While Jamie is shopping at her local grocery store, she notices a sign in one aisle which states:

“SPECIAL OFFER, PUMPKIN $3 EACH”. Jamie puts a pumpkin into her basket, dreaming of
pumpkin soup. At the checkout, the shopkeeper tells her that the pumpkin is actually $5. Jamie
is furious and argues that stock displayed with a price on it is an offer and insists on paying $3.
The shopkeeper argues that the sign is not an offer.
Is Jamie or is the shopkeeper correct? With reference to the rules of offer and acceptance in
contract law, explain how much Jamie is required to pay for the pumpkin

ISSUE
Jamie went shopping at the local grocery store, there was a sign “SPECIAL OFFER, PUMPKIN
$3 EACH”. Jamie bought a pumpkin and the shopkeeper told it was $5. Jamie disagreed with
this price. The shopkeeper argues that the sign is not an offer. The question is who is correct,
Jamie or the shopkeeper.

RULE
Offer-Acceptance
Invitation to treat
Display at store
The display of an article in a shop, even with an indication of price, is not generally an offer but
merely an invitation for someone to make an offer of purchase: Pharmaceutical Society of
GreatBritain v Boots Cash Chemists (Southern) Ltd [1952] 2 QB 795 (Boots)

APPLICATION
The pumpkin displayed in the store is an invitation to treat, not an offer. The price for pumpkin
displayed in the store is an invitation to treat, not an offer. Jamie is the one making an offer
when she presents it at the cash register. The shopkeeper is free to accept or reject Jamie's
offer

CONCLUSION
The shopkeeper is correct. She has to pay $5 for a pumpkin if she wants it.
Issue: The issue at hand is whether Jamie or the shopkeeper is correct regarding the price of
the pumpkin. Specifically, whether the sign stating "SPECIAL OFFER, PUMPKIN $3 EACH"
constitutes a valid offer or not.

Rule: In contract law, an offer is a clear expression of willingness to enter into a contract, which,
if accepted, creates a binding agreement. For an offer to be valid, it must be distinguished from
mere invitations to treat. An invitation to treat is an invitation for others to make an offer, and it is
not itself an offer.

Application: In this case, Jamie notices a sign in the grocery store aisle stating, "SPECIAL
OFFER, PUMPKIN $3 EACH." Jamie interprets this sign as an offer, puts a pumpkin in her
basket, and proceeds to the checkout. However, the shopkeeper informs Jamie that the
pumpkin is actually priced at $5.

The key question is whether the sign stating the $3 price constitutes an offer or an invitation to
treat. The determination depends on the intention of the store and the reasonable interpretation
of the sign.

In general, signs displaying prices are considered invitations to treat rather than offers. They are
inviting customers to make an offer to purchase at the stated price. The shopkeeper, in this
case, can argue that the sign was not an offer but merely an advertisement or invitation for
customers to make offers.

Conclusion: The shopkeeper is likely correct in this situation. The sign stating "SPECIAL
OFFER, PUMPKIN $3 EACH" is likely considered an invitation to treat rather than a binding
offer. Jamie, by putting the pumpkin in her basket, made an offer to purchase the pumpkin at
the displayed price. The shopkeeper, as the recipient of the offer, has the right to accept or
reject it. In this case, the shopkeeper rejected the offer by informing Jamie of the actual price of
$5.

Therefore, Jamie is required to pay the price of $5 for the pumpkin, as that is the price
communicated by the shopkeeper at the checkout. The sign in the aisle, while misleading, does
not constitute a binding offer.
ISSUE
Rena lived in Singapore for 6 years with her family (husband and children). Agnes (Rena’s aunt)
asked Rena to move to Australia and live with her. Agnes promised to put Rena in the will. Rena
and her husband gave up their jobs and apartment in Singapore and moved to live with Agnes.
After one year, Agnes did not want to live with Rena anymore and wrote her out of the will. So
the question is whether the agreement between Agnes and Rena is a contract

RULE
Domestic agreements
Intention to create contract

APPLICATION
Domestic contracts are contracts made among the people who already have a relationship with
each other, for example, members of the family, therefore a legal presumption arises that there
is no intention to create legal relations between the parties; However, in this case, the expense
of travel, the sale of the belongings Rena suffered, Agnes's codicil to her will, and the fact that
there was no provision of separating or terminating the arrangement were sufficient to rebut the
presumption, notwithstanding this was a domestic arrangement, there was an intention to create
legal relations. If Rena did not intend to be contractually bound she wouldn't have acted in the
way they did; Agnes's changing her will also reflect her seriousness towards this arrangement.

CONCLUSION
The agreement between Agnes and Rena is enforceable by the court
Issue:

Whether Jonas is liable for Kieran's financial loss due to his negligence in damaging the
electrical cable.

Rule:

Negligence is the failure to take reasonable care in a situation. A person who is negligent can
be held liable for the losses that they cause to others.

In this case, Jonas was digging a hole for a backyard pool with a mechanical shovel. He
damaged an electrical cable, which affected the electricity supply to Kieran's factory machinery
four kilometres away. Kieran suffered a financial loss until the cable was repaired.

Application:

To determine whether Jonas is liable for Kieran's financial loss, we need to consider the
following factors:

Did Jonas owe a duty of care to Kieran?

Did Jonas breach that duty of care?
Was Kieran's loss a reasonably foreseeable consequence of Jonas' breach of duty?
Was Kieran's loss caused by Jonas' breach of duty?

Conclusion:

It is likely that Jonas owed a duty of care to Kieran. Jonas was using a mechanical shovel in a
residential area, and he could have reasonably foreseen that his actions could damage an
electrical cable.

It is also likely that Jonas breached that duty of care. Jonas was not using the mechanical
shovel in a careful manner. He did not take any steps to ensure that he was not damaging any
electrical cables.

Kieran's loss was a reasonably foreseeable consequence of Jonas' breach of duty. Jonas could
have reasonably foreseen that damaging an electrical cable would affect the electricity supply to
Kieran's factory machinery.

Finally, Kieran's loss was caused by Jonas' breach of duty. The damage to the electrical cable
was the direct cause of Kieran's financial loss.

Therefore, it is likely that Jonas is liable for Kieran's financial loss due to his negligence.

Here are some additional things to keep in mind:

Jonas could argue that he was not negligent because he was using the mechanical shovel in a
way that was consistent with the manufacturer's instructions. However, this argument is unlikely
to be successful. The manufacturer's instructions are not the only standard of care that applies.
Jonas must also take reasonable care to avoid causing harm to others.
Kieran could argue that he contributed to his own loss by failing to take reasonable steps to
mitigate his losses. For example, he could have argued that he should have had a backup
generator in case of a power outage. However, this argument is also unlikely to be successful.
Kieran's failure to take reasonable steps to mitigate his losses does not necessarily absolve
Jonas of liability.

Issue: The issue at hand is whether Jonas is liable for Kieran's financial loss due to damaging
the electrical cable while digging a hole for a backyard pool.

Rule: To establish liability for negligence, the following elements must be proven:

Duty of care: The defendant must owe a duty of care to the plaintiff.
Breach of duty: The defendant must have breached the duty of care.
Causation: The defendant's breach of duty must have directly caused the plaintiff's harm.
Damages: The plaintiff must have suffered actual damages as a result of the defendant's
actions.
Application: In this case, Jonas was digging a hole for a backyard pool with a mechanical shovel
when he damaged an electrical cable. As a result, Kieran's factory machinery, located four
kilometers away, experienced a loss of electricity supply, leading to financial losses for Kieran.

Duty of care: Jonas owes a duty of care to Kieran to avoid causing harm through his actions.
Digging a hole with a mechanical shovel carries a foreseeable risk of damaging underground
utilities, including electrical cables.
Breach of duty: By damaging the electrical cable, Jonas likely breached his duty of care. A
reasonable person would exercise caution and take appropriate measures to avoid damaging
the cable while digging.
Causation: Jonas's actions in damaging the electrical cable directly caused the loss of electricity
supply to Kieran's factory machinery, resulting in financial losses until the cable was repaired.
Damages: Kieran suffered actual financial losses due to the disruption of the electricity supply.
Conclusion: Based on the application of the elements of negligence, Jonas is likely liable for
Kieran's financial loss due to his negligence. He had a duty of care to avoid damaging the
electrical cable while digging, and by breaching this duty, he caused the loss of electricity supply
to Kieran's factory machinery, resulting in financial losses. It is advisable for Kieran to consult
with legal professionals to assess the specific laws and regulations in their jurisdiction and
determine the appropriate course of action.
Issue:

Whether the board of directors of Hunter Winery Pty Ltd is bound to pay $35,000 for the picnic
area with a children's playground, when the managing director, Michael, has exceeded his
authority by entering into a contract for $35,000 without the express authority of the board.

Rule:

The authority of a managing director is determined by the company's constitution and by the
resolutions of the board of directors. In this case, the board of directors has passed a resolution
limiting Michael's authority to enter into contracts that commit more than $25,000 of company
funds without the express authority of the board.

Application:

Michael has exceeded his authority by entering into a contract for $35,000 without the express
authority of the board. Therefore, the board is not bound to pay $35,000. The board can only be
bound to pay $25,000, which is the maximum amount that Michael was authorized to commit.

Conclusion:

The board of directors is only bound to pay $25,000 for the picnic area with a children's
playground. Michael is personally liable for the remaining $10,000.

Here are some additional things to keep in mind:

The board of directors can ratify Michael's actions, which would make the board liable for the full
amount of the contract. However, the board is not likely to ratify Michael's actions if he
exceeded his authority by a significant amount.
Michael could argue that he had implied authority to enter into the contract for $35,000. Implied
authority arises when a person acts in a way that leads others to believe that they have the
authority to act. However, it is unlikely that Michael would be successful in arguing that he had
implied authority in this case. The board of directors had clearly limited his authority, and he did
not take any steps to try to obtain their express authorization.
Issue: The issue at hand is whether the board of directors of Hunter Winery Pty Ltd is bound to
pay $25,000 or $35,000 for the agreement signed by Michael, the managing director, without
consulting the board.

Rule: The authority of a managing director is typically derived from the board of directors and
can be limited or restricted by board resolutions. If there is a resolution in place that limits the
managing director's authority, they are required to obtain express authority from the board
before entering into a contract that commits company funds above the specified limit.

Application: In this case, the board of directors of Hunter Winery Pty Ltd passed a resolution
that limits Michael's authority. According to the resolution, Michael is not permitted to enter into
a contract that commits more than $25,000 of company funds without express authority from the
board.

However, Michael, without consulting the board, decides that a picnic area with a children's
playground will enhance the business. He signs an agreement with a contractor for $35,000 on
behalf of Hunter Winery. Since the agreement exceeds the $25,000 limit set by the board's
resolution, Michael has exceeded his authorized authority.

Conclusion: The board of directors is bound to pay only $25,000, not $35,000. Despite
Michael's decision to enter into the agreement for $35,000, his authority was limited by the
board's resolution, which required express authority for contracts exceeding $25,000. Since
Michael did not consult the board or obtain the necessary authorization, his actions in
committing the company to the $35,000 contract were in breach of his authority. Therefore, the
board is only bound to pay up to the authorized limit of $25,000, and the excess amount of
$10,000 would not be enforceable against the company.
The duty of care of directors is to exercise reasonable care, skill, and diligence in the
management of the company. This means that they must take all reasonable steps to ensure
that the company is managed in a way that protects the interests of the shareholders and
creditors.
In the case of Frank, Sally, and Guldo, they have a duty to oversee the financial management of
the company, even if they have delegated this task to Robin, the chief accountant. They cannot
simply trust Robin's financial expertise and then wash their hands of the matter. They have a
responsibility to ask questions and to take steps to ensure that the company's financial reports
are accurate.

By failing to do so, they have breached their duty of care. ASIC is likely to argue that their failure
to exercise proper care has caused the company to suffer financial losses. They may also argue
that their actions have damaged the reputation of the company.

If ASIC is successful in its civil penalty proceedings, the directors could be ordered to pay a fine
or compensation to the company. They could also be disqualified from being directors of a
company in the future.

Here are some of the things that Frank, Sally, and Guldo should have done to fulfill their duty of
care:

Regularly review Robin's financial reports and ask questions about any areas that they do not
understand.
Retain an independent auditor to review the company's financial statements.
Implement internal controls to prevent fraud and financial irregularities.
Take steps to ensure that the company has adequate insurance coverage.
By taking these steps, Frank, Sally, and Guldo could have helped to protect themselves from
legal liability and ensure that the company was managed in a responsible manner.

Here are some additional things to keep in mind about the duty of care of directors:

The standard of care that is expected of directors is that of a reasonably prudent person in a
similar position.
The duty of care is not absolute. Directors are not liable for every mistake that they make.
However, they are liable for mistakes that are made as a result of negligence.
The duty of care can be discharged by taking reasonable steps to protect the interests of the
shareholders and creditors.
If you are a director of a company, it is important to understand your duties and responsibilities.
You should take steps to fulfill your duty of care and protect yourself from legal liability

Issue:
Whether Frank, Sally, and Guldo, the directors of the property development company, have
breached their duty of care by failing to check over Robin's financial reports or even ask her any
questions about the company's financial position.

Rule:

The duty of care of directors is to exercise reasonable care, skill, and diligence in the
management of the company. This means that they must take all reasonable steps to ensure
that the company is managed in a way that protects the interests of the shareholders and
creditors.

Application:

In this case, Frank, Sally, and Guldo have delegated the financial management of the company
to Robin, the chief accountant. However, they have not taken any steps to verify Robin's work or
to ask her any questions about the company's financial position. This is a clear breach of their
duty of care.

The fact that they trust Robin's financial expertise is not a defense. The directors are still
responsible for ensuring that the company is managed in a prudent manner. They cannot simply
delegate their responsibilities to Robin and then wash their hands of the matter.

The directors had a duty to:

Regularly review Robin's financial reports and ask questions about any areas that they do not
understand.
Retain an independent auditor to review the company's financial statements.
Implement internal controls to prevent fraud and financial irregularities.
Take steps to ensure that the company has adequate insurance coverage.
By failing to take any of these steps, Frank, Sally, and Guldo have breached their duty of care.

Conclusion:

ASIC is likely to argue that Frank, Sally, and Guldo's failure to exercise proper care has caused
the company to suffer financial losses. They may also argue that their actions have damaged
the reputation of the company.

If ASIC is successful in its civil penalty proceedings, the directors could be ordered to pay a fine
or compensation to the company. They could also be disqualified from being directors of a
company in the future.

Explanation of the duty of care to Frank, Sally, and Guldo:

The duty of care of directors is a legal obligation that they owe to the company and its
shareholders. It requires them to act in the best interests of the company and to take all
reasonable steps to protect its assets.

The standard of care that is expected of directors is that of a reasonably prudent person in a
similar position. This means that they must take the same care that a reasonable person would
take in their own affairs.

The duty of care can be discharged by taking reasonable steps to protect the interests of the
company. This includes things like:

Ensuring that the company has adequate financial controls in place.

Reviewing the company's financial statements regularly.
Asking questions about any areas of the company's operations that they do not understand.
Taking steps to prevent fraud and financial irregularities.
By failing to take these steps, Frank, Sally, and Guldo have breached their duty of care. They
have exposed the company to financial losses and have put the interests of the shareholders at
risk.

The authority of partners in a partnership is determined by the partnership agreement. In the

absence of a partnership agreement, the partners have equal authority to bind the partnership.
In this case, Mary's primary role in the business is to process customer orders and to ensure
that items are in stock. She does not have a specific duty to purchase new stationery
innovations. However, she does have implied authority to make purchases that are in the
ordinary course of business.

The purchase of one hundred automated pencil sharpeners is a significant purchase that is not
in the ordinary course of business. Therefore, Peter and Paul may be able to argue that Mary
did not have implied authority to make the purchase.

However, Peter and Paul may also be able to argue that Mary had ostensible authority to make
the purchase. Ostensible authority arises when a partner acts within the scope of their
apparent authority, even if they do not have actual authority.

In this case, Mary may have apparent authority to make the purchase because she is a partner
in the business and she has been entrusted with the responsibility of ordering new stationery.
Peter and Paul may have led Mary to believe that she had the authority to make the purchase,
even if they did not explicitly give her that authority.

Ultimately, the question of whether Mary had the authority to make the purchase would need
to be decided by a court. The specific facts of the case would be important in determining the
outcome.

Here are some other factors that a court would consider in deciding whether Mary had the
authority to make the purchase:

 The nature of the business.

 The size of the purchase.
 The knowledge and experience of the partners.
 The conduct of the partners towards Mary.

If you are in a similar situation, it is important to speak to an attorney to get legal advice
specific to your case.

Issue: Whether Mary, a partner in a stationery business, has the authority to purchase one
hundred automated pencil sharpeners at a trade show without the consent of the other partners.

Rule:
The authority of partners in a partnership is determined by the partnership agreement. In the
absence of a partnership agreement, the partners have equal authority to bind the partnership.

Application:

In this case, there is no partnership agreement. Therefore, Peter, Paul, and Mary have equal
authority to bind the partnership. However, Mary's authority is limited to acts that are within the
ordinary course of business.

The purchase of one hundred automated pencil sharpeners is not within the ordinary course of
business. It is a significant purchase that would have a major impact on the business.
Therefore, Mary does not have the authority to make this purchase without the consent of the
other partners.

Conclusion:

Peter and Paul are correct in refusing to pay the bill for the pencil sharpeners. Mary is solely
responsible for the debt.

Discussion of the authority of partners:

The authority of partners in a partnership is a complex issue. There are many factors that can
affect the authority of a partner, including the partnership agreement, the custom and practice of
the partnership, and the surrounding circumstances.

In general, partners have the authority to bind the partnership to contracts that are within the
ordinary course of business. However, partners may also have the authority to bind the
partnership to contracts that are outside the ordinary course of business, if the other partners
have consented to this authority.

The consent of the other partners can be express or implied. Express consent is given when the
partners explicitly agree to give a partner the authority to bind the partnership to a particular
contract. Implied consent is given when the partners' actions or words indicate that they have
given a partner the authority to bind the partnership to a particular contract.

In the case of Mary and the pencil sharpeners, there is no express consent from Peter and Paul
to allow Mary to bind the partnership to the purchase. There is also no implied consent.
Therefore, Mary does not have the authority to bind the partnership to the purchase of the pencil
sharpeners.
Issue:

Whether Mary, a partner in a stationery business, has implied authority to purchase one
hundred automated pencil sharpeners at a trade show without the consent of the other partners.
Rule:

The authority of partners in a partnership is determined by the partnership agreement. In the

absence of a partnership agreement, the partners have equal authority to bind the partnership.
However, a partner may have implied authority to act on behalf of the partnership if the other
partners have led the partner to believe that they have such authority.

Application:

In this case, there is no partnership agreement. Therefore, Peter, Paul, and Mary have equal
authority to bind the partnership. However, Mary's authority is limited to acts that are within the
ordinary course of business.

The purchase of one hundred automated pencil sharpeners is not within the ordinary course of
business. It is a significant purchase that would have a major impact on the business. However,
Mary's role in the partnership is to process customer orders and to ensure that items are in
stock. This suggests that she has some authority to purchase stationery supplies.

The question is whether Mary's purchase of the pencil sharpeners was within the scope of her
implied authority. The answer to this question depends on the specific facts and circumstances
of the case. However, it is likely that Peter and Paul would argue that Mary's purchase of the
pencil sharpeners was not within the scope of her implied authority. They would argue that the
purchase was too significant and that it would have a major impact on the business.

Conclusion:

It is likely that Peter and Paul would be successful in arguing that Mary does not have implied
authority to make the purchase of the pencil sharpeners. Therefore, they would not be liable for
the debt.

Discussion of the authority of partners:

The authority of partners in a partnership is a complex issue. There are many factors that can
affect the authority of a partner, including the partnership agreement, the custom and practice of
the partnership, and the surrounding circumstances.

In general, partners have the authority to bind the partnership to contracts that are within the
ordinary course of business. However, partners may also have the authority to bind the
partnership to contracts that are outside the ordinary course of business, if the other partners
have consented to this authority.

The consent of the other partners can be express or implied. Express consent is given when the
partners explicitly agree to give a partner the authority to bind the partnership to a particular
contract. Implied consent is given when the partners' actions or words indicate that they have
given a partner the authority to bind the partnership to a particular contract.

In the case of Mary and the pencil sharpeners, there is no express consent from Peter and Paul
to allow Mary to bind the partnership to the purchase. However, there is some evidence that
Mary may have had implied authority to make the purchase. This evidence includes her role in
the partnership and the fact that she purchased stationery supplies.

Ultimately, the question of whether Mary has implied authority to make the purchase of the
pencil sharpeners is a question of fact that would need to be decided by a court.

Issue: The issue at hand is whether Mary, as a partner in the stationery business, had implied
authority to make a purchase on behalf of the firm for the new automated pencil sharpeners.

Rule: In a partnership, partners generally have implied authority to bind the firm in matters that
are within the ordinary course of the partnership's business. Implied authority arises from the
partner's position and the nature of the partnership's activities.

Application: In this case, Mary is a partner in the stationery business, and her primary role is to
process customer orders and ensure that items are in stock. While her main responsibility may
not explicitly include searching for new stationery items, her implied authority extends to making
purchases that are within the ordinary course of the partnership's business.

Mary, during her spare time, attends trade shows to find unusual stationery items. At one trade
show, she comes across an automated pencil sharpener that she believes is superior to the
ones the business usually stocks. Mary, acting within the scope of her implied authority as a
partner responsible for ensuring items are in stock, orders one hundred of these new
sharpeners for the stationery business.

Conclusion: Mary has implied authority to make the purchase of the automated pencil
sharpeners on behalf of the stationery business. Her role in processing customer orders and
ensuring items are in stock, combined with the nature of the partnership's business, grants her
the authority to make such purchases. Peter and Paul, as partners in the business, cannot
solely claim that Mary is responsible for the debt incurred from the purchase. They share joint
liability as partners, and unless there are specific agreements or restrictions in place within the
partnership agreement, Mary's actions are considered binding on the firm.