FINAL EXAMINATION* AUTUMN SESSION 2012

SCHOOL OF LAW
Student Family Name: Student Given Names: Student Number: Course:
Unit Name (in full): Unit Number: Time Allowed: Number of Questions: Total Number of Pages: Contracts 200011 3 hours (includes reading time) 3 4

Unit Coordinators Name: Simon Kozlina INSTRUCTIONS PLEASE READ CAREFULLY BEFORE PROCEEDING
1. Write your name and student number on this examination paper and on ALL answer booklets. 2. The time allowed for this examination includes reading time, however, you are allowed to begin writing straight away. 3. This is an OPEN BOOK examination. 4. Answer all questions. Please answer each question in a separate Answer Booklet. 5. The Exam is worth 55 marks. Question 1 is worth 20 marks. Question 2 is worth 10 marks. Question 3 is worth 25 marks.

DO NOT TAKE THIS PAPER FROM THE EXAMINATION ROOM

Page 2 of 4 Question 1 (20 marks) Robb and his 15 year old younger brother, Bran, provide building maintenance services on a monthly basis to a local landholder, Tyrion. These services include such tasks as cleaning Tyrions buildings, repairing broken windows and locks and replacing light bulbs, amongst other things. The arrangement has been in operation for quite some time but only recently did the parties agree to reduce everything to writing. Robb and Brans lawyers, Stark The Law Firm, prepared a draft of the written contract and Tyrions lawyers, Lannister & Lannister, negotiated the text for quite some time. Eventually, the lawyers settled on a form of words agreeable to their clients to establish a 3 year contract and Robb, Bran and Tyrion signed the document containing the finalised text. Just as Tyrion was about to sign, Robb said, But, of course, this contract doesnt include actually checking whether your buildings are structurally sound. All we do is simple building maintenance. Tyrion heard the comment and signed anyway. The document, titled Agreement on Conditions for Building Maintenance, included the following clauses: 6. This agreement contains the entire understanding of the parties with respect to the provision of building maintenance services and there is no other understanding, agreement, warranty or representation in any way binding on the parties. 7. The parties acknowledge that Robb and Bran will not be responsible for any loss, including negligence, arising from building maintenance undertaken by Robb and Bran. 8. The parties acknowledge as a condition the requirement that Robb and Bran will notify Tyrion of any remedial building work required. As luck would have it, one terrible, cold winter night a few days after the contract was signed, a violent storm blew through Tyrions lands and his buildings suffered various levels of damage. Robb and Bran arrived the next morning and cleaned up the debris and rubbish and repaired a few of the broken windows. Repairing one of the seriously damaged windows required someone to hang onto the outside of the building. Bran fancied himself to be a climber (although he has never received training) and had a go. Unfortunately, he slipped and fell, smashing into Tyrions Bentley motor vehicle, which happened to be parked below, the repair of which would cost tens of thousands of dollars. Meanwhile, Robb was cleaning up another building and noticed that a tree had fallen during the storm and landed heavily on the building. The building did not collapse and the only visible damage was several very large cracks in the roof that Robb can only see when he climbed a ladder to replace a light globe. Sunlight could actually be seen
EXAM CS AUTUMN 2012*

Page 3 of 4 through the cracks and the possible damage looked significant. Robb remained silent and did not inform Tyrion. Sometime later, while Tyrions Bentley was still being repaired, the building with the cracks collapsed due to the damage caused by the tree. Advise Tyrion on whether he can sue Robb and Bran for damages and whether he can terminate the building maintenance contract. Question 2 (10 marks) As equitable estoppel is based in unconscionable conduct, mere reliance is insufficient to justify the wielding of such a powerful sword. Discuss this statement in relation to the materials and cases examined this semester, in particular at least two of the judgments in the case of Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387. Question 3 (25 marks) Three friends, Delta, Keith, and Joel want to make a 4-episode television show and sell it to a television station for lots of money. They approach a famous performer CL to be the shows big star. Delta, Keith and Joel send an email to CL that sets out the proposed terms of the arrangement including CLs fee per episode and CLs percentage of future earnings. CL replies via text message to Delta that he will only participate if reasonable entertainment costs are also included in the arrangement. Delta replies via text message that they are unwilling to agree to that arrangement. CL sends another text message suggesting that any disagreement on costs could be referred to MMA (Molly M. Arbitrators) for resolution. Keith calls CL as soon as he sees that text message and says, We can do that, subject to a television station actually buying the show. CL replies to Keith, Put my name on that rose, Im in your show. Two episodes are recorded and everyone is very enthusiastic about the project. A television station expresses interest in buying the show for much more than would ordinarily be offered if sold in the market for television shows but with two requirements: i) The show must be re-recorded in High Definition format (which would substantially increase the cost of production as the current recording is in the much cheaper Standard Definition format); and ii) The television station will receive all future earnings and no future earnings can be distributed to any other person. Delta, Keith and Joel reluctantly agree to the terms with the television station and meet with CL to re-negotiate the payment of future earnings from the show. Delta, Keith and Joel say to CL that the television show cannot proceed unless CL agrees to new terms, which will be the same as the original arrangement but CL will receive no percentage of future earnings. CL refuses. Delta, Keith and Joel say they really like CL and want to continue working with him but they need the television station to buy the show. CL
EXAM CS AUTUMN 2012*

Page 4 of 4 refuses. Finally, Delta shouts Were powerful people, so, if you refuse, we will make sure you never work in this town again! Despite being a tall, strong man, CL is concerned about his future and agrees to the new arrangement. Returning to the studio to continue making the show, trouble strikes during the recording of the third episode. There is significant disagreement on who should pay for the seven highly trained masseuses hired by CL to assist him during recordings. CL shouts, Of course getting a massage is a reasonable entertainment cost in this industry; do you expect me to be bored all day? Delta, Keith and Joel hold firm and refuse to pay for the additional costs. Frustrated, CL says, Enough! I wont participate in this charade of a show any longer. He walks to the studio door, yanks it open and walks out, shutting the door loudly behind him. Joel runs to door, opens it and shouts in CLs direction, Fine! And dont come back. We dont want to work with the likes of you anymore anyway. Just after that eventful moment in the television studio, Delta, Keith and Joel sit down to look at the shows financial position and Joel says, Well, perhaps CL just saved us as there is no way we could re-record the show in High Definition format; the extra costs would have killed us! A. Advise Delta, Keith and Joel on the relevance of: a. offer, acceptance, certainty and intention in relation to whether a contract has been validly formed with CL, (5 marks) and; b. the conditional promise in relation to whether an enforceable contract exists and whether they would have been entitled to reject the offer from the television channel. (5 marks) B. Assuming an otherwise validly formed contract, advise Delta, Keith and Joel on whether CL repudiated the contract. (5 marks) C. Assuming an otherwise valid contract would have been formed, advise CL on the relevance of duress in vitiating the modified contract between him and Delta, Keith and Joel. (5 marks) D. Assuming an otherwise valid contract remained on foot, advise Delta, Keith and Joel on the relevance of frustration in validly ending their contract with CL. (5 marks) END OF EXAMINATION PAPER

EXAM CS AUTUMN 2012*