Comlaw 203 Contract Law

Question 1:

Margaret, a property tycoon, puts up an advertisement inviting tenders for the design and construction of condominiums on the land she has recently bought.

Her ad states: “All tenders received at my office at 137 Riverside Drive before 4.00pm 1 April will be given full and fair consideration.  However, lowest or any bid will not necessarily be accepted.”

Margaret receives four tenders before the deadline and these she examines carefully but is not impressed by any of them because the design is not attractive or the price is too high or both.

Charles puts great effort into his tender and takes so much time over it that he has to have his secretary hand deliver it to 137 Riverside Drive. His secretary puts it in the letterbox just before 4.00pm but Margaret fails to notice it there until the next day.

However, Margaret is very impressed by Charles’ tender and wants to accept it.

Which of the following best describes Margaret’s legal position?

 Group of answer choices:

1. She may accept Charles’ tender but that would mean she would be in breach of the unilateral contract with the other tenderers because they were not treated equally. However, their damages would only be for loss of a chance and their chance of being selected, no matter what, would have been very low.

2. She is free to accept Charles’ tender because her contract with conforming tenderers is to give each full and fair consideration. She has done this.

3. She is free to accept Charles’ tender because the advertisement was only an invitation to treat.

4. She is not free to accept Charles’ tender because she did not consider all tenderers at the same time. Hence, she did not treat them equally.

Question 2

John and Philip are neighbours and friends. In response to the calls to “Be Kind” from the government and various media, John decided to do something kind for Philip.

About one month ago, John reached an agreement with Nadia under which Nadia would paint the exterior walls of Philip’s house while Philip was on holiday and John would pay Nadia $20,000. They also agreed on all the necessary details of the work.

Nadia has done the work according to the agreement. Philip is overwhelmed with surprise and elation now that he is back and sees his ‘new’ house. But John refuses to pay Nadia.

Which of the following statements is correct?

 Group of answer choices:

1. There is a contract between Philip and Nadia so that Philip can sue Nadia for breach of contract if Nadia’s work is defective.

2. There is a contract between John and Nadia under which John must pay Nadia.

3. There is no contract between John and Nadia because Nadia has promised to do or has done nothing beneficial to John and hence has not provided any consideration for John’s promise to pay her.

4. There are two related contracts under which John must pay Nadia and Philip must then reimburse John for the payment.

Question 3

Many years ago, Barbara bought a flat for $400,000. Toward the end of 2015, she discussed the possibility that her daughter, Dianne, would pay off the remaining mortgage debt to the bank and could then have the flat. Both of them knew that Dianne, a recent BCom graduate earning $45,000 a year, was not in a financial position to promise that she would definitely pay off the remaining debt.

After some discussion, Barbara wrote and signed a short note stating: “If Dianne manages to pay off the remaining mortgage debt ($120,000, to be paid off by paying me $20,000 per year from 2016 to 2021), I will transfer the title to the flat to her. However, if Dianne cannot afford the payments to me, I will not hold that against Dianne, but in that case Dianne will not have the flat either.”

In the past five years Dianne has made the payments, largely by living on a diet of instant noodles. But there has been a serious falling out between Barbara and Dianne since the start of 2019 for various reasons, and Barbara is now threatening to undo the whole arrangement. The market value of the flat is now $700,000.

Which of the following statements is the most accurate as of today?

 Group of answer choices:

1. There is a contract between them and therefore Dianne is entitled to have the flat transferred to her.

2. Barbara is not entitled to revoke the offer in the note.

3. There is a contract between them under which Dianne has the contractual obligation to continue to pay the unpaid balance of the $120,000.

4. Barbara is entitled to revoke her offer in the note if she pays back the payments made by Dianne. That is because there is no contract between them yet: Dianne has never promised to pay off the debt and hence has never provided any consideration for Barbara’s promise.

Question 4

On Day 1, Paul receives a written offer in two copies from Victor to sell Victor’s house to Paul for one million dollars. The offer stipulates that Paul can only accept the offer by signing one copy and returning that copy to Victor. In the morning of Day 3, Paul is still considering the offer, and then he receives another written offer from Victor selling the same house for 1.2 million dollars.

While he is reading the second offer, he receives an email from Victor saying: “Sorry, Paul. I had to increase the price because my partner is very unhappy with the price in the first offer. I do not want any trouble at home.”

Paul immediately replies by email (which is instantaneously received by Victor): “I’m sorry too, Victor. But I have decided to accept your first offer. I have signed the offer and will post it to you in 20 minutes”. He runs out and posts the signed offer 10 minutes later. On Day 4, Victor receives a copy of the first offer signed and returned by Paul. Which of the following statements is correct?

Group of answer choices:

1. There is no contract at any time.

2. There is a contract when Victor receives Paul’s email.

3. There is a contract on Day 4.

4. There is a contract when Paul posts the signed offer.

Question 5

Bart is a keen rugby league fan. But his unruly behaviour has led to his local league club banning him from attending games held at the club grounds. One day, he goes to the club’s ticket office to buy a ticket for a game against a visiting Australian side. After hearing “I will buy a ticket for the game”, the sale representative looks up and sees it is Bart. The rep refuses to sell any ticket to him citing the ban.

Undeterred, Bart asks his friend Milhouse to buy a ticket for him. Milhouse does so and never mentions that he is buying the ticket for Bart. On the day of the match the attendants refuse to allow Bart entry even though he holds a ticket.

Which of the following statements is the most accurate?

 Group of answer choices:

1. The club’s offer to sell tickets is made to the public at large including Bart, and it is therefore wrongful for the club to refuse to sell tickets to Bart.

2. Bart can sue for breach of contract because the club’s offer to sell tickets is validly accepted by Milhouse on his behalf, and hence there is a contract obliging the club to allow him entry.

3. Bart can sue for breach of contract because there is a contract at the moment Bart validly accepts the club’s offer by saying “I will buy a ticket for the game”.

4. Bart is validly denied entry to the grounds because there is no contract between Bart and the club obliging the club to allow him entry.

Question 6

Which of the following statements is the most accurate?

Group of answer choices:

1. If an advertisement for the sale of goods says “first come, first served” or “while stocks last”, that alone will turn the ad, which otherwise would be merely an invitation to treat, into an offer to sell the goods.

2. If what is said to be the consideration provided by the promisee does not benefit the promisor in any way, the said consideration is not valid consideration for the promise.

3. If an offer to enter into a unilateral contract is made to Olivia, she has the obligation to complete the requested conduct once she has started to do the conduct although she has no obligation to start the conduct at all.

4. An offeror may revoke their offer by conduct before the offer is accepted, provided that the revoking conduct is made known to the offeree before acceptance.

Question 7

In the 1890s, Butch robbed a bank. He never disclosed where he hid the loot before he was hanged. But legend has it that he hid it in a cave on the West Coast and left a map. Mr Smith and Mr Green share a passion for spelunking (cave exploration). They have explored many caves in New Zealand together and have saved each other’s life on several occasions. Naturally, they have become the best of friends and would, in their own words, “do anything for each other”.

In December 2019, Smith obtained a map that he believed to be the one left by Butch. Smith showed the map to Green. They agreed that they would combine their efforts to find the loot by co-ordinating their searches and sharing expenses, and that whoever found the loot would share it equally with the other.

In March 2020, Smith found the loot (worth one million dollars) while exploring a cave on the West Coast. He refuses to share the loot with Green.

If Green takes the matter to a court, what is the most likely outcome?

Group of answer choices:

1. There is a contract and hence Smith has the obligation to share the loot with Green.

2. Whether the court finds a contract or not, the court will determine what is a reasonable outcome in the circumstances and will decide the case accordingly. For example, it will be reasonable to divide the value of the loot on a 80 (to Smith) to 20 (to Green) basis considering that the map belonged to Smith in the first place and it was Smith who found the loot.

3. There is no contract to share the loot because, given the profound depth of their friendship, they could not have intended, at the time of reaching the agreement, to drag each other before a court for future breaches of the agreement.

4. There is no contract to share the loot because Green did not provide any consideration for Smith’s promise to share.

Question 8

Which of the following statements is the most accurate regarding the postal rule?

Group of answer choices:

1. The postal rule may apply even though the offeror has not used the post as the means of communicating the offer.

2. If the offeree posts a letter of acceptance to which the postal rule applies, the rule will also apply to the offeree posting a letter revoking their acceptance.

3. If the offeror posts a letter of offer, the postal rule will apply to the offeror later posting a letter revoking the offer.

4. If the offeror posts a letter of offer and in reply the offeree posts a letter of acceptance, the postal rule will always apply to the posted acceptance.

Question 9

On Friday morning, ABC Ltd (the company) makes an offer to buy Craig’s commercial building. At 1 am Saturday, Craig faxes his acceptance to the company, and the fax is received by the company’s fax machine in its office at 1.01 am Saturday (the first fax).

Nobody in the company works at the office Saturdays. On this Saturday morning, though, the director of the company, Dianne, comes to the office to fetch her netball gear. She sees and reads the fax. Then she texts her assistant: “Pls inform our lawyer the offer is accepted.”