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GUIDED SOLUTIONS TO THE PRACTICE QUESTIONS
STRICTLY FOR ACADEMIC USE ONLY
Before you use this material: Please note that the material in this file is composed of Guided
Solutions, NOT model solutions nor legal opinions which cover, within the context of each
question, every possible relevant legal principle studied in the course.
The Guided Solutions are couched, for the most part, in the form of instructional narratives,
with significant reference to the Text at various points for convenience of consultation.
Students have been urged throughout the course to attempt Tutorial Questions at the end of
each Chapter of the Text. Many of these questions lend themselves to use as practice
questions for the exam.
PRACTICE QUESTION 1 [20 marks]
Note: this is a problem-type question and it requires IRAC format – an issue, rule, application
and a conclusion. The response should have legal explanation, rather than a mere lay person
view. A good standard of English expression is expected.
On 1st February, Arthur advertises his computer for sale in the local paper, giving information
on the computer and contact details. Ben reads the advertisement, and on 2nd February, posts
an offer to buy the computer for $2000. This letter reaches Arthur on the 4th February.
On the 5th February, Arthur sends a letter to Ben stating: “Please advise if payment is by cash
or cheque”. In response the next day, Ben posts a letter to Arthur stating: “My price is cash on
delivery.” This letter reaches Arthur on 8th February.
On the 10th February at 2pm, Arthur sends a letter to Ben stating: “I agree to your offer to buy
my computer as specified for $2000 cash on delivery.” This letter reaches Ben at 3pm on the
11th February. However, on the 9th February, there is a change of plans by Ben. As a result,
Ben sends a letter to Arthur at 1pm on the 9th February seeking to cancel the earlier offer and
stating that he was now only willing to purchase the computer for $1800 cash on delivery. This
letter is received by Arthur at 4pm on the 10th February.
Is there a valid simple contract between Ben and Arthur for the computer? Justify your response
citing case authority whenever relevant. When answering this question, fully consider the
relevant Common Law principles, rules and propositions in the Law of Contract. Do not
consider any matters that might arise in the circumstances under other relevant legislation.
Guideline: To answer this question you need to follow and apply the legal principles and case
laws from Chapter 7 of the Text.
Issue: Frame the Issue to pin-point the legal problem, mention the name of the disputing
parties, and very briefly consider what facts/circumstances brought the parties to court. State
the Issue as a question. In the given problem, a suggested Issue could be like this:
Was there a valid agreement between Ben (offeror) and Arthur (offeree) on 10th February at
2pm when Arthur posted the acceptance letter to sell the computer at $2000?
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Rule: Rules are always taken from the Text and an in-text citation is a must. Keep the Rule
section general, that means, do not use the name of the parties (from the story) in the rule
section. Use the name of the parties (from the story) in the Application section where you will
be applying these rules.
In this problem, a legal discussion may start with an explanation of an invitation to treat.
In the second paragraph, you should define an offer.
Then, explain the postal rule related to offer: an offer made by letter is not effective until it
is received by the offeree.
Next, explain the legal consequence of request for further information.
Then, you should explain the postal rule related to acceptance: an acceptance is effective as
soon as it is posted.
Next, the crucial discussion starts on the revocation of an offer and the postal rule regarding
the revocation of an offer. According to the postal rule, “If revocation of the offer is to be
effective, it must be received by the offeree before they post their letter of acceptance” (Gibson,
2018, 217).
Application:
Application section must have sufficient legal analysis, and multiple well-developed
paragraphs. Talk about one particular legal principle in a paragraph and apply it to the given
scenario. There should be a logical flow while you develop your argument in different
paragraphs.
In the first paragraph of the Application section, you need to justify why you consider Arthur’s
advertisement on 1st February in the local paper is an invitation to treat.
In the second paragraph, you should justify whether Ben’s letter posted on 2nd February is an
offer or not.
At this stage, you should justify why you are considering the postal rule in this problem. Then
apply this rule in the given scenario and justify when Ben’s offer of purchasing the computer
for $2000 cash on delivery becomes valid (4th February).
Next, explain the legal consequence of request for further information and apply it in the
exchange of letters between Arthur and Bob from 5th to 8th February.
Then, you should explain the postal rule related to acceptance: an acceptance is effective as
soon as it is posted. Apply this rule in the given scenario and justify when Arthur’s acceptance
of Ben’s offer of purchasing the computer for $2000 cash on delivery becomes binding (10th
February at 2pm).
Next, you need to clarify from the story that on 9th February at 1 pm Ben revoked the original
offer of buying the computer for $2000 cash on delivery, and made a fresh new offer to
purchase it for $1800 cash on delivery. You also need to clarify by applying the postal rule that
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this revocation is effective on 10th February at 4pm when Arthur received the revocation letter
via post. However, in the previous paragraph they have already established that a valid
acceptance already happened on 10th February at 2pm. According to the postal rule, “If
revocation of the offer is to be effective, it must be received by the offeree before they post
their letter of acceptance” (Gibson, 2018, 217). By applying this rule, you can argue that, Ben
cannot revoke the original offer as he is already in a binding agreement with Arthur to purchase
the computer for $2000 cash on delivery.
Conclusion: There was a valid agreement between Ben (offeror) and Arthur (offeree) on 10th
February at 2pm when Arthur posted the acceptance letter to sell the computer at $2000 cash
on delivery.
PRACTICE QUESTION 2 [20 marks]
Note: this is a problem-type question and it requires IRAC format – an issue, rule, application
and a conclusion. The response should have legal explanation, rather than a mere lay person
view. A good standard of English expression is expected.
Pat and Dan are partners in a firm called Copythat, that leases photocopiers to commercial
businesses. Their partnership agreement states they are prohibited from selling toner to clients
other than by arrangement with Maddy’s business, which sells toner. Samantha, an important
client of Copythat, asks Pat to supply toner, which Pat provides from a private supplier without
informing Dan or Maddy. The toner is of poor quality and Samantha sues Copythat for
damages, arguing that it was in the scope of their business to supply toner. Dan argues that as
a partner he is not jointly liable since Pat acted contrary to their agreement.
Advise Samantha. Give reasons and justify your response considering relevant common law
principles and citing case authority whenever relevant. Do not consider any matters that might
arise in the circumstances under any legislation other than the Partnership Act.
Guideline: To answer this question you need to follow the rules and legal principles of
Partnership from Chapter 20 of the Text.
Issue: Frame the Issue to pin-point the legal problem, mention the name of the disputing
parties, and very briefly consider what facts/circumstances brought the parties to court. State
the Issue as a question. In the given problem, a suggested Issue could be like this:
Can Samantha bring an action against the firm named Copythat or against the partners for the
unauthorised actions of Pat (one of the partners) for supplying poor quality toner?
Rule: Rules are always taken from the Text and an in-text citation is a must. Keep the Rule
section general, that means, do not use the name of the parties (from the story) in the rule
section. Use the name of the parties (from the story) in the Application section where you will
be applying these rules.
In this problem, a legal discussion may start with the definition of partnership.
Then explain the legal relationship of partners to outsiders (Gibson, 2018, 552) and
introduce the concept of agency in this paragraph. Every partner is an agent of the firm and
other partners for the purpose of the business of the partnership. This means that any act of a
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partner done in the usual course of partnership business can bind the firm and its partners
(Gibson, 2018 552).
After introducing agency relationship, explain three types of authorities – actual, implied and
apparent authority. You can have three separate paragraphs on each of these authorities.
Special attention should be given on apparent authority to solve this problem.
As mentioned by Gibson (2018, 552), if a third is to succeed against a firm, they must establish
that:
The particulate partner was acting within the scope of the usual business;
The transaction was carried out in the usual way;
The third party knew or reasonably believe that the partner was a partner of the firm; and
The third party was not aware that the partner lacked authority to bind the firm.
In this problem, you also need to explain how the third party can file a case against one of the
partners. So, develop at least one paragraph explaining the joint liability of partners.
Application: Application section must have sufficient legal analysis, and multiple welldeveloped paragraphs. Talk about one particular legal principle in a paragraph and apply it to
the given scenario. There should be a logical flow while you develop your arguments in
different paragraphs.
In this Application section, first introduce the partners and their partnership business in the
given problem.
As in the second paragraph of the Rule section, you have explained the legal relationship of
partners to outsiders, in the second paragraph of this Application mention that one of the
partners, Pat, has provided toner to Samantha from a private supplier without informing Dan
or Maddy. Clearly mention that in this problem Samantha is the outsider, a third party.
Now you need to assess all three types of authorities (in three separate paragraphs) to justify
which one is applicable in the given problem.
Justify why you think that Pat had no actual authority to supply toner from a private supplier.
(The partnership agreement, in the given problem, prohibited the partners from selling toner to
clients other than by arrangement with Maddy’s business, which sells toner. Pat violated this
agreement by providing Samantha, the third party, toners from a private supplier without
informing Dan or Maddy. Therefore, it can be argued that Pat had no actual authority to supply
toner from a private supplier.)
Then, justify why you think that Pat had no implied authority to supply toner from a private
supplier. (Samantha sues the firm, Copythat, for damages, arguing that it was in the scope of
their business to supply toner. So, we need to assess whether Pat had the implied authority to
supply Samantha toner from a private supplier or not. Regarding implied authority it is
mentioned by Gibson (2018, p. 552), “Provided nothing is stated to the contrary in the
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partnership agreement, the power of partners to bind the firm by their acts include…entering
into contracts on behalf of the firm.” What Pat did in this story is contrary to their partnership
agreement. Therefore, it can be argued that Pat had no implied authority to supply toner from
a private supplier.)
Finally, justify how a third party, Samantha, can establish an apparent authority. If Samantha
(the third party) wishes to succeed in an action against the firm, Copythat, she has to show that
Pat had an apparent or ostensible authority. Then apply all four elements mentioned in the Rule
section in the given scenario to establish an apparent authority. You can cite the case law
Walker v European Electronics Pty Ltd (in liquidation) (1990) 23 NSWLR 1.
In this case, you also need to explain how Samantha can file a case against Dan or Maddy.
So, develop at least one paragraph explaining the joint liability of partners. (If the firm’s assets
do not cover the debt, partners’ personal assets can be used to cover liability after their private
debts are covered. This is because, according to s 16 of the Partnership Act (WA), ‘each partner
is liable jointly (collectively) with the other partners for all debts and contractual obligations
of the firm’. If one of the partners’ private assets are also insufficient, the other partners would
have to make up the difference and recover the balance from those partners if possible (Gibson,
2018, 553.
If Samantha decides to bring an action against one of the partners, instead of filing the case
against the firm, Copythat, he is entitled to bring only one action. The other partners of the
firm cannot be sued later, because their liability is joint and they have been discharged from
liability by the first action (Gibson, 2018, 554).)
Conclusion: A conclusion should be very straight forward, no justification required here. For
instance,
Samantha can bring an action against the firm, Copythat, or one of the partners (Dan or Mandy)
for supplying Samantha toner from a private supplier contrary to the partnership agreement.
PRACTICE QUESTION 3 [5 marks]
Note: this is a short answer-type question. The response should incorporate all the legal
aspects related to the topic. A good standard of English expression is expected.
Distinguish between a special agent, a general agent and a universal agent, and explain the need
for the distinction.
Guideline: To answer this question you need to follow and apply the legal principles from
Chapter 18 of the Text.
A special or limited agent is authorised by the principal to make a particular type of contract
or to represent the principal in a particular transaction only (Gibson, 2018). Whatever the type
of transaction, it should not be in the ordinary course of the agent’s business, but rather be seen
as the agent acting in their private capacity.
According to Gibson (2018), a general agent is authorised to make contracts of a certain class
that are normal for such agents or to do some act for a principal that forms part of the ordinary
course of business for the agent.
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A universal agent, as explained by Gibson (2018) has power to do practically anything the
principal can do, and is usually appointed through a power of attorney.
The reason for the classification is to determine the actual extent of an agent’s authority.
PRACTICE QUESTION 4 [5 marks]
Note: this is a short answer-type question. The response should incorporate all the legal
aspects related to the topic. A good standard of English expression is expected.
How do the following terms in a contract differ?
a. condition;
b. condition precedent;
c. condition subsequent.
Guideline: To answer this question you need to follow and apply the legal principles from
Chapter 14 of the Text.
These terms differ in a contract in the following manner:
a. A condition is a term of vital importance to a contract, which goes to the root of the
contract, and which, if broken, enables the injured party generally to seek rescission
and/or damages.
b. A condition precedent is a condition in an agreement that prevents a contract coming
into effect until it is fulfilled (Gibson 2018). For example, making a purchase ‘subject
to bank finance’.
c. A condition subsequent, as explained by Gibson (2018), is a term in a contract that must
be complied with after the contract is made. Failure to comply will allow the other party
to terminate the contract. The contract ends on the happening of an event external to
the contract—for example, a provision that the contract will continue ‘until supplies
run out’.
STRICTLY FOR ACADEMIC USE ONLY
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