200909 Arthur Case Study - Creation Interpretation and Enforcement of Contracts - Business Law Assessment Answer

Assessment Task:

200909 Business Law Assessment Answer

How to approach a legal hypothetical:

1. Identify the legal issues from the problem. These are the questions of law the parties would ask the court to answer, should it go to court. Be logical in expressing them. They are questions so phrase them as questions.

2. Identify and explain the relevant law for each of the legal issues, giving legal support and authority where possible (You are not expected to do your own legal research so using cases given in your textbook will be perfectly acceptable).

3. Apply the relevant law to the facts of your problem, exploring all reasonable arguments. Explain why the law you just stated is relevant to the facts of the problem. As far as possible, use the actual words stated in the problem, be specific, when explaining the law’s relevance.

4. Consider any relevant defences or remedies, if appropriate, and reach a conclusion, if possible, or at least state which view is more likely or stronger.

PROBLEM:

Arthur is about to start his degree at university at the age of 17. He wants a car to get him to his classes because public transport in his area is quite haphazard. He goes to a BMW dealership in Parramatta and chooses a Series 2 convertible for $60,000. Can Arthur enter into a binding contract?

ISSUES:

What do you see might be the relevant issue(s) being raised on these facts? Look carefully at the question stated as this might help you to focus on a particular issue.

Is the problem asking you if there is a binding contract, such that you will discuss agreement, intention and consideration?

Or is the problem asking you if Arthur has the capacity/ability to enter into a binding contract? Why might he lack the contractual capacity to enter into a binding contract?

It is important to work out what the relevant issues are/issue is in any problem. Hopefully, you identify that it is the second issue stated above that is the most relevant here.

So you decide this is a problem on legal capacity (one of the defects which could be raised to avoid an enforceable contract). You could state this as follows: Does Arthur lack contractual capacity?

LAW:

Now you need to state the relevant legal principles to deal with an issue of a lack of capacity. You do not just copy from your textbook, where it refers to different aspects of capacity such as mental disability, as there is no indication that might be relevant on the facts. You would only refer to the situation governing minors (persons under  the age of 18, which Arthur is). You must refer to the Minors (Property & Contracts) Act (NSW) 1970 s19 and others.

Write out, in your own words (which is better than just copying out the relevant sections), the principles or the tests set out in this legislation.

For example: any contract which is for the minor’s benefit will be presumptively binding on the minor (s 19), unless the minor could not understand what they were entering into (s 18). The minor has until just before their 19 th birthday to repudiate the contract (s 31), but s/he should realise the court may order compensation (s 37). If s/he affirms the contract after turning 19 it will be binding on her/him (s 30).

APPLICATION:

Now you need to apply those principles/tests to the facts of the problem

Consider whether or not the facts match the statements of principle or not.

Imagine you have a 2 column table and on the left are your legal principles and in the right-hand column you have the relevant facts of your problem.

CONCLUSION:

Depending on your arguments you may be able to draw a conclusion but on our few facts your conclusion would be more likely to be as follows:

Whilst a car might be for his benefit, it is questionable if purchasing a BMW at $60,000 is for his benefit. Perhaps a cheaper car could have been sufficient. If it is for his benefit then Arthur does not lack contractual capacity and can enter into a binding contract. He can avail himself of any other legal argument to try and get out of the contract but not capacity. If the BMW is not for his benefit then he lacks contractual capacity and this contract is not binding on him.

Making Deals: Creation of contracts

Topic 1: Introduction to contracts

Topic 2: Agreement — Offer

Topic 3: Agreement — Acceptance

Topic 4: Intention

Topic 5: Consideration

When Deals Go Wrong: Interpretation and Enforcement of Contracts

Topic 1: Terms

Topic 2: Invalid contracts

Topic 3: Ending the contract

Topic 4: Remedies

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