AUSTRALIAN COMMERCIAL LAW

Subject: Business    / Management    

Question

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LAWS20058 AUSTRALIAN COMMERCIAL LAW

ASSESSMENT 1 TERM 3, 2015

Total : 20 Marks

Case Study 1 12 Marks

Arnold is purchasing officer of Jamco Pty Ltd, a company that makes and markets variety of fruit jams. Arnold meets Grace, the sales manager of Glassco, a company manufactures glass products.

Arnold says to Grace: “Can you supply Jamco with 100,000 standard bottling jars?

Grace agreed to supply the required quantity of bottling jars.

Arnold further said to Grace that he would prefer jars that contain some recycled glass which Grace agreed as she said their all glass jars are made with up to 10% recycled glass.

Arnold and Grace then both sign a written contract on behalf of the Company. It states that Glassco agrees to supply Jamco with 100,000 standard bottling jars for a price of $5,000. The contract also states: “The jars must be delivered to the buyer within 10 days of the agreement.” There are no other terms in the written agreement.

The 100,000 jars are delivered on time and Jamco pays for them. But when Jamco tries using them to bottle jam, the jars crack and break as soon as the hot jam is poured in. Arnold discusses this problem with Grace. She says standard jars are successfully used for many food products but they are not thick enough to resist the high temperature of freshly made jam.

Arnold discovers that the jars delivered to Jamco were made with only 2% recycled glass. He says this is not what was expected. And, since the jars are useless for bottling jams, Jamco does not want to keep them. Arnold wants to return the jars to Glassco and get back the money Jamco paid for them.

Question 1:

In this circumstances outline in the case which area of law provides Jamco with its most likely cause of action?

Question 2:

Assume that Arnold wants to prove what Grace said about Glassco jars containing upto10% recycled glass became an express term of the contract for the purchase and sale of the glass jars. Does it matter that no such promise was included in the written contract?

Question 3:

Assuming what Grace said about the percentage content of recycled glass did become an express term of the contract, is this term likely to be treated by a court as a condition or a warranty? Do the facts show that there has been a breach of this term?

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Question 4:

Assuming that Jamco can establish a breach of warranty by Glassco, what remedies are available to them?

Question 5:

Assume Glassco is in breach of a contractually binding promise that the jars were heatproof and that, as a result of this breach, Jamco is unable to bottle a batch of jam which has cost $5000 to make. Jamco offers to sell the whole batch to a biscuit maker at cost price, but the biscuit maker only offers $2000. If the jam had been bottled, the bottled jam would have been sold to retailers for $10,000.

Question 6:

If Jamco were able to establish only substantial performance of a condition of the contract, rather than complete performance, what remedies are available to Jamco?

Required:

With reference to relevant cases and legislation explain the above questions.

Case Study 2 8 Marks

HDFC Bank approved a five year fixed rate loan for Leo and Diana. At the time of the loan, the bank’s lending policy was to assess a borrower’s repayment capacity at 30% of their gross income. The bank knew that Leo and Diana’s repayments exceeded this amount, but notes on the application shows that this was discussed at the time and they both were comfortable with the required repayments. Leo and Diana had a good savings record and were able to prove appropriate security. Consequently, the bank approved the loan. Shortly afterwards, Leo lost his job.

Leo and Diana now argues that the bank should not have granted the loan as its terms were unreasonable and that the loan should be discharged.

Required:

With reference to common law and relevant cases discuss the rights and remedies for:

1) Leo and Diana

2) HDFC Bank

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Assessment Criteria

The term assignment will use the following assessment criteria:

Problem solving: The focus of many parts of the assignment is upon developing applied problem solving skills. This requires students to read and analyse fact scenario matrix and identify legal issues and apply these in conjunction with case law and or provisions of legislation to develop a reasoned outcome to the issue presented by the problem matrix.

Critical thinking: Students are required to critically analyse and evaluate information, facts and law in a problem solving context. The skills being emphasized involve the critical appraisal and reflection of legal issues and the application of case law and legislation against a factual matrix.

Information literacy: The assignment tests understanding and comprehension of critical legal knowledge and legal concepts discussed in the course in topics covered prior to submission of the assignment. Students need to develop understanding and familiarity with legal terms and words introduced in topics covered prior to submission of the assignment. This information understanding and literacy is tested in an applied rather than a descriptive context.

Information technology competence: This assignment tests student’s aptitude and capability to access web-based information and resources. Competence in producing academic written work with use of technology forms part of this assignment exercise.

Ethical practice: In formulating response to questions in the assignment students are exercising judgement and weighing possible courses of action in resolving on particular outcomes to legal problem solving questions. This process indirectly applies ethical practice in action.

Student are expected to go beyond textbooks to answer their assessment questions. Use of online databases such as Austlii is recommended for your research.

Students are expected to go beyond their textbooks to answer this assessment questions.

The word limit is maximum 2000 words and is due on Thursday 17 December 2015 at 5.00pm AEST on Moodle. Students please note that there is no extension to this due date. If you cannot submit your assessment on time you should be prepared to miss 20 marks. All extension applications will be handled by the Course Coordinator only.