCIAL AGREEMENTS: PRESUMPTION: THAT THE PARTIES DID NOT INTEND TO CREATE A LEGALLY ENFORCEABLE AGREEMENT . page 6 PRESUMPTION IS REBUTTED (In this context rebutted means that the usual presumption no longer applies and the alternative presumption applies) .A Domestic/Social presumption will usually be rebutted if the consequences of breaking the agreement create a hardship for one of the parties. DOMESTIC.) However. (Coward v 4. HUSBAND and WIFE -a) If living together in harmony at the time agreement made = Social presumption applied (Balfour v Balfour) [holiday . you may wish to put a short reminder note in brackets to jog your own memory and understanding of the rule . [prises awarded] = Social resumption applied C/ is done in square brackets below. SOCIETIES.

a court always has that right).e. HUSBAND/WIFE agreements where separated at time of agreement (particularly maintenance agreements) (Mc Gregor v Mc Gregor) [wife compromised her rights] (Merritt v Merritt) [transfer of property]. (ii) FRIENDS 3. intention implied (Carlill v Carbolic Smoke Ball Co). Agreements where “no intention to be legally bound” is stated in rules (Jones v Vernon Pools) [soccer pools case]. Advertisements offering a reward for failure of a product may not be just mere advertising “puff” but could be a legally binding contract .e.Property arrangements (Popiw v Popiw) 2. house) and move (country to country) to look after a relative in return for property or inheritance. jobs. c/f (however) a court could hold otherwise (Nyulasy v Rowan) [share offer at ridiculous price] . TATS. 3. Honour Clauses = clause in agreement contains a clause “no intention to have legal consequences” (Rose and Frank v Crompton) Note: It is against “Public Policy” (i. THAT A CONTRACT IS INTENDED A) Commercial Presumption applied: 1.e.and all contribute financially .Held -Commercial some way (Simpkins v Pays) B COMMERCIAL ARRANGEMENTS PRESUMPTION IS THAT THE AGREEMENT IS TO BE LEGALLY BINDING ON BOTH PARTIES i. Riches v Hogben.e. the law) to oust the jurisdiction of the court (an agreement cannot claim to be a contract and refuse the court the right of adjudication upon its terms . to give up their established situation (i. hence presumption (of intention) applies. FAMILY SITUATIONS where one member has agreed.where one party purchases / applies for / enters . (Wakeling v Ripley. footy pools .if offer is commercially ridiculous (Keller v Holderman) [sell watch for little money].i. Todd v Nicol) also (Parker v Clarke) [geriatric care arrangement].1. Government or Administrative offers / schemes for assistance / subsidies are not necessarily contracts unless an Act of Parliament eg (The Administration of the Territory of Papua and New Guiney v Leahy) [tick 6 . 2. on request of another. Joint agreements to enter competitions.REBUTTED 1. eg. Then the arrangement breaks down after the move and promises not kept. 2. Offers made in jest or joke may be found to have no intention to be bound . . B) Commercial Presumption .

4. HUSBAND and WIFE -a) If living together in harmony BUT b) If separated at time agreement = rebutted = intended to contract 2. 6 FAMILY ARRANGEMENTS CLUBS.) _______________________________________________________________ PAGE INTENTION 5 A DOMESTIC / SOCIAL AGREEMENTS : PRESUMPTION : THAT THE PARTIES DID NOT INTEND TO CREATE A LEGALLY ENFORCEABLE AGREEMENT 1. 2. Advertisements Offers made in jest or joke c/f (however) a court could hold otherwise (Nyulasy v Rowan) 3. 3. Honour Clauses 7 . FAMILY SITUATIONS (ii) FRIENDS 3. The explanations and case references should be written out in full at the pages indicated in the margin. not in return for work done]. HUSBAND/WIFE . The following are the notes on INTENTION (above) written out with an index.But note also that the following is just the headings from the notes. 4. Joint agreements to enter competitions B COMMERCIAL ARRANGEMENTS 7 PRESUMPTION IS THAT CONTRACT IS INTENDED in the following situations:1.eradication scheme] (Australian Woollen Mills v Commonwealth) = wool subsidy. “Ex Gratia” Payments [voluntary payment. This is how your indexed notes could look ready to take into the exam room. SOCIETIES FRIENDS PRESUMPTION IS REBUTTED A DOMESTIC/SOCIAL (i) FAMILY 1. (Imagine that the following is the index to your set of notes . Agreements where “no intention to be legally bound” is stated 4. May be enforceable if the promisee (person to whom monetary promise made) gave up a right or something of value in return (Edwards v Skyways) [premature retirements].Property arrangements (Popiw v Popiw) 2.

similar in complexity and length to questions to be found in past examination papers.  Terms v Misrepresentations (as in Oscar Chess Ltd v Williams and related cases)  Mistake. and so on).The Paper The paper comprises 6 questions.  Remedies for Breach of Contract. 8 . revocation.  Exclusion clauses.  Capacity to contract.  Intention (to create legal relations). postal rule of acceptance.  Consideration – (often. You should look at old exam papers to see what kind of questions have been asked in the past. but not always. counter-offer. requiring analysis of the case of Masters v Cameron). especially discharge by frustration. All are compulsory. Question 6 is the traditional “short answer” question Questions may be taken from all areas of the syllabus other than the above topics. FAQs – Problem Based These include  Formation of Contract.  Misrepresentation. including offer. Questions Questions 1 .5 are typical problem questions. in the context of discharge of a contractual obligation). acceptance.  Conditional Acceptance (preliminary agreements. especially damages. Examiner’s Exclusion Clause The above list of FAQs is a guide only.  Discharge of contract.

the matters over which there is or may be some dispute). come to a conclusion. decide what rules of law are applicable to those issues. state the remedy. It is important to apply the following format when answering a problem question: (a) decide what the issues are (that is. (b) (c) (d) (e) (f) 9 .It is not necessarily an exhaustive list of the possibilities. a case or statute). apply the rule to the facts. cite the authority for the rule (that is.

10 . Arthur offers to sell his antique desk to Harry for $5. Nothing further is said concerning the desk. There's no doubt that I could afford to buy this desk if I could pay for it in three installments.000. Advise Harry whether he has an action against Arthur for breach of contract. Harry subsequently inspects the desk and says to Arthur 'The desk is in excellent condition and I'd like to have it.000 On 20 September Arthur receives Harry's letter of acceptance.A sample exam question: On 15 September. Give detailed reasons for your answer. On 19 September. On 18 September. Harry learns that Arthur has sold the desk to Richard for $6. Harry sends a letter to Arthur in which he accepts Arthur's original offer.

19 September H learns A sold desk to R 5. A offer 2. H A H will buy if can pay in instalments 18 September H accepts offer H 3. it is useful to draw a diagram: A 1.To get a clear picture of related events. 20 September A receives 11 . 4.

It could be: * an acceptance of the offer * a request for more information * a counter offer 12 . more than one law could apply to it. • The statement: ‘I’d like to have it …’ (one fact) could be interpreted in more than one way legally.H’s acceptance Next step: • isolate areas of dispute which may occur • these are the issues • an issue is a fact of a situation that could have more than one legal interpretation. That is.

Counter offer? Request for more Information? 3. A offer H A H will buy if can pay in instalments 18 September .• A questioning attitude is important The issues are indicated by elliptical circles in the following diagram: Areas of possible dispute A 1.H accepts offer 19 September H learns A sold desk to R H 2. 4. Revocation of Offer 13 .

Jaques v McLean) H rejected A’s offer open (H intended to add new terms) therefore no contract/no breach A’s offer still.5. 20 September A receives H’s acceptance which occurred first – acceptance or revocation? Plan of Answer A offered H desk ($5000) H’s reply Counter offer? (Hyde v Wrench) Request for more information? (Stevenson. could be accepted Acceptance occurred when? Postal rule apply? Yes acceptance before revocation No acceptance after revocation 14 .

If the offer was made verbally.contract exists/ breach no contract/ therefore no breach Answer An offer has clearly been made by Arthur to sell his antique desk to Harry for $5000. Therefore Harry made no counter offer and Arthur’s offer remained open. By selling the desk to Richard. If the former applies then the result depends on whether Arthur revoked his offer prior to the 20th. In Dickinson v Dodds 15 . as in Stevenson. However. It is now necessary to determine if and when Harry accepted the offer. Arthur’s offer would therefore have terminated. If it was a counter offer then. as was indicated in Harvey v Facey. If the latter applies then Harry has an action for breach of contract. the revocation must be communicated to the offeree. as decided in Byrne v Van Tienhoven. There is probably not sufficient evidence to decide the issue absolutely. However the revocation does not have to be communicated by the offeror in person. He was talking around the offer. To be an offer (whether an original offer or a counter offer). before deciding how to respond to Arthur’s offer. Whether the Postal Rule applies depends on whether the offeror has contemplated and expressly or impliedly approved the post as a mode of acceptance. and hence could not be accepted. Harry’s statement contained no promises. In my opinion. It is not disclosed how Arthur’s offer was made. then probably the Postal Rule did not apply. a statement must contain a promise or promises and not just a fact or information. and there would have been no contract. The first question is whether Harry’s reply was a counter offer or a request for further information. He did not promise to buy it on condition he could pay by instalments. as was held in Hyde v Wrench. It may be made by any other person provided it is reasonable in the circumstances for the offeree to rely upon that other person. then it was a counter offer and he could not sue for breach of contract. If it was a request for further information. Harry could just have been commenting on his own ability to pay thereby seeking further information from Arthur about what method of payment would be acceptable to him. Alternatively. the offer was still open and could have been accepted. Arthur clearly intended to revoke his offer. it amounted to a rejection of Arthur’s offer. Therefore acceptance did not occur until the 20th. If the offer was made by post then acceptance would probably have occurred on the 18th (that is when Harry posted the letter). perhaps seeking a response from Arthur. when Arthur received the letter. Jacques v McLean. If the Postal Rule applied then acceptance occurred on the 18th (that is at the time of posting – Nunin Holdings Pty Ltd v Tullamarine Estates Pty Ltd). He merely stated a fact about his financial circumstances and the method of payment he could manage. So the question becomes did Harry intend his statement to be a promise to buy the desk on condition that he could pay for it in three instalments? If he did.

............................................. It is necessary now to apply the law to the present problem fact situation... shows........................... .................. I t c o u l d b e a g u e d t h a t … … … … … … … ....... In applying the law to the present problem we see that .. The case of ..... clarified........... the law is upheld. highlights............... demonstrates this area of law...... 16 ..... The law is demonstrated in the case of ........ In this area the law states that ............ Applying these principles of law to the subject question we can see that ..... manifests...v .the court decided that revocation is effective if it is communicated to the offeree by a reasonably reliable source......... Cases It was held in the case of .......... There are two issues raised in this question.... Law The law in this area states that .......... and secondly............. v The case of .............. explains............... In my opinion Harry has little chance of success because either: a) there was a counter offer... or b) the Postal Rule does not apply and revocation occurred prior to acceptance. Two issues require discussion in this question.............. It seems clear that this has happened in this case................... They are ......demonstrates... H o w e v e r ...... They are .......... Apply If we apply the law to the present problem we see that ...„ v ………...... In this instance .......... and ..... illustrates...................... Two issues need to be addressed in this question.. When applying the law to this problem it can be seen that .............. The law says that ... firstly . They are ........... Introductory Sentences Issue This question raises two issues.. The law stipulates that ............ In the case of . i t is not an acceptable argument because ……………………… Conclusion v...... The issues' raised in this question are ....... They are .......... where ......... and hence.... exhibits............. We can say that the relevant law is .. The law states that ........... exemplifies ......... v ...... v . that . v ..................... Harry cannot accept Arthur’s offer because it no longer exists......... Two issues are evident in this question.... The law is refuted in the case of ....................... v .... This (the law) has occurred in cases such as .... . The law requires that .....

.. is that .... (2 marks) 6. can sue ... In conclusion. (2 Marks) 6..... would get ......... BLO1105 Question 6.. ........ for ... .............. hence ... ...1 Explain briefly the distinction between a warranty in a contract and a condition in a contract.... Explain the two equitable remedies... equity has developed two significant remedies which can apply in breach of contract cases. Consequences Consequently......2 Summarise briefly the presumptions applied by courts in deciding whether or not parties to an agreement intend legal obligations to flow from their arrangement......... .....3 Define briefly a "condition precedent" and a "condition subsequent"..... therefore.... Our conclusion in the present case......... can claim that he is entitled to ........................ hence he will .... To conclude.. Explain when they operate by giving an example of each... (2 Marks) 17 ... .......... is that he could succeed in his action against ........... Why is this distinction important? (2 Marks) 6..My advice to ......4 Although damages are the typical remedy for breach of contract under the common law.... can take action against ..... Business Law 6. The consequences would be that ......................

the contract never existed at all. These questions are straightforward and are an easy way to pick up marks. In what circumstances (if any) may a minor enter into a valid and legally enforceable contract? (2 Marks) (5x2 Marks = 10 Marks) Short Answer Questions There will be five short answer questions worth two marks each. that is. They have never existed and never had any legal effect.6. then the court will declare that the contract was void for mistake. They usually require you to give definitions or explanations of legal principles or concepts. Example of a 2 mark Question - What is the difference between `void' contracts and `voidable' contracts? Give an example of each. For example. if a mistake is proven to have occurred. Voidable contracts are formed through the wrongdoing of one of the parties.5 A person under the legal age of majority is said to be a “minor”. Void contracts are a nullity. Voidable contracts are perfectly valid contracts and are effective until the wronged party takes action to avoid the contract 18 .

then the innocent party can avoid or rescind the contract. She receives a letter from her parents. relinquishes her job and returns to Melbourne to look after them. After their deaths five years later. their beach house at Portsea in appreciation of her services. If one party to a contract misrepresents an important exercising their right to rescind the contract. asking her to return and care for them in their old age. Can 19 . working and living in New York. she discovers that the Portsea house has been left in her parents’ will to the Lost Dogs Home. Facts: “Florence is a trained nurse. The contract then cannot be enforced by the guilty party. They assure her that they will leave to her in their respective wills. their favourite charity. She is employed there on most favourable terms because of her specialised knowledge and she also owns her own apartment in Manhattan. pleading with her to return to Melbourne as they are both ill. making it voidable. She sells her Manhattan property. Examples of a bare pass and a substantive answer for a 5 mark question.

The question could be answered to a bare pass standard in the following way:‘Florence can sue the estates in contract if she can prove all of the elements of a contract. The facts are remarkably similar to the case of Todd v Nichol. there was intention to create a legal obligation. intention and consideration. where the Court decided that although there was a domestic relationship between the parties. They all appear to exist. acceptance.’ 20 . and therefore. there was a binding contract between the parties. By using that case as a precedent. They are offer. Florence would succeed if she sued the estates. the only suspect one being intention. This would justify a 15 minute answer.she claim the Portsea house from their Estates?” This question is worth 5 marks.

Realistically. thus suggesting a domestic or social agreement. the presumption is that no intention to be legally bound attaches to the arrangement (Balfour v Balfour).commercial Edwards v Skyways . with social or domestic agreements. (Edwards v Skyways Ltd.domestic . using a 4 step procedure. An answer which would attract 5 marks would be as follows:“The issue raised by this question is whether or not the parties intended to be legally bound by their agreement. the answer would have to be limited to about a page. together with offer. the fact that they relinquished property interests and jobs in Scotland was evidence that they intended to be legally bound.Merritt v Merritt Application . Again. By applying the law to the facts.A plan for the answer.Roe & Frank v Crompton . there must be such intention.) This presumption can be rebutted by clear evidence of an opposite intention. The conclusion.She probably wins and can successfully sue the estates for the house. therefore. so that the presumptions do not really provide us with an answer. would be as follows:Issue/ . when the court decided in similar facts.Presumptions . leaving 10 minutes to write the answer. if the agreement is commercial in nature. we see that the agreement has both commercial and domestic elements. follows a more logical sequence.Elements of both social and commercial (Todd v Nichol) Conclusion and Consequences . acceptance and consideration. there is a presumption that they intended to be legally bound. given the time restrictions. A ‘planned’ answer is much quicker to write than an unplanned one. (Rose & Frank v Crompton) Conversely. this dilemma arose in the case of Todd v Nichol. this presumption can be rebutted by clear contrary evidence (Merritt v Merritt).Intention is component of every legal contract . by relying on 21 .rebuttal . First.Intention Law and cases . The law of contract requires that.Balfour v Balfour . A plan of this nature can be prepared in 5 minutes.rebuttal .Proof of intention? . is that. in order for a binding contract to exist. The existence of intention is tested by using two established presumptions. despite the fact that the parties were related. that. and covers all the relevant points. However.

‘Whilst all possible care is taken with stringing and restringing work entrusted to us we cannot accept responsibility for any defective work or defective products used by us. A few days later. The same words which appeared on the notice behind the counter were also printed on the docked in very fine. This could be achieved in the planning stage by going into detail about the cases referred to in the answer. Subsequent testing of the strings showed that 22 . a more detailed answer would be justified. the strings in Tina’s racquet broke. and we will not be liable for any loss or losses to customers.’ If the same problem arose as the sole issue in a question worth 10 marks instead of 5. even if she had seen it. When she enters the expert's shop. in medium-sized print: . She purchases four new badminton racquets without strings. even if demonstrably caused by negligent workmanship on our part’.000 which Tina would have received if she had played in the finals were thus lost and all observers agreed that Tina’s poor performance was directly attributable to her faulty racquets. She decides to update all of her badminton equipment. She left her racquet for restringing and was given a docket she placed in her purse.Todd v Nichol. Florence can prove all the elements of a contract and can sue the estates of her parents to enforce those rights as against the Lost Dogs Home. She was eliminated form the first round of the championships. Valuable endorsements totalling $20. packed the racquets with her other gear and left for the world championships overseas. paid the costs of restringing. assuming that it identified her racquets so that she could collect the right racquets on her return. including her racquets. and takes them to an expert in badminton racquets in Melbourne to have the racquets strung at the correct ' tension. but legible. Tina collected her racquets which appeared to be correctly strung. Such an action would have excellent prospects of success. 1994 ---------------------------------------------------------------------------------------------------------QUESTION 3 Tina is a champion badminton player. and is to compete in the forthcoming world badminton championships representing Australia. She selected two replacement racquets in turn and the strings also broke. she does not notice a sign which is placed on the wall behind the counter which says. print on the bottom of the docket. which had been strung with defective material. Whilst competing in the first round of competition. Tina could not have read the notice. since she wears contact lenses which she did not have with her at the time. BAO/BL01105 BUSINESS LAW SEMESTER 1.

it is not a contractual document. or could not read it if he had seen it (Thompson v LM&S Railway Co. The question thus becomes 'should he have known of the clause?'.-function. it will be effective if prominently displayed (Balmain New Ferry Co v Robertson). ( Parker v South Eastern Railway Co. interpret them 'contra proferentum'. Thompson v London. and cannot be relied upon. If it is a contractual document.000 which she has clearly lost as a result of his faulty work? Advise Tina. even if the actual customer has not seen it. Application. Midland & Scottish Railway Co. Can she successfully sue the racquet stringer for the $20. or does it have some other . then ( and only then) the court will ask whether reasonable steps have been taken to bring the existence of the clause to the notice of the customer. the court will apply two tests. or can he rely upon the exclusion clause displayed on the premises and printed on the docket to defeat Tina's claim? Law & Cases Courts adopt a hostile attitude to exclusion clauses and. The law relating to exclusion clauses is well defined. Dealing first with tickets or dockets.) or proof of ownership (Causer v Brown).they were suitable for squash racquets. not introduced afterwards.). where possible. since one party to a contract cannot unilaterally introduce new terms (especially exclusion clauses) after the contract is made. then he must suffer the consequences of his action. and the 'reasonable notice' test. The nature of the document test means that the court will look at the piece of paper upon which the exclusion clause is printed and ask whether. and/or displayed upon the business premises. (Olley v Marlborough Court Ltd). 23 . not 'did he actually know of the" clause?' This highlights the distinction between actual and constructive knowledge. the offending clause is usually printed on a ticket or docket handed to the victim. It follows that. if a person enters knowingly into a contract which contains an exclusion clause which potentially defeats that person's contractual rights on breach of the contract. since the question of knowledge will be tested objectively by reference to a 'reasonable person'. Thornton v Shoe Lane Parking. objectively tested. such as a receipt (Chapleton v Barry Urban District Council. but is governed by the question of whether we are considering a case of a signed contract or a case where nothing has been signed by the victim. Tina seeks your advice. In either case (ticket or notice). the clause must be accessible to the customer at or prior to the time of entering into the contract. In the latter case. (10 marks) (30 minutes) Exclusion Clauses Issue Can Tina successfully sue the racquet restringer for damages. but they nevertheless acknowledge that parties are free to enter into contracts upon whatever terms they choose. These are the 'nature of the document' test. If it does have some other function. If the clause is displayed on the premises. The key word in this summary is 'knowingly'. and they should never have been used by the person stringing the racquets for Tina. it is a contractual document? Is it a piece of paper upon which a reasonable person would expect to find contractual terms.). but not for badminton racquets.

Tina's victory on the ticket aspect of the case is therefore academic. After owning the car for only a short time. Ben was told that it had only one previous owner. since his own mechanic had told him the car had been in a serious accident and had travelled many more kilometres than the odometer indicated. Jane discovers that some of the statements made to her by Ben were 24 . Ben decides to sell his car.Tina could successfully argue that the docket she was given would be regarded by a reasonable person only as proof of ownership of the racquets. Another question and the methodology to answer. When he bought the car. It had never been in an accident. Nevertheless. And the mileage shown on the odometer was genuine. some of the statements made to him by the dealer from whom he bought the car were wrong. Jane buys the car from Ben at the price requested by Ben. she will be bound by the clause displayed on the shop premises.since he had been deceived by the dealer from whom he bought it . and he advertised it as in excellent condition. and the odometer reading was genuine. as displayed on his premises. Ben was assured. to defeat Tina's claim. was reasonable for him to also deceive anyone who bought the car from Ben. who had carefully maintained the vehicle and always had it regularly services by the same dealer from whom Ben had bought it. Consequences It would be pointless for Tina to sue. When Jane came to inspect -the car in response to Ben's advertisement. provided it is prominently displayed (Balmain New Ferry Co v Robertson). He has owned it for 3 years. Conclusion The business proprietor will be able to rely upon the exclusion clause. Ben repeated that the car had no accident history. Ben thought that . despite the fact that she has not noticed it and could not have read it even if she had. as occurred in Causer v Brown.. accident free and so on. She would not therefore be bound by the clause printed on the docket. Ben knew that. having bought it second-hand from a care dealer.

They could: be a term of a contract or a mere representation be a misrepresentation 25 . but that it’s true value (given the accident history and increased mileage) is $17.untrue.000 is worth that price. and she consults you for advice as to her legal rights. That is. Assume that it can be proven that the car as described . • What action (if any) can she now take against Ben? • Isolate areas of dispute which may occur • these are the issues • an issue is a fact of a situation that could have more than one legal interpretation. could be interpreted in more than one way legally.000. more than one law could apply to it • the statements made by Ben to Ben and bought by Jane for $24. Advise Jane -.

A breach of a warranty. . 26 . entitles the injured party to an award of damages only. .Rescission is restoring the parties to their original precontractual position.A breach of a condition entitles the injured party to rescind the contract and sue for damages. . there are a number of factors that can make claiming rescission impossible. a minor term of the contract.a condition is a major term of the contract that is the substance of the contract.• A questioning attitude is important Step 2 • Are the statements a term of the contract? • If they are a term of the contract are they a condition or a warranty? . -However. Rescission is not available.

an innocent misrepresentation is a false representation.• Apply discussion of law to facts Come to a conclusion Step 3 • Are statements a misrepresentation? • Are they an innocent or fraudulent misrepresentation? . believed it to be true remedy is rescission of contract -a fraudulent misrepresentation is a representation made by a person who. had no honest belief in its truth. when they were making it. .elements required to establish fraudulent misrepresentation • statement must be fact • statement must be false 27 . at the time of making it. made by a person who.

If she wants to keep the car. then she may argue fraudulent misrepresentation or a breach of a condition of a term of the contract and claim rescission and damages. she may claim damages for losses suffered as a result of 28 .• person who makes statement must have no belief in the truth of the statement • the statement must be intended to persuade the other party to enter the contract and have that effect remedy is rescission and damages • Apply discussion of law to facts • Come to a conclusion Step 4 Of major consideration is what the parties want? If Jane wants to hand car back and get damages.

Thus. she may argue that the false statements were a breach of a warranty of a term of the contract.the overpayment. 29 .