TUTORIAL 5– ANSWER GUIDE
What follows is a guide to the structure that you need to develop when answering problem questions. It demonstrates an approach to answering problem questions and has been designed to help you develop the analytical skills you will require. It is not a sample answer and is not in essay format – the format in which you will be required to present your answers.
Your first step should be to go through the question, highlighting or underlining important points, to consider what issue(s) are being raised by the question, and what information you are being given to address these issues. Information is usually included to direct your mind to a particular issue, so consider carefully why the information in a particular question is being provided.
The most important step in answering a problem question is always to read the question very carefully.
Tutorial 5
Janine is a widower who lives in Perth. During her married life her doting husband gave her a number of pieces of jewellery featuring pink Kimberley diamonds to complement her three carat solitaire engagement ring. Her diamond jewellery is currently valued at in excess of 5 million dollars. As it has such sentimental value, she does not want to see this collection sold or broken up, so she has decided to give all of it
Are we discussing a gift, a conditional gift, or a contract? Where is the consideration?
to one of her three daughters
The relationship here is mother/daughter. Is there intention to create legal relations? Why? Why not?
before she dies so that they can wear and enjoy it now. On 25 September 2006 Janine writes to her three girls with the following proposition:
“I have decided to give my diamond jewellery to one of you. I will give the jewellery to the first of you who successfully completes the Kokoda Track, provided that you walk the Track in less than 10 days.”
Is this an offer? If so, how is it accepted? Does acceptance take place at the same time consideration is furnished? If a contract, what sort of contract are we dealing with?
Suzy is the youngest of Janine’s girls
If an offer, has it been communicated?
and lives in Sydney. Immediately upon receipt of the letter,
Is acceptance in reliance on the offer? Why is this important?
Suzy gives up her day job and starts training for the Track.
Has Suzy accepted? Is she providing consideration?
She hires a personal trainer at a cost of $100 per week and buys new exercise equipment at a cost of $2,500. On 2 May 2007, Suzy flies toPort Moresbyin Papua New Guinea to continue her preparation.
Consider Suzy’s actions and the costs she has incurred in preparation to walk the Kokoda Track.
On 10 May 2007 Jacqui, Suzy’s older sister, telephones herin Port Moresby and tells her that Janine has changed her mind and has decided not to give away the jewellery.
Is this the revocation of an offer? Who may communicate revocation? What is your legal reason?
Suzy is furious. She tries to telephone Janine to confirm the truth of Jacqui’s conversation but is unable to speak to her. Suzy decides to persevere with the Kokoda Track as she is due to depart in 2 days. Suzy finishes the trek in 8 days.
Has Suzy accepted/provided consideration? Was the offer still open to be accepted when she did so?
On her return to Sydney, Suzy suffers from medically diagnosedexhaustionand is unable to take on any work for one year.
Advise Suzy:
- as to what legal rights, if any, she has against Janine in relation to the jewellery; and
- as to what remedies, if any, Suzy has in these circumstances, including whether she can recover from Janine any costs that she may have incurred or damages suffered as a consequence of preparing for and participating in the Kokoda Track.
This question is in two parts, so your best structure will be to consider each part separately.
Question a
Consider:
WHAT IS THE ISSUE BEING RAISED BY THIS QUESTION: How can legal rights arise as between Suzy and Janine? Is a contract in existence? (i.e. THE QUESTION RAISES THE ISSUE OF CONTRACT FORMATION)
WHAT IS THE LAW YOU NEED TO DISCUSS FOR CONTRACT FORMATION? Remember, even though you need to know the entire law of contract formation, you will not need to refer to all of it to answer this question. You need to select the relevant areas to address the particular issues raised in this question.
HOW WILL IT APPLY TO THE FACTS OF THIS CASE? It is not sufficient to discuss the law in isolation. You must apply it to the relevant facts.
YOUR PROCESS WILL ALWAYS BE THE SAME: TOISOLATE THE ISSUE(S), CITE THE RELEVANT LEGAL PRINCIPLES AND APPLY THEM TO THE FACTS OF THE CASE. YOU SHOULD THEN FINALISE YOUR DISCUSSION WITH A WELL SUPPORTED CONCLUSION.
ISSUE:Is there a binding contract between Janine and Suzy?
To decide this we need to consider the following sub-issues:
ISSUE: Intention to create legal relations
Why is this an issue you would address in this question (remembering that you do not have to address every aspect of contract formation in every question)? Because it is raised by the facts. The question tells us that Janine and Suzy are mother and daughter. This should raise intention to create legal relations as an issue in your mind to address.
LAW: There is a rebuttable presumption that parties to a social or domestic arrangement do not intend to create legal relations. (What is your authority for this proposition – what case(s) will you cite in support?)
APPLICATION: On the facts does this presumption stand, or can it be rebutted? Offer made in writing? Family or commercial setting?
You must draw a well supported conclusion. If you decide that there is no contract because there was no intention to create legal relations, do not stop there. State your conclusion on this issue, but then go on to consider all the other issues.
ISSUE: existence of offer
Every contract requires an offer. Where is the offer here? The offer is in the letter from Janine to her daughters.
LAW:An offer must be made to another person with the intention of creating binding legal obligations and it must have enough detail that the person receiving the offer only has to say “yes” for a contract to come into existence. There must be nothing left to be negotiated between the parties. (How do you know that this is the relevant law? i.e., which cases will you cite in support?)Accordingly an offer must be distinguished from an invitation to treat and a request for information.
APPLICATION: Was the letter an offer?Consider the relevant legal principles and apply the appropriate case law.
Was it communicated?
Was it communicated to definite person or persons?
Did the offeror intend to be bound?
Was the offer definite?
Was anything left to be negotiated?
WHAT IS YOUR CONCLUSION ON THIS ISSUE? WHY?
If an invitation to treat, can it be accepted? If it was an offer, was it accepted? The remainder of your answer will build on the conclusion you reach here. Often, you may need to consider two alternatives, but in situations like this, where the law is clear, you should only discuss the issues as if the letter was an offer. There are no legal reasons for suggesting this was anything other than an invitation to treat. The use of the word “gift” in the question does not necessarily create a gift rather than a contract. A ‘gift’ in exchange for consideration can still create a legally binding contract.
ISSUE: Was the offer revoked?
Does the phone call from Jacqui revoke the offer?
LAW:An offer may be revoked at any time prior to acceptance. The revocation must be communicated to the offeree but it need not be communicated by the offeror personally – it is sufficient if it is done through a reliable third party. (How do you know that this is the relevant law – what case(s) will you cite as authority?)
APPLICATION:
Was the revocation communicated? Telephone call from Jacqui? Is she a reliable third party?
Was the revocation communicated prior to acceptance? To answer this, we need to consider the issue of acceptance.
ISSUE: Was the offer accepted?
Look carefully at the offer – how is it to be accepted? By a promise or by performance? What type of contract are we dealing with here – unilateral or bilateral?
LAW :Acceptance must:
- be unequivocal,
- be in reliance on the offer
- correspond with the offer
- be communicated
(How do you know that this is the relevant law? i.e., which cases will you cite in support?)
What is the law with respect to acceptance of a unilateral contract? When does acceptance of a unilateral contract commence?
Is revocation possible once the offeree has begun the act of acceptance but has not yet completed it? Consider Errington v Errington and Veivers v Cordingley and contrast with the more recent Mobil Oil Australia Ltd v Welcome International Pty Ltd. What is the current legal position in Australia?
APPLICATION:
Has Suzy commenced acceptance? She has given up work, hired a personal trainer, bought exercise equipment and travelled to Papua New Guinea. How much of this was done prior to Jacqui’s telephone call?
Has Suzy accepted? Has she walked the Kokoda Track? When – in relation to any purported revocation?
Can/was the offer revoked after performance/acceptance had begun, but had not been completed?
MAKE A DECISION AND GIVE YOUR REASONS. YOU MUST PROVIDE A CONCLUSION WHICH ADDRESSES THE PRINCIPAL ISSUE RAISED, AND SUMMARISES YOUR FINDINGS ON THE SUB-ISSUES. SO –
Is there a binding contract between Janine and Suzy which creates legal rights which Suzy can enforce?
Question b
as to what remedies, if any, Suzy has in these circumstances, including whether she can recover from Janine any costs that she may have incurred or damages suffered as a consequence of preparing for and participating in the Kokoda Track.
Remember, both parts of the question must be addressed. Do not write about the same issues again. Although based on the same facts, this question will raise different issues. This question builds on your conclusion in part a. If your conclusion was contentious, you may want to argue in the alternative in this second part.
Consider:
WHAT IS THE ISSUE BEING RAISED BY THIS QUESTION: What remedies will Suzy have as against Janine? If there is a contract these will arise as a result of the contract and any breach. If there is no contract because it has been revoked before acceptance was complete, what remedies will Suzy have?
WHAT IS THE LAW YOU NEED TO DISCUSS? What was the view of the Federal Court in Mobil? Are damages available for breach of an implied ancillary promise? Will an injunction be available? THIS IS A QUESTION WHICH REQUIRES YOU TO UNDERSTAND THE MOBIL CASE. YOU COULD NOT ANSWER THIS QUESTION WELL WITHOUT AN UNDERSTANDING OF THE MOBIL CASE.
HOW WILL IT APPLY TO THE FACTS OF THIS CASE? It is not sufficient to discuss the law in isolation. You must apply it to the relevant facts.
Look at the question. What did Suzy do to prepare for Kokoda? What did she spend? Note she stopped work for a year, and also suffered nervous exhaustion. This question raises issues about how damages are assessed – material which will be discussed later in the course. At the moment however for this question it is important to recognise why damages may be available to Suzy (based on Mobil) and generally, the types of things for which she may be able to recover.