Understanding Business Law: Extracting Key Information from Case Studies

Reading and Understanding Case Law

In Business Law, most of the cases you will be expected to read and understand will be summaries of the cases rather than the full court judgment that is recorded in law reports (please note that the cases reported in the law reports are primary sources, whereas, the case summaries are secondary sources). In your assessment tasks, you will be required to discuss the details of cases to illustrate the application of legal principles and to cite them as an authority for these principles in your legal arguments when you are answering problem questions. 

In legal argument, whenever you state a legal principle you are expected to also state (ie. “cite”) your authority for that principle. Such authority usually is a case or a piece of legislation (laws made by parliament). As has been outlined in the introductory notes, cases explain the law as it has been interpreted and applied in disputes between parties. Students need to study the important elements of cases because they are required to apply the rules of law that have been used in these cases to decide the outcome of new similar disputes given in problem questions.

Reading a Case Study

*The following exercise contains a case summary from which students are required to extract important information. Students may find the language used difficult to understand. Students should attempt the tasks, after which the tutor will go through the exercise and give assistance with respect to the language used and the requirements of the tasks. 

In De Jong v Carpenter (1982) 2 BPR 9524, the Supreme Court of New South Wales was asked to determine whether a contract existed between the parties in the following circumstances:

The plaintiff wished to purchase certain land from the defendant. To this end, the defendant’s solicitor prepared a contract which provided that the sale was subject to the purchaser obtaining finance from a particular source within 28 days. He retained a copy of this agreement and sent a counterpart to the purchaser’s solicitor. The defendant later instructed his solicitor to insert a further condition in the contract which rendered completion by a certain date “of the essence of the contract”.  This amendment was duly inserted by the defendant’s solicitor in his copy of the contract, but the purchaser’s solicitor was not notified of this alteration.  

Accordingly, it was not recorded in the purchaser’s copy. Subsequently, both solicitors agreed to change the period of time referred to in the finance clause from 28 days to 14 days. No evidence was presented to show that the purchaser had agreed to such a change. 

Case Study Example: De Jong v Carpenter

Signed contracts were exchanged in due course, but before completion the defendant purported to rescind the contract. The purchaser sought specific performance. 

It was held that there was no contract between the parties because they had in effect failed to reach agreement on two terms which were material to the contract: first, the time of the essence clause had been inserted by the defendant’s solicitor without the knowledge or permission of the purchaser or his solicitor; second, the consent of the purchaser’s solicitor to reducing the period of time from 28 days to 14 days was not supported by any evidence that his client had authorised such a change. 

In the absence of such evidence, no assumption could be made that the purchaser had agreed to such an alteration and therefore no binding contract existed between the parties.        

The key information you are required to extract from cases is:

• the name of the case

• the type of dispute/legal issue

• the facts

• the court’s decision about who won the case

• the legal principles upon which the decision was based

• the facts that the court identified as being important in applying these legal principles

The words and phrases we have put in bold in the case summary are called linking words or signalling words. These words and phrases link ideas together and are important tools in assisting effective communication of these ideas. They also assist the reader in understanding the meaning of the information provided in the case. In addition, they are used to indicate the beginning of each of the important pieces of information which make up the case summary. Hence, by identifying these words and phrases, it will help you to locate the key information you are required to extract from the case ( a list of linking/ signalling words is given in Crosling and Murphy, How to Study Business Law, 4th edition, 2009 pp.31-32).

Exercise 2.1

In this case of De Jong v Carpenter, locate and write down:

• the name of the case;

• the area of dispute/legal issue;

• the facts;

• the court’s decision and the legal principles upon which the decision was based; and

• the facts that the court decided were important in arriving at its conclusion.

For more information about cases and their role in law subjects refer to Chapters 4 and 5 in Crosling and Murphy, How to Study Business Law, 4th edition, 2009.

Extracting Key Information from Cases

Exercise 2.2

Belinda, a 19 year old student, decides that she wants to buy a car. She visits “Lora’s Tough Cars” and spots a second hand car of the make and model she likes. Belinda discusses buying the car with Lora and stipulates that the car must have done only 50,000 kilometres (the odometer shows the car has done 47,000 kilometres). They discuss how Belinda can pay half the price in cash and that credit arrangements will be provided for the balance. Lora prepares a written agreement and Belinda signs it even though certain details regarding the engine number have yet to be filled in. Lora keeps it so that these details can be added later. Arrangements are made for Belinda to attend the next Wednesday to pay the cash portion of the purchase price and pick up the car. 

After Belinda leaves, Lora starts to worry about Belinda buying on credit (she thinks Belinda might not be able to make the regular payments) and she inserts into the contract a provision stating that Belinda’s parents have to act as guarantors for the amount provided by credit. She rings Belinda but she is not at home and Lora speaks to Belinda’s elder sister. Lora explains the amendment she has made to the agreement and Belinda’s sister says that Belinda will probably not mind because she has said how much she likes the car. Belinda’s sister forgets to tell her about the telephone conversation. 

In addition, while Lora is preparing the car for delivery she discovers that the odometer has been wound back by a previous owner and the 47,000 kilometre reading considerably understates the actual distance the car has travelled. She inserts another clause into the contract stating that the odometer reading is incorrect and that the true reading is considerably more. She does not tell Belinda about this amendment.

Three days before the Wednesday, Belinda decides that she cannot afford the car and wants to get out of the arrangement to buy it. Can she do so or can Lora legally force her to comply with the terms of the final version of the written agreement? 

Give reasons for your decision using the reasons given for the decision in De Jong v Carpenter as guidance.

Additional Reading

Students are reminded that helpful information on the Australian legal system is referred to in the Introductory Notes at the start of the tutorial program, as well as in Module 1 of the VU Collaborate space for this unit.  

Case Study Exercise: Belinda and Lora's Tough Cars

Tutorial Three - Interpreting Legislation

The purpose of this tutorial is:

- to gain an understanding of the two sources of the law, and, in particular

- to complete an exercise in the use of legislation in solving a problem

In the first tutorial, the exercises required students to examine a case, identify the legal principles applied in it by the judge and apply them to a new fact situation. This is applying judge-made law, which is one of the primary sources of the law.

The other primary source of the law is legislation, or laws made by parliament. For instance, the road traffic rules are created by legislation. Judges are often called upon to interpret legislation and decide how the words of the legislation might apply to a particular fact situation.

Generally the words in statutes are to be given their natural meaning according to the intention of parliament when the statute was made (“enacted”). Occasionally when there are disagreements the different methods of interpretation come into play.

The purposive approach to statutory interpretation must be adopted if there is any dispute or disagreement as to the true intention of Parliament.  Section 15AA of the Acts Interpretation Act 1901 was inserted in the Act by an amendment to it in 1984. It provides as follows: -

“In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.”

Given that the Acts Interpretation Act is a Commonwealth Act, it applies to the interpretation of all Commonwealth statutes. The Victorian Parliament passed the Interpretation of Legislation Act 1984, section 35 of which is effectively the same as s.15AA of the Commonwealth Act. The Victorian act applies in the interpretation of all Victorian legislation. Both acts also provide that if a court is unable to ascertain the purpose or object of the Act from the words of the Act itself (which is inherently unlikely), it may refer to extrinsic (outside) evidence, such as Hansard Reports, to assist in that process.

Prior to 1984, Australian courts adopted the “common law rules of statutory interpretation”, which were the “literal rule”, the “golden rule” and the “mischief rule”. 

Interpreting Legislation

The literal rule was the dominant rule, and was applied in all cases of statutory interpretation unless it produced an absurd or clearly unintended outcome. Under the literal rule, the meaning of the words is “found by an examination of the language used in the statute as a whole” (per Higgins J in Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129 at 161.

The question posed under this rule is “what does the language mean”? We then establish what the language means in its ordinary (literal) sense. The golden rule was (sparingly) used by the courts to allow some flexibility, but only in cases where the literal rule was obviously inappropriate, as in Bedford’s case (Re Sigsworth; Bedford v Bedford [1935] Ch 39). An alternative to the golden rule was the mischief rule which was also used only if the literal rule was not appropriate. This involved an examination of the problem (mischief) that the Act was intended to remove from society, and then interpreting the Act in such a way as to facilitate the removal of that problem or mischief. It is very similar to the purposive approach in practical terms.

By amending and passing their respective statutes in 1984, the Australian Parliament and the Victorian Parliament exercised their undeniable right to dictate to the courts how their legislation should be interpreted by the courts in future. Thus the “statutory rules of interpretation of statutes” now prevail over the “common law rules of interpretation of statutes”.  

Exercise 3.1

Statutory Interpretation 

In this exercise, you are required to interpret and apply fictional legislation to the facts provided.

While driving his car, Lee does not see a pedestrian on the road. The pedestrian takes avoiding action and Lee sees the pedestrian at the last moment. Consequently, Lee narrowly avoids hitting the pedestrian but the pedestrian falls to the ground. Lee continues on for some distance and then decides to stop his car. He puts his head out the driver’s window and looks back at the pedestrian. He sees that several people have come to the aid of the pedestrian who is sitting up on the roadway and appears all right. He then drives off without speaking to anyone. These events take only a few seconds. But he has been recognised and when the police call on him, he admits the truth of the above facts.

He is charged with breaches of both parts of the following (fictional) road traffic regulation:

“Where a motor vehicle is involved in an accident in which a person is injured or property is damaged, then the driver of the motor vehicle must: - 

a) stop the motor vehicle; and

b) immediately render such assistance as is necessary.”

The question is whether Lee is guilty of either of the offences. 

To answer this question the meanings of some key words in the regulation have to be determined. What are those words? What are their ordinary meanings? Do you think that they should be given a different or special interpretation when used in this regulation?  If so, what interpretation should they be given?

Exercise 3.2

What are the rules that judges in courts use for deciding the meaning of laws made by Parliament? Explain these rules in your own words.

Is there any difference in meaning between the following: statute, legislation, Act of Parliament?

Tutorial Four - Intention to Create Legal Relations

The purpose of this tutorial is:

- to consolidate the concept of what a contract is, its status and effect on the  parties.

- to understand that no contract exists unless the parties intend that there be a contract.

- to learn that in contract law the issue of intention of the parties