Contract & Consumer Law

Assignment
Submission Instructions:
Key steps that must be followed:

• Please complete the Declaration of Authenticity at the bottom of this page.

• Once you have completed all parts of the assessment and saved it (eg. to your
desktop computer), login to the Monarch Learning Management System (LMS)
to submit your assessment.

• In the LMS, click on the file "Submit Contracts & Consumer Law assignment” in
the Contracts & Consumer Law section of your course and upload your
assessment file/s by following the prompts.

• Please be sure to click “Continue” after clicking “submit”. This ensures your
assessor receives notification – very important!

Declaration of Understanding and Authenticity*

I have read and understood the assessment instructions provided to me in the Learning Management System.

I certify that the attached material is my original work. No other person’s work hasbeen used without due
acknowledgement. I understandthat the work submitted may be reproduced and/or communicated for the
purpose
of detecting plagiarism.
Student Name*: Date:

* I understand that by typing my name or inserting a digital signature into this box that I agree and am bound by
the above student declaration.

Important assessment information

Aims of this assessment

This assessment covers the application of legal principles in contract and consumer law.

It requires the completion of a set of questions in relation to:-contract formation and

validity; contractual performance and the principles of E-Contracts.

Enforcing rights and obligations, along with consumer protection law is also covered.

We look at and assess restrictive trade practices and financial services consumer
protection.

Business based scenarios present different types of contracts and the capacity to enter into
a contract. There is an assessment task which covers the working use of E-contracts;
important in today's progressive society.

Also, what is lawful and unlawful in the area of consumer protection is explored.

Preparing your responses

Please refer to the beginning of the text and familiarise yourself with the sections on 'Case
Studies, Scenarios and Problem Questions', and 'How to answer a question'. This will assist
you to formulate your response.

Marking and feedback

This assignment contains 9 assessment activities based upon nine chapters of the text book.
Each assessment activity contains specific instructions.

Chapter 1 is not assessed in this unit as it is assessed in FNSTPB505 Property Law.

Chapters 8 and 9 are not assessed in this unit as they are assessed in FNSTPB504
Corporations and Trusts Law.

This particular assessment forms part of your overall assessment for the following unit of
competency:

• FNSTPB503 Apply legal principles in contract and consumer law

Grading for this assessment will be deemed “competent” or “not-yet-competent” in line
with specified educational standards under the Australian Qualifications Framework.

What does “competent” mean?

These answers contain relevant and accurate information in response to the question/s
with limited serious errors in fact or application. If incorrect information is contained in an
answer, it must be fundamentally outweighed by the accurate information provided. This
will be assessed against a marking guide provided to assessors for their determination.

What does “not-yet-competent” mean?

This occurs when an assessment does not meet the marking guide standards provided to
assessors. These answers either do not address the question specifically, or are wrong from
a legislative perspective, or are incorrectly applied. Answers that omit to provide a
response to any significant issue (where multiple issues must be addressed in a question)
may also be deemed not-yet-competent. Answers that have faulty reasoning, a poor
standard of expression or include plagiarism may also be deemed not-yet-competent.
Please note, additional information regarding Monarch’s plagiarism policy is contained in
the Student Information Guide which can be found here:
http://www.monarch.edu.au/student-info/

What happens if you are deemed not-yet-competent?

In the event you do not achieve competency by your assessor on this assessment, you will
be given one more opportunity to re-submit the assessment after consultation with your
Trainer/ Assessor. You will know your assessment is deemed ‘not-yet-competent’ if your
grade book in the Monarch LMS says “NYC” after you have received an email from your
assessor advising your assessment has been graded.

Important: It is your responsibility to ensure your assessment resubmission addresses all

areas deemed unsatisfactory by your assessor. Please note, if you are still unsuccessful in
meeting competency after resubmitting your assessment, you will be required to repeat
those units.

In the event that you have concerns about the assessment decision then you can refer to
our Complaints & Appeals process also contained within the Student Information Guide.

Expectations from your assessor when answering different types of assessment questions

Knowledge based questions:

 A knowledge based question requires you to clearly identify and cover the key subject
matter areas raised in the question in full as part of the response.

Good luck

Finally, good luck with your learning and assessments and remember your trainers are here
to assist you

Assessment Activity 1:
Achieving Contract Formation ( Chapter 2)

Activity instructions to candidates

• This is an open book assessment activity.
• You are required to read this assessment and answer all 8 questions that follow.
• Please type your answers in the spaces provided.
• Please ensure you have read “Important assessment information” at the front of this
assessment
• Estimated time for completion of this assessment activity: 2 - 3hours
Question 1.1

What is the fundamental difference between an agreement and a legally binding contract?
(Note: This question is not asking you to define the two terms, instead it is asking you to describe the
difference between them.)
Question 1.2

Identify four contracts about which a client may seek advice from a financial services provider.

Question 1.3

Lucy is a client whose tax and business matters you have dealt with for some time. She has been married
for 10 years to Desi but they are currently separated whilst they consider divorce. Desi runs his own
separate business. They have entered into various private agreements during the life of the marriage
concerning money. Lucy wants to know under what type of circumstances would a private agreement
between a husband and wife be considered contractually binding?
Question 1.4

What is a 'letter of intent' and in what circumstances are such documents likely to be used?

Question 1.5

In what commercial situation may a client seek a letter of comfort? What three forms may it take? What
is a 'letter of comfort'? Name a commercial situation where 'letters of comfort' are commonly used.

Question 1.6
What are some of the ways an offer and acceptance can be communicated between the parties to a
contract?

Question 1.7

List some of the ways an offer may lapse.

Question 1.8

Valentine spotted a lovely blackwood bookcase in an antique shop owned by Tristan, which had a price
tag of $5,000. Valentine approaches Tristan and tells him she will take the bookcase for $3,000. Tristan
says that isn't possible but how about $4,000? Valentine says no, how about $3,500? Tristan says no to
which Valentine replies that she will accept Tristan's offer of $4,000. Tristan does not reply but turns to
serve another customer Isolde, as Valentine steps away from the counter to take a call on her mobile
phone.

Valentine then turns to pay for the bookcase, but Tristan says he has already sold it to Isolde for $5,000.
Valentine is furious and says that she and Tristan had a contract and the bookcase was hers. Is Valentine
correct? Give reasons for your answer.
 Assessment Activity 2:

Achieving Contract Validity (Chapter 3)

Activity instructions to candidates

• This is an open book assessment activity.
• You are required to read this assessment and answer all 7 questions that follow.
• Please type your answers in the spaces provided.
• Please ensure you have read “Important assessment information” at the front of this
assessment
• Estimated time for completion of this assessment activity: 2-3 hours
Question 2.1

A minor does not have the capacity to enter into a contract which will be enforceable against them,
except in exceptional circumstances. Why? What are those exceptional circumstances?

Question 2.2

If a person who is intoxicated enters into a contract with another person will that contract always be
voidable by the intoxicated person when they return to sobriety? Give reasons for your answer.
Question 2.3

Tom, a client who is a commercial builder, entered into a contract with Roger to undertake construction
of an office building. Two months ago, Tom paid Roger $15,000 under a clause in their contract which
required Tom to pay this sum if Tom's work breached the National Construction Code. Tom has just
been informed that the clause of the Code he allegedly breached is invalid because of an inconsistency
with environmental protection legislation. Can Tom recover his $15,000? Give reasons for your answer.

Question 2.4

In what relationship does the presumption of undue influence arise?

Question 2.5
What is the definition of a guarantor? What is the legal responsibility of a person who agrees to be a
guarantor on a loan for someone else?

Question 2.6

A young couple wishes to take out a sizeable home loan and, at the insistence of the bank, your client,
asks the husband's elderly Chinese parents to guarantee the loan. The parents have very limited spoken
and written English. Under what circumstances would you advise your client, the bank, that they could
successfully rely on this guarantee should the young couple default on their loan?

Question 2.7

Inspired by the myriad of cooking shows on television, Dawn is interested in investing a sum of money
she has recently inherited in a restaurant and therefore seeks the advice of Global Domination Advisors
Pty Ltd.
Angel is appointed as her advisor and after some discussion, Angel recommends she invest in 'The
Witches Cauldron', assuring Dawn that the restaurant has been very successful and that its future is
even brighter - investment monies are now being sought so it can franchise and that an excellent profit
within the next year is assured. Dawn takes Angel's advice, but she wants extra funds to invest so she
will receive a higher return.
Dawn approaches her neighbour, Tara, whom she has befriended. Tara suffers from a mild mental
disability and depression and does not cope well in the wider community, particularly since the death of
her mother. Tara relies on Dawn for advice and support. Dawn asks Tara to lend her $20,000 so she can
make it into $40,000 for her. Tara asks if this will make Dawn happy, when Dawn says yes, she gives her
the money, and Dawn asks her to sign a document to the effect that Tara has loaned the money to
Dawn interest free, to be repaid if and when the restaurant venture succeeds to Dawn's satisfaction.
Sadly, after 6 months, The Witches Cauldron is losing money and Dawn has lost most of her investment
monies. Dawn discovers that Angel gave his advice relying on financial information which was out of
date and incorrect. He also ignored the fact that the restaurant was about to be prosecuted for breach
of their license conditions. Dawn is furious. Tara's niece has now also discovered Dawn's behaviour and
insists that she repay Tara, claiming that the loan agreement is not valid.
Advise Dawn and Tara if there is any action and against whom they may take it, giving reasons for your
answers.

Assessment Activity 3:
Identifying and Enforcing Rights and Obligations (Chapter 4)

Activity instructions to candidates

• This is an open book assessment activity.
 • You are required to read this assessment and answer all 6 questions that follow.
• Please type your answers in the spaces provided.
• Please ensure you have read “Important assessment information” at the front of this
assessment
• Estimated time for completion of this assessment activity: 3-4 hours
Question 3.1

Why is it important to identify the ‘terms’ of a contract?

Question 3.2

Using examples, describe how you would explain to a client the differences between conditions and
warranties, and why the differences matter?
(Note: This question is not asking you to define the two terms, instead it is asking you to describe the
difference between them.)

Question 3.3

How would you explain to a client the effect of a signature on a contractual document? Would your
explanation be different if one of the parties had not bothered to read the terms of the contract?
Give reasons for your answer.
Question 3.4

List three contractual transactions which are required by Australian legislation to be recorded in a
written document.

Question 3.5
Michele has undertaken an inventory of the electrical appliances throughout her business and discovers
that some require cleaning and repair. Michele takes the appliances to Rolando the repairer, with whom
she has not dealt before. Unfortunately, whilst the goods were waiting to be repaired, Rolando’s repair
shop was burgled and the appliances stolen. Rolando refuses to accept liability for the loss and draws
Michele’s attention to a small sign on the door leading into a back room of the shop which says “No
liability for loss or damage to goods accepted under any circumstances”. Rolando points to these same
words printed on the back of the receipt Michele was handed when she deposited the appliances for
repair.
Is Rolando correct in his refusal? Give reasons for your answer.

Question 3.6

What is a standard form contract? What is the difference between a commercial standard form contract
and a consumer standard form contract? Use examples to explain your answer.
(Note: This question is not asking you to define the two terms, instead it is asking you to describe the
difference between them.)
 Assessment Activity 4:

Contractual Performance, Managing Termination and Breach (Chapter 5)

Activity instructions to candidates

• This is an open book assessment activity.
• You are required to read this assessment and answer all 6 questions that follow.
• Please type your answers in the spaces provided.
• Please ensure you have read “Important assessment information” at the front of this
assessment
• Estimated time for completion of this assessment activity: 2-3 hours
Question 4.1

In what circumstances can a third party (‘stranger’) to a contract be held liable in the event of a breach?
'subsist' or cone into existence? How is copyright a valuable asset in business?

Question 4.2

In certain circumstances, rights can be assigned due to operation of law. List three circumstances where
such assignment can occur.
Question 4.3

Sheila entered into a domestic building work contract with Bruce to build her first home for $200,000 in
six months. The contract set out that progress claims would be paid when the footings were poured, at
completion of walls, at completion of roof cover, second fix carpentry and practical completion. All
obligations are met until the progress claim for completion of the walls has been paid, after which Bruce
becomes busy with other work and stops working on Sheila’s house, despite her protests. When no
further work has been completed after a further six months, Sheila takes action for breach of contract
against Bruce and hires another builder to complete the work. Sheila wants Bruce to pay back the first
two progress claims.

Will she be successful? Give reasons for your answer.

Question 4.4

What is the purpose of a force majeure clause? Under what circumstances will they apply?
Question 4.5

Paige is a financial consultant who has entered into a contract to work exclusively for Annie’s company
for two years. Three months into the contract, Annie informs Paige that her services are no longer
required because she wants to take the company in a different direction. Paige intends to sue Annie for
damages for breach of contract.

Explain the matters the court will take into account in assessing the measure of damages they will award
Paige.

Question 4.6

Now for some fun, complete the following crossword puzzle.

Across
1. An unforeseen event, the fault of neither party which makes it impossible for the contract to be
performed.
2. A remedy to put the injured party in the position they would have been in if the contract had been
properly performed.
3. A court order preventing someone from performing a specific act.
4. Where one party leads the other party to reasonably believe that they will not be insisting on strict
performance of the agreed terms.

Down
1. The concept that provides only the parties to the contract can enforce it.
2. A three party agreement whereby the original parties agree to discharge their contract in
consideration of a new contract being entered into between one of the original parties and a third party.
3. When each party properly performs their contractual obligations and the contract is discharged.
4. Attempted performance.
5. A remedy that restores the parties to their pre-contractual position, nullifying the existing contract.

Assessment Activity 5:

E-Contracts: Principles and Practice (Chapter 6)

Activity instructions to candidates
• This is an open book assessment activity.
• You are required to read this assessment and answer all 6 questions that follow.
• Please type your answers in the spaces provided.
• Please ensure you have read “Important assessment information” at the front of this
assessment
• Estimated time for completion of this assessment activity: 2-3 hours

Question 5.1

Define the term ‘E-commerce’.

Question 5.2

Are there any exceptions to the type of contracts which can be made electronically?

Explain your answer using examples.

Question 5.3

Heidi has been a client for some years, operating a traditional retail business. She has now made the
decision to operate online as well and seeks your advice as to undertaking online transactions. Heidi has
the following questions:
 • When making an offer over a website, to whom is the offer being made?

• With what legal requirements must Heidi comply?

Question 5.4

What are the requirements of electronic signatures under the ETA?

Question 5.5

Explain the use and significance of Australian Business Number Digital Certificates.
Question 5.6

List three rules under which domain names are allocated.

 Assessment Activity 6:

Contractual Agency (Chapter 7)

Activity instructions to candidates

• This is an open book assessment activity.
• You are required to read this assessment and answer all 6 questions that follow.
• Please type your answers in the spaces provided.
• Please ensure you have read “Important assessment information” at the front of this
assessment
• Estimated time for completion of this assessment activity: 2-3 hours

Question 6.1

Ginny works for the Poptop Makeup Shop. She signs a contract with Glamour Co. for a shipment of
lipsticks to be stocked at Poptop. Poptop never agreed for Ginny to be their agent, but are thrilled with
the deal she struck, and decide to stock the lipstick in accordance with the contract. Poptop has a
change of heart after closer examination of the stock . They wish to withdraw from the contract and
argue the contract is not enforceable by Glamour Co. because at the time of signing, Ginny was not
Poptop’s agent.

Is the contract enforceable? If so, from what point in time?

Question 6.2
Stephen appointed Daniel from Daniel’s Real Estate to sell his property. Because Daniel is too busy, he
subcontracts the sale to Michael’s Real Estate, without Stephen’s permission. Has Daniel done anything
unlawful?

Question 6.3

Tilly engages Shona as an agent to sell her business to Selva. Is Shona a Party to the contract to sell the
business? Explain.

Question 6.4

Explain how an agency relationship differs from that of an independent contractor.

(Note: This question is not asking you to define the two terms, instead it is asking you to describe the
difference between them.)
Question 6.5

Which party (agent, principal or third party) would not be held liable for fraudulent misrepresentations
where the agent acted outside their authority?

Question 6.6

Joe, in his capacity as an agent for Silvio, is authorised to purchase cattle at a limit of $200 each.

Joe could not purchase the cattle at this price so he purchased in his own name, 400 cattle at $300 each.
Subsequently Silvio conferred with Joe and agreed to ratify his act. Neither Joe nor Silvio will pay for the
cattle when delivered. Who is liable?
 Assessment Activity 7:

Consumer Protection Law ( Chapter 10)

Activity instructions to candidates

• This is an open book assessment activity.
• You are required to read this assessment and answer all 5 questions that follow.
• Please type your answers in the spaces provided.
• Please ensure you have read “Important assessment information” at the front of this
assessment
• Estimated time for completion of this assessment activity: 2-3 hours

Question 7.1

Can omitting to provide information ever count as misleading or deceptive conduct? How would you
explain this concept to a client?
Question 7 .2

A client contacts you having received several complaints about the manner in which they are advertising
their prices. The client operates a bike shop, and they have been advertising bikes for $300. In reality the
full price a consumer has to pay is $330 because of GST. Your client has presumed a customer will simply
imply this and add it to the price.

Are the complaints of the consumers justified? How would you explain this to your client and what
advice would you give them to ensure they operate in compliance with the ACL?

Question 7.3

Anthea sold Bob some paper and pens for $65. Anthea did not give Bob a receipt. Has Anthea done
anything unlawful?

Question 7.4

Marc is considering entering into a mobile phone contract with GreedyGuts Phones. He is upset to find
out that within the contract, there is a term stating that if Marc defaults on payment of his monthly
statement, there is a default fee that increases by 10% every day of default. Marc considers this extreme
but the salesperson informs him that this contract is standard form and its terms are non-negotiable.
What argument could Marc make? Do you think he would be successful?

Question 7 .5

Sebastian is going camping in the snow and asks the sales assistant which sleeping bag would be the
best for his requirements. He is advised that the SleepDry bag is the best but in fact he gets wet and cold
while camping. Who would be responsible for his miserable camping trip: Sebastian, the manufacturer
or the sales assistant? Do you need further facts to answer this question fully?

Assessment Activity 8:

Restrictive Trade Practices ( Chapter 11)

Activity instructions to candidates

• This is an open book assessment activity.
• You are required to read this assessment and answer all 5 questions that follow.
• Please type your answers in the spaces provided.
 • Please ensure you have read “Important assessment information” at the front of this
assessment
• Estimated time for completion of this assessment activity: 2-3 hours

Question 8.1

Ting and Chrome are separate businesses that manufacture hats. Muhammad invites them both to
make offers to stock his shop. Ting and Chrome get in contact with each other and agree not to sell any
of their hats to Muhammad for less than $40 each.

Have Ting and Chrome done anything illegal? Explain your answer with reference to the CCA.

Question 8.2

Harmony Publishers provide Bookworm Bookshop with a variety of books. The bookshop begins selling
Harmony's books at a discounted price. Harmony contacts the Bookshop and asks them to sell the books
at their recommended retail price. Bookworm refuses. Harmony withholds the supply of books until the
discounting stops, placing the Bookshop in a difficult financial position.

Has the Bookworm Bookshop done anything unlawful? Has Harmony Publishers done anything
unlawful?

Question 8.3

Penny provides free-range eggs to Bob's Diner. Penny's husband, Ted, is an excellent plumber but has
been having a hard time finding work. To help her husband, Penny tells Bob she will only continue
providing him eggs if he hires Ted at a fair price for any plumbing needs the diner may have.

Has Penny acted lawfully? Explain your answer.

Question 8.4

Jia Pty Ltd and Katcan Pty Ltd are competitors in the poultry market. They agree to supply fewer organic
chickens to stores for a period of eighteen months to push up prices. Is this lawful? Why or why not?

Question 8.5

Explain what is meant by a cartel.

Assessment Activity 9:

Financial Services Consumer Protection (Chapter 12)

Activity instructions to candidates
• This is an open book assessment activity.
• You are required to read this assessment and answer all 2 questions that follow.
• Please type your answers in the spaces provided.
• Please ensure you have read “Important assessment information” at the front of this
assessment
• Estimated time for completion of this assessment activity: 2-3 hours

Question 9.1

Jacob is a stockbroker who, over the course of a year, sold 1.5million shares in a company, ChemTex to
people and other companies that he was affiliated with. He did this so that ChemTex looked like a
success and encouraged others to trade. Has Jacob done anything unlawful?

Question 9.2

Boris seeks personal investment advice from Rory, a financial adviser and AFS licence holder. Boris, a 60
year old client with an income of $60,000 per year, is considering investing his life savings of $300,000 in
a new technology company. Rory uses accurate data to calculate that the company has a 50% chance of
tripling his money and a 50% of going broke. Rory advise Boris to make the $300,000 investment.

Has Rory fulfilled his obligations as an AFS licensee?