1. Jason requests Beta by Design (Beta), a website design company, to produce a website for his business. The website is to feature the tours, a booking function, and links to websites with information about the local history of the region.
Calum, a young IT graduate, is an employee of Beta and creates the website. An anti-malware programme is to be installed, together with standard anti-virus software. Calum completes the required tasks, but fails to have the website tested and signed off by one of Beta’s senior managers before it goes live.
The malware filter has not been activated and as a result, the website is hacked. The data on Jason’s hard drive is erased, including details of the financial operations and information about suppliers, creditors and debtors. As a result, Jason misses the deadline for submitting his IRD returns and has penalty interest imposed by the IRD. It costs him $4000 to rebuild his system, with many hours of work tracking down the details of suppliers, creditors and debtors.
Jason notifies Beta that he plans legal action to recover his losses.
Calum is shocked when told of the website’s failings and asks your advice on the relevant law. Advise him on the following:
i. What are the elements that Jason must prove for a claim in negligence? Explain these in your own words.
ii. Who should Jason bring the legal action against? Explain the law that applies here.
iii. Jason wishes to recover all the losses he has suffered, including the IRD penalty, the new accounting system and the time lost in contacting suppliers, creditors and debtors. Explain the rule which applies here and the amounts he is likely to recover
2. Alan, who manufactures office furniture, emails to Bertha on 1 June offering her a sole distributorship of his products in the Auckland area for a commission of 3% on all products sold. Bertha asks for time to think about this, and Alan agrees, and emails her with a deadline for her decision by 4pm on 4 June. On 3 June Alan emails Clara making a similar offer.
On 4 June Alan telephones Derek and during their conversation mentions these offers. Derek immediately offers to take the distributorship for a commission of 2.5%, sending an email to Alan confirming his offer. Alan emails his acceptance.
Alan immediately texts Bertha to withdraw his offer but due to a fault in the system the text cannot be delivered or accessed by Bertha. At 2.00pm Alan emails both Bertha and Clara withdrawing his offer. Bertha is away from her office and doesn’t see the email. She texts Alan at 3.00pm saying that she will accept the sole distributorship for 3.5% commission.
Advise Alan as to his legal position. Refer to all relevant legal rules in your answer.
3. i. David is a law student. His sister, Edwina, phones him to say that the police are to prosecute her (Edwina) for a road traffic offence. David goes to the library and spends three hours reading the law on this topic. He writes out his findings for Edwina, and Edwina goes to court for the court hearing. Relying in court on the advice given by David, she is found not guilty of the offence. When David hears of this not guilty verdict he sends Edwina a bill for $150 for the time he spent researching the law.
ii. Bruce runs an excursion business, taking people on tours in his buses. Joan is hosting a group of visitors from Japan who are on a tour of gardens in New Zealand. Bruce agrees for one of his drivers to take the visitors to see various gardens. The agreed price is $2,500 and the date of the trip is agreed to be 10 November.
Payment is to be in two parts:
(i) a deposit of 50% one month before the trip and
(ii) the balance on the day.
Shortly after Joan has paid the 50% deposit, Bruce has discovered that diesel prices have increased so he tells Joan that as diesel has increased in price of the garden tour will be $2,750 – an additional $250. Joan is unhappy about making the extra payment and asks you for legal advice
4. Harriet is 17. She is still at school and lives at home. She has a part time job in a supermarket. Harriet visits a motor cycle dealer on Saturday morning and agrees to buy a 2012 model Honda 500 motor cross bike.
The sale is on hire purchase and Harriet must bring the motorcycle back for servicing every two months. The price is $12,000. Harriet pays a deposit of $3000.
Harriet enters into a motor cross race and unfortunately loses control of the motorcycle on a corner and she and the motorcycle land in a river. The motorcycle is recovered but has extensive damage. The damage will cost $2000 to repair. Harriet has now refused to continue paying for the motorcycle. She believes it was too expensive as she has seen similar motorcycles for $7000 at other motorcycle dealers.
Briefly outline Harriet’s legal situation.
5. Bodo and Wilhelmina decide to leave their jobs in the city to make a new beginning as strawberry growers. In early September they inspect a small farm owned by Luther. The strawberries have been in production for three years. Bodo and Wilhelmina ask Luther if the farm has experienced any problems with plant viruses or infections and he tells them that the plant stock is healthy and there have been no problems with the strawberries in the past. They sign a contract, with settlement to take place in late September.
Two weeks after taking ownership they discover that the strawberries are falling off the plants before ripening. Investigation reveals a rare virus which is attacking the roots of the plants. Tests identify that the virus has being in the ground and attacking the roots for at least the past two months. The virus can be treated by removing all plants and fumigating the soil, but the strawberry harvest for the forthcoming spring and summer season will have to be sacrificed. Luther believed the plants to be in good health at the time of contracting and was unaware of the virus.
Bodo and Wilhelmina want to sue Luther. He points out that the land is still economic and will produce a good harvest in the following year. Expert advice confirms this
Identify and discuss the relevant law which applies here and the potential statutory remedies available to Wilhelmina and Bodo
· Has a misrepresentation been made in this situation? If so, why and if not, why not?
· Whether or not damages can be claimed?
· Whether or not the contract can be cancelled and if so how this should be done? Refer to specific sections of the relevant legislation.
6. Vinod operates an accounting practice in South Auckland, employing Angela, who is a qualified accountant, and Colleen who acts as a receptionist.
Both Angela and Colleen have terms in their contracts of employment which state:
“On termination of employment, the employee will not work for any firm of accountants within the Greater Auckland area for a period of two years.”
Angela wishes to leave Vinod’s employment to set up her own accounting practice on the North Shore and Colleen wishes to move to another firm of accountants about three kilometres away from Vinod’s office.
Explain the law which applies here and discuss the enforceability of the above clause, and advise Jane and Linda whether or not the above clause is enforceable or not.
Would your advice be different if Vinod had trained Jane in new accounting software which Vinod had developed and plans to sell to the accounting profession?
7. Albert works as a gardener for a large company, and has worked for this company for 35 years. He has a limited understanding of business activities. The company has offered its employees shares in the company for $4.00 per share.
The company has offered each employee 500 shares. If they accept the shares they will pay for them by a deduction from their pay of $50 per week until the shares are paid for.
Unknown to the employees the company is in financial trouble and cannot raise money from banks. The shares have a value of less than 10 cents per share. Albert buys the shares.
Explain the law of undue influence bargain and apply the law to these facts.
8. Camilla buys a house which needs to be completely redecorated before she can move in. The house is close to her work and very close to a child care centre for her daughter. She has enrolled her daughter with the child care centre and paid the fee for November.
The location of the house will make it possible for Camilla to walk to work, and take her daughter to the centre, rather than making a long train trip every day to get to work.
She makes a contract with Tim to do the decorating, and the contract states that the work is to be completed by 1 November. She tells Tim about her plans to walk to work, but does not tell him about her daughter and the nearby child care centre.
Tim does not complete the work until 28 November. As a result of this delay Camilla is seeking damages.
She wants clarification regarding the following:
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