LAWS1100 Business Law – Answer Analysis Exercise (5%)

Semester 2, 2021

Instructions

Question Released: 4/10/2021 at 2.00pm

Question Due: 8/10/2021 at 2.00pm
Grading: 5%

Task Description:
Students have to briefly analyse 5 parts of a "proposed model answer" to the 15%
Problem Set question. This is not a lengthy exercise and should not take long to complete.
However, this task is designed to enable students to critically analyse components of an
answer provided to them. Your analysis can be either positive or negative.
This task will not be graded according to whether the student is 'right' or 'wrong'. Students
will be awarded 5% for demonstrating that they have put in a good effort in response to
this exercise.

Please remember:
• Only submit the completed “Answer Submission Document” (the final page of
this document). Do not include a copy of the Instructions, Examples, ILAC Question or
Model Answer in your submission.

• Submit your answer in the correct folder called: “Submission Folder – Problem Scenario
Exercise – Part 2 – Answer Analysis Exercise (5%)”. This folder is located under
“Assessment” and “ILAC Problem Scenario – 5% (Answer Analysis Exercise)” on
Blackboard.
LAWS1100 Business Law – Answer Analysis Exercise (5%)
Semester 2, 2021
Marking Critera

Grade Criteria

The student has attempted to analyse the key issues relevant to this
exercise and in doing so has demonstrated a satisfactory understanding of
5% the relevant considerations and legal principles involved. The student has
adequately discussed the strengths and weaknesses of the model answer,
 with relevant reference to the ILAC technique.

The student has failed to identify the key issues relevant to this exercise and
has demonstrated little or no knowledge of the relevant considerations
0& and legal principles involved. The student has shown little to no
understanding of the ILAC technique and their attempt at this exercise is
unsatisfactory.

CORRECT STUDENT EXAMPLES

Answer Analysis Exercise (5%) from a previous Semester

Analysis 1 The “Issue” should be a short and concise question. This is a

very well written “Issue” that correctly identifies the precise
area of law that is needed to answer the question.

This is an example of a well written application section. The

tests were correctly applied. Overall, it is quite long, but does
Analysis 2 highlight all the important facts. A case analysis was also
conducted, however more details regarding the similarities
between the previous case and this one could have been
addressed.
Analysis 3 This conclusion is not well written. It is rather long and
unnecessarily repeats many of the facts and arguments
discussed in the application section. The conclusion should
be a short, concise answer to the issue. This conclusion is
not that.

LAWS1100 Business Law – Answer Analysis Exercise (5%)

Semester 2, 2021 – ILAC QUESTION

After divorcing her husband and moving out of his home,

Alexandra goes online to look for another place to live and
speaks with a gentleman named Daniel, who owns a rental
house near Brisbane city.
After lengthy negotiations, Daniel hands Alexandra a
detailed written two-year lease agreement for her to read
through. Alexandra says to Daniel, “Are you able to confirm
for me that there are no problems with the roof? I’ve had
some bad past experiences with leaking ceilings and so I’d
like to know that everything is in good order.” Daniel replies,
“Yes, there is no problem with the roof. It was repaired not
long ago.”
Alexandra then says to Daniel, “I also don’t really want the
rent to be more than $400 a week.” Daniel replies, “That
should be fine.”
After this conversation, Alexandra takes a few more days to
look over the lease and then returns the lease to Daniel,
after signing it. The lease does not mention anything about
the recent repairs to the roof, or the roof not leaking and
states that the rent is $500 a week.
One week after moving into Daniel’s rental house,
Alexandra discovers that the roof leaks rainwater into the
house, above her lounge room. This caused $2000 worth of
damage to her furniture. Alexandra also finds out that Daniel
wants to charge her $500 a week in rent.
Advise Alexandra as to her rights under the lease with
Daniel.
For the purpose of this question, you can assume that a
contract has been formed.
Your answer must be confined to any relevant material
in Contract Law 2. Please do not discuss the topic of
Terms and Representations or Conditions and
Warranties.
Use ILAC to answer this question.

“Model” Answer
Issue 1
Will Alexandra be able to sue Daniel for damages due to the damaged roof and incorrect
rental amount?

Law
Promissory Estoppel
The principle of estoppel may allow a promise to be enforced even though the formal
requirements are not satisfied. If the promisee has not provided consideration for the
promise, the promise will still be enforceable using promissory estoppel if all of the
following requirements are satisfied. See: Walton Stores v Maher and Another (1988).
There are four elements that need to be established for promissory estoppel to exist:
1.) The promisor intended the promisee to rely upon a clear and unambiguous
promise;
2.) The promisee has, in fact, relied upon the promise by changing their
circumstances;
 3.) If the promisor does not keep their promise, the promisee will suffer a material
disadvantage; and
4.) It would be unconscionable (unfair) for the promisor to break their promise.
Parol evidence rule
The parol evidence rule states that when the contract is in writing, and the writing appears
to be entire, it is presumed that the written contract contains all terms agreed to by the
parties.
If there is an inconsistency between a written term and a verbal promise, the court will
favour the written term. No other evidence may be admitted to vary, add to or contradict
such terms: Mercantile Bank of Sydney v Taylor.
Collateral contracts
One exception to the parol evidence rule is where a collateral contract has been formed.
There are four elements that need to be established for a collateral contract to exist:
1.) There is an oral statement and a main written contract;
2.) The oral statement was intended as a promise, made to induce entry into the
contract;
3.) The collateral contract is not inconsistent with the terms of the main written
contract;
4.) Entry into the main contract is consideration for enforcing the promise made under
the collateral contract. De Lassalle v Guildford

In De Lassalle v Guildford the parties entered into negotiations over the lease of the
defendant’s house. Prior to signing the contract, De Lassalle asked if the drains were in
good order. Guildford represented orally that they were, even though the lease contained
no reference to this matter. After discovering that the drains were defective, the plaintiff
brought an action against the defendant claiming damages and breach of warranty.
Breach of the oral statement/promise entitles the innocent party to damages.
Application
Parol evidence rule
Under the parol evidence rule, because the term regarding the roof being in good order
was not contained in the written agreement between Alexandra and Daniel, it will not be a
part of the contract.
Collateral contracts
However, because there is a collateral contract the parol evidence rule does not apply. In
relation to the four elements:
1. Daniel made an oral statement regarding the condition of the roof and there was a
main written contract, being the detailed 2-year lease agreement.
2. Daniel’s response was arguably intended as a promise, made to encourage
Alexandra to sign the lease. This is because Alexandra had told Daniel about her
bad experiences with leaking roofs prior to signing the contract.
3. While the lease does not make reference to the condition of the roof, there is
nothing in there that is inconsistent with it.
4. Alexandra signing the lease is consideration for enforcing the promise about the
roof.
These facts are similar to De Lassalle v Guildford where Guildford represented orally
that the drains were in good order, causing De Lassalle to sign the lease. The court held
that the verbal promise was not inconsistent with the terms of the lease and that De
Lassalle signing the lease was itself the consideration for enforcing the promise about the
drains, even though under the parol evidence rule the verbal term would have otherwise
been excluded.
Similarly, here Daniel made a promise regarding the state of the roof, knowing that it would
lead Alexandra to signing the written lease. Whilst the lease did not say anything about the
roof, there was nothing in there that was inconsistent with it. Under the parol evidence
rule, the verbal term would be excluded. However, because a collateral contract has been
formed, whereby Alexandra signing the lease is the consideration for enforcing the verbal
promise, the term can be enforced.

Conclusion
Daniel’s verbal promise about the roof being in good order amounts to a collateral contract
that was formed with Alexandra and therefore can be enforced. Alexandra is therefore
entitled to $2000 worth of damages against Daniel

Issue 2
Is Alexandra’s statement regarding the rent being $400 a week a part of the contract
between Alexandra and Daniel?

Law
See above.

Application
Parol evidence rule
The detailed 2-year lease between Daniel and Alexandra is in writing, and appears to be
entire. Therefore there is a presumption that it contains all the relevant terms. The lease
states that rent is to be $500 a week. This is inconsistent with the verbal promise for $400
a week rent. The court will therefore prefer the written term and evidence of Daniel’s
promise cannot affect the lease.
Collateral contracts
In relation to the four elements:
1.) Daniel made an oral statement about the rent being $400 a week. There was a 2-
year lease which was in writing.
2.) Daniel’s response arguably was intended as a promise, encouraging Alexandra to
sign the lease. However, it could also be argued that Daniel’s response was rather
vague when he stated, “That should be fine.” The word ‘should’ is uncertain
enough to cast doubt on whether his response was in fact intended as a promise.
3.) Regardless of whether requirement 2 is satisfied, the terms of the written lease
($500 a week) are inconsistent with the verbal promise ($400 a week).
4.) Alexandra signing the lease was not consideration for enforcing the verbal
promise.
These facts are quite different from De Lassalle v Guildford which concerned a verbal
promise about the condition of the drains, which was a matter not referred to in the lease.
Here, in contrast, the lease stated that rent was to be $500 a week which contradicts the
$400 a week verbal promise.

Conclusion
Whilst Daniel’s verbal promise about the roof being in good order amounts to a collateral
contract and entitles Alexandra to $2000 worth of damages against Daniel, the term
regarding the rent being $400 a week was not a part of the contract between Alexandra
and Daniel and therefore the rent will be $500 a week as per the written lease.

***ONLY SUBMIT THIS PAGE***

LAWS1100 Business Law – Answer Analysis Exercise (5%)

Answer Analysis Submission Document

Analysis 1

Analysis 2
Analysis 3

Analysis 4

Analysis 5