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LAW60003 Corporation And Contract Law

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Case Study 1

Read the following case study and answer all five questions that follow.

Shona is a business student at University and she is approaching her final year exams. Shona is trying to catch up on some essential last minute studying and is seeking to buy books to help her prepare. She sees an advert pinned to the business school noticeboard of the faculty where she studies.

The advert reads:

Business studies — text books — unused — happy to discuss what you need.

Anyone who is interested please contact Raymond on 000111222.

Shona is very excited by this and immediately telephones Raymond. Shona tells Raymond that she wants to meet him and Raymond agrees to meet her at the refectory. When they meet Shona discovers that Raymond has three new text books but they are not for the subjects she is studying. Shona tells Raymond she does not want them. Raymond is very angry and says that she has wasted his time and train fare getting there and demands that Shona buys the books. Shona refuses and says that she wants business text books like the ones Raymond mentioned in his advert. Raymond says that he had some Business text books but that he had sold them by the time Shona called and that these are the only books he has left and that Shona must take and pay for them. Raymond states that he has studied business and that he and Shona have a contract between them and she must buy his books otherwise he will take a legal action for the value of the books, his train fare and for wasting his time. Shona states that she will take a counter action against Raymond for his failure to provide what he had offered.

Shafiq owns a property business and he is seeking some advertising materials. He is searching online and discovers ADS-FOR-YOU who are a provider of advertising materials at a very reasonable cost. Shafiq sends an e-mail to the company making clear all of his requirements. The company responds quickly with an e-mail stating that they can meet all of his requirements but Shafiq is disappointed to read that the price is far more than what they appeared to advertise on their website. Shafiq decides not to buy anything from them and deletes the e -mail without replying to it. A few days later Shafiq is checking his e-mail and he sees that ADS -FOR-YOU sent Shafiq another e -mail that stated, ‘We are sure that you will be impressed by our products and prices,’ and, ‘If we do not hear anything from you within 24 hours we will take this as your acceptance and we will send the materials and charge you for the amount stated.’ Shafiq realises that this was three days ago and is now concerned about paying for something that he doesn’t want.

Veronika has bought a large house that requires renovations. Once the repairs have been completed, Veronika intended selling the property at a significant profit.

Veronika has, however, discovered that she does not have the finance available to carry out the renovations. A friend of Veronika's family, Johnathon Harker, is a builder and he speaks to Veronika about her situation. Johnathon agrees to complete all the necessary work for Veronika.

On completion of the work Veronika completes a document stating, ‘In consideration of you, Johnathon Harker, carrying out the renovations required, I agree to pay you £8,000 from the proceeds of sale of the house.’ Veronika sells the house at a considerable profit. Three weeks later Johnathon has not been paid for his work.

Chung Lee is a property developer and he has been discussing the purchase of a very desirable piece of land near the city. Chung Lee has been meeting a representative of the developer, Katie Owen, to agree the terms of the potential sale. Katie is a new member of staff and is very keen to agree her first sale. Chung Lee and Katie have a final meeting where Chung Lee makes an offer of £1.5 million for the land. Katie enthusiastically agrees and proceeds to take note of all of Chung Lee’s requirements and details. Katie provides him with a bank account to transfer the money too. Chung Lee instructs his bank to transfer the funds and leaves the meeting very happy. Later that day Chung Lee is contacted by his bank to say that the money has been returned without explanation. Chung Lee calls Katie and angrily demands to know what is happening with his newly purchased property. Katie tells Chung Lee that the property is not his and that he has no entitlement to anything.

Chung Lee is furious and tells Katie that he has already made plans for developing it and they have a binding contract between them. Katie again repeats that the property is not his and refuses to comment further.

Ralpinda, Daphne and Ted are friends who share a flat together. They are redecorating and looking for new furniture. Ralpinda sees a television for sale on the website SELL-YOUR-STUFF.COM and arranges to meet the seller at their home to view the TV. Daphne and Ted visit their local HOMEBUYS store where they see some furniture on sale. Ted sees a new large sofa on display that is reduced and appears to be a bargain. The sign on the sofa clearly states ‘Mahogany hardwood family sofa — end of season sale — £100.’ Ted and Daphne tell the sales staff that they want the sofa and they wait at the cash desk.

At the cash desk Daphne sees a large sign that states ‘No refunds on any goods under any circumstances’. She points this out to Ted but Ted says to ignore it because HOMEBUYS are a reputable brand. Meanwhile, Ralpinda buys the TV and takes it back to the flat. Daphne and Ted arrive home with the sofa and with Ralpinda they all sit on their new sofa together to watch the TV. When they turn on the TV they find that the picture is very poor and that there is a very noticeable interference in the sound. As they sit there, they hear a loud cracking sound and realise that the sofa has broken in half. On closer inspection Ted finds a sticker on the leg of the sofa that states ‘100% plywood’ and not mahogany hardwood as advertised.

Ted and Daphne return to the store where the manager points out the ‘No refunds on any goods under any circumstances’ sign and denies any responsibility for the sofa breaking stating that the sofa was for ‘decorative purposes only’ and wasn’t meant for sitting on.

Daphne points out the label that was on the sofa that states ‘family sofa’ and ‘Mahogany hardwood’ but the manager ignores her and walks away. Meanwhile, Ralpinda has telephoned the man who sold her the TV and complained about it not working. Ralpinda says that she demands her rights as a consumer and to receive her money back. The man replied that it was second hand and what did she expect? The man adds that it was a private sale so she can’t do anything about it anyway.



  1. With reference to the above scenario explain what would be required to create a legally binding contract between Shona and Raymond ANDadvise whether, in the scenario above, there is a contract between them. 
  2. With reference to the above scenario explain the legal position of Raymond’s advert - is Shona correct in her assertion that Raymond must deliver what he has offered?


With reference to the above scenario advise Shafiq as to whether he must pay for the advertising materials. 


With reference to the above scenario and with reference to Statute where applicable, explain the rules of contract as it applies to Johnathon AND whether he is entitled to his £8,000.


With reference to the above scenario advise Chung Lee as to whether he has a binding agreement with Katie meaning that the property is indeed his. 


With reference to the above scenario explain the legal effect of the ‘No refunds on any goods under any circumstances’ sign at the cash desk with regards to the sofa AND explain to Ralpinda what her rights are regarding the TV. (5 marks)

Case Study 2

Read the following case study and answer the questions that follow.

Kieran is an avid fan of martial arts movies. He attends his local martial arts club but he really wants to copy the actions of his favourite martial arts movie characters. To copy his favourite actors Kieran wants to use a folding knife throwing weapon that he sees the characters using in the films. Kieran visits his local equipment supplier, KUNG-FU-KIT, and orders a folding throwing knife like those available in Japan.

Kieran pays £100 for the knife. The manager of the store tells him to return in a week when his order will be in stock. Seven days later Kieran returns to the store only to be told by the manager that they cannot sell the knife as weapons of this type are prohibited in the UK.

Kieran is furious and very disappointed. Kieran states that the store must honour their contract to sell and deliver the knife.

Saba is a friend of Kieran and has been in a relationship with her partner Aisha for several years. They have both decided that they wish to get married under the recent Marriage (Same Sex Couples) Act 2013. Aisha is, however, very jealous and has agreed to marry Saba only on the grounds that she signs an agreement that, should their relationship finish, Saba will never marry again nor can Saba pursue Aisha for any form of financial support following any break up regardless of the grounds for that support. Aisha has told Saba that this agreement is legal and binding upon them. Saba is now worried about whether she should marry Aisha on these terms.

Dirk and Harry share a large house with three others. Dirk and Harry have applied for credit cards in the names of the other occupants of the house. They both agree a plan to intercept the mail on its arrival, and, using the cards and PIN numbers intended for the others, use the cards to buy goods and cars and then travel to Europe. Dirk and Harry exchange e-mails which outline their plan and an express agreement that all of the proceeds of their plans will be split equally between them. The cards and PIN numbers duly arrive and they are quickly intercepted by Dirk and Harry.

Dirk immediately takes the cards and purchases a second hand car and lots of high value stereo equipment, clothing and travel tickets to Europe. Without telling Harry, Dirk leaves the country intending not to return. Harry is furious and sends an e -mail to Dirk claiming his rights to half of the proceeds of their plan and threatens to take a legal action based on their agreement.

Naomi studied agriculture at University and has decided that she wishes to begin a small business rearing livestock on some land. She is fortunate that her late grandmother owned a small house in the country near the University where Naomi studied and Naomi has now moved into the property and is beginning to plan her new enterprise. The house has a large garden but she realises that she needs more land to accommodate her livestock so she contacts a neighbouring farmer to offer to purchase a piece of land that is adjacent to her own garden boundary. Naomi wants to save as much money for the purchase so makes her own initial negotiations with the neighbour who is keen to sell the land for a price that Naomi believes is very reasonable.

Naomi and her neighbour exchange some informal hand written letters agreeing that the land will be sold to Naomi for the price of £5,000. Naomi replies with an agreement to buy the land and states she will pay the neighbour the £5,000. Naomi then seeks the assistance of a conveyancer to have a proper contract drawn up for the sale of the land. When speaking to the conveyancer Naomi discovers that she does, in fact, already own the land as shown by her property title and that it had always been part of her grandmother’s garden. Naomi contacts her neighbour to advise them of this only to be told by them that they had absolutely no idea that was ever the case and that they consider the correspondence between them as evidence of a binding contract and that they fully intend taking a legal action against Naomi for the £5,000.


With reference to the scenario above, explain whether Kieran has an enforceable contract with KUNG-FU-KIT. (Your answer should focus on the legality of the contract and not any applicable legislation governing the sale of offensive or dangerous weapons.)


With reference to the scenario above, explain to Saba whether the agreement, she has entered with Aisha is enforceable and binding. (Your answer should focus on the legality of the contract and not any applicable legislation governing same sex marriage.)


With reference to the scenario above, explain whether Dirk and Harry have an obligation in law to split the proceeds of their plan. (You are not required to consider any crimes that may have been committed within the scenario).


With reference to the scenario above, explain to Naomi whether there is a binding contract between her and her neighbour. (Your answer should focus on the legality of the contract and not any applicable land law or legislation governing the sale of land).

Case Study 3

Read the following case study and answer the questions that follow.

Steven has recently purchased and owns a Norton ‘Dominator’ motorcycle and a Norton ‘TT Racing’ motorcycle which he has now advertised for sale. Steven believes that these two motorcycles were part of a previous collection of classic motor vehicles owned by the late actor and racing driver Steve McQueen. Steven knows that motor vehicles from Steve McQueen’s collections are fetching very large sums of money at classic motor vehicle auctions both in the UK and in Europe. Steven writes to his friend Brian, offering to sell him his ‘little beauty’ (meaning the Norton ‘Dominator’ motorcycle for £30,000. Brian is a collector of classic motorcycles and thinking that Steven is referring to the Norton ‘TT Racing’ motorcycle, accepts, saying: ‘Dear Steven, I am delighted to accept your offer and this will become a valued part of my collection of period racing vehicles.’ Steven delivers the Norton ‘Dominator’ motorcycle to Brian’s home whilst Brian is not at home. Brian returns home and finds the ‘Dominator’ and is quite confused. Brian believed that he was buying and more importantly wanted the Norton ‘TT Racing’ motorcycle and not the ‘Dominator’. Before Brian can return the motorcycle another friend, who is an authority on classic vehicles and in particular the collection of Steve McQueen, visits him and tells him that the Norton ‘Dominator’ is actually in very poor condition and has been fitted with non-original parts of poor quality and not worth more than £5,000. He does state, however, that a Norton ‘Dominator’ motorcycle in first class condition would have been worth £10,000 to £20,000. Steven, it seems, had bought the ‘Dominator’ for only £2,000. Steven refuses to take the motorcycle back and insists that Brian must pay him £30,000.

Kiran and Tasmin have been work colleagues for 10 years. Kiran is selling her motor home, a Beaumont Continental, for £20,000. Kiran tells Tasmin that it is only three years old, low mileage and has recently been serviced with brand new tyres, exhaust and central heating system. The vehicle is, in fact, six years old and the display showing the distance travelled by the vehicle is faulty and the mileage is much higher than shown. The tyres that have been fitted were badly worn remoulds from a small garage in the town and the exhaust has had some minor patches applied to try to stop it smoking badly. The central heating system had no work done to it except a fluid top up but it works only intermittently. Tasmin admits to Kiran that she knows absolutely nothing about motor vehicles of any kind and she needs something that is reliable and capable of crossing Europe during the summer holidays that she has planned. Kiran assures Tasmin that this is the vehicle she needs to take her effortlessly on her travels.

When Kiran and Tasmin were discussing the sale Kiran provided Tasmin with various documents which detailed the apparent extensive service and maintenance history since the motor home was first purchased. The documents were inaccurate but they did state the true age of the vehicle and Tasmin would have seen this if she had examined them closely. On the eve of her summer holiday Tasmin arranges to meet Kiran and following a very brief inspection of the vehicle Tasmin agrees to buy the yacht for £20,000. Kiran presents Tasmin with a piece of paper that Kiran refers to as there, ‘Contract of purchase and sale.’ Tasmin reads the paper that contains assurances on the vehicles condition and roadworthiness based upon Kiran's prior statements regarding the vehicle tyres and exhausts. Tasmin also notices a statement that reads, ‘On signing this contract the buyer accepts that Liability for any pre-contractual misrepresentation will be excluded.’ Tasmin signs the piece of paper and hands over to Kiran a cheque for £20,000. The next week when Tasmin is driving the motor home to the ferry terminal to begin her long awaited holiday she smells strong exhaust fumes and feels that the steering is pulling sharply to the left.


On stopping the vehicle Tasmin inspects the tyres closely and sees that the front left tyre has a serious tear and the others are almost without any tread on them and is unusable. She also sees plumes of dark exhaust smoke pouring from what appears now to be a badly mended rear silencer. On closer inspection Tasmin notices that there is a pool of fluid from a leak under the vehicle which, unknown to her, is pouring from the broken central heating system in the vehicle. A roadside recovery vehicle attends and the mechanic advises Tasmin that in his professional opinion the vehicle is a ‘death trap’ and should not be driven under any circumstances.


  1. Using case law where appropriate and with reference to the facts of the scenario above, explain the legal situation that exists between Steven and Brian. 
  2. Using case law where appropriate and with reference to the facts of the scenario above, are there any legal remedies available to Brian and, if so, clearly explain what they are.


  1. Using case law where appropriate and with reference to the facts of the scenario above, explain the legal situation that exists between Kiran and Tasmin in regard to the sale of the motor home.
  2. Using case law where appropriate and with reference to the facts of the scenario above, does Tasmin have any legal remedies available to her and, if so, clearly explain what they are.
  3. Using case law where appropriate and with reference to the facts of the scenario above, explain the legal position of the statement, ‘On signing this contract the buyer accepts that Liability for any pre-contractual misrepresentation will be excluded.’
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