LW 201: Contract Law 1

Faculty of Arts, Law and Education/ School of Law

Final Examination
Semester 1 2016

Face to Face & Online Mode

Reading Time: 10 minutes

Writing Time: 3 hours

Instructions:

2. This exam has four (4) questions. You must answer ALL four (4) questions.

3. This exam is worth 50% of your overall mark.

4. This is a closed book exam. No materials apart from writing equipment and a
wristwatch are permitted in the examination room.

5. All problems are based in the fictitious jurisdiction of Pacifica. This jurisdiction has
adopted English common law, and finds decisions from Australia, New Zealand and
other Pacific countries to be highly persuasive.

6. Support all your answers by reference to relevant cases and/or legislation.

7. You cannot write anything during the reading time.

Question 1 12.5 Marks

Beat Taekishi is the owner of Beats Fruit and Vegetables which sells fruit and vegetables to customers
in Pacifica. Beat meets with King Musashi who is a general supplier of food in the South Pacific. After
discussing the type of food that King could supply, the quantity that Beat wants and the price, Beat
enters into a 12 month contract with King to be supplied monthly with a shipment of 500 kilograms of
bananas and pineapples. The price for each delivery is agreed to be $500. They both sign a written
contract containing these terms.

When Beat receives the first months delivery, he discovers that the fruit is not fresh enough for
customers to want to buy because it will expire in the next 3-4 days. Beat complains that most of his
customers will not want to buy it because they want fruit that has at least one week to expire. However,
King says that in the food supply trade it is normal for someone like Beat to pay at least double what
Beat agreed to under the contract if he wanted fruit with a one week expiry. There was no discussion
between them before entering into the contract as to how fresh the fruit would be nor was anything
about this this written into the contract.

Advise Beat if there is any way that a term about the fruit having a one week expiry from delivery could
be considered to be part of the contract.

Question 2 12.5 marks

Mola operates a tourist souvenir shop in Pacifica and needs a new supplier of carved wooden souvenirs
to sell to tourists when they arrive in Pacifica on cruise ships.

Mola approaches a wood-carver called Tor and discusses entering into a contract with him to supply
wooden souvenirs. Mola promises him that in exchange for Tor producing a set quantity of wooden
carved masks, war-clubs and ornaments each month, Mola will pay him a monthly set price each month
for 12 months. They agree that Tors solicitor will write these terms into a contract and they will sign it
before it comes into effect. Tors solicitor drafts the contract; Tor signs it and sends it to Mola for
signing.

Mola then contacts Tor and says Listen, I still want to sign the contract, but I should tell you that since
we spoke, I am also negotiating with another wood-carver. But it depends on what he wants for a price,
so if it does not work out with him, then I will let you know and sign the contract.

Tor thinks about this and decides go ahead to buy wood and employ workers to produce the first
months quantity of souvenirs to improve his chances of Mola signing the contract. But when Tor
delivers it to Mola, Mola says Listen, Im sorry, Ive decided to sign a contract for the 12 months with
the other wood-carver. When Tor gets upset, Mola says Im not liable; I did not sign the contract with
you.

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Advise Tor if he can argue that the oral contract is binding, or if he can use promissory estoppel to argue
that Mola is bound by his promise to enter the 12 month contract.

Question 3 12.5 marks

Toasi has worked overseas for many years and had finally come home to Pacifica to build a house on a
block of land which he owns. He negotiates with a professional builder named Koroa about entering into
a contract for Koroa to build the house.

Over the course of a week they write down terms into a contract which they agree on regarding the
design of the house, the time it will take to build, the cost of materials and the price for Koroas time
and labour. Toasi is still not sure about proceeding but then asks Koroa Will you include a 5 metre
swimming pool in the price? Koroa says Ok, sure. On hearing this Toasi immediately signs the written
contract and so does Koroa, without writing this conversation into the contract. Toasi goes back
overseas expecting the work will be finished when he returns.

However, when Toasi comes back 3 month later, he finds that whilst the house has been built, there is
no swimming pool. When he complains Kuroa says I was losing money on this job, if you wanted this
pool you should have paid more. Toasi also discovers that the contract contains the term This contract
represents the entire agreement between the parties and the parties will not be liable for anything
otherwise agreed outside of this contract.

Advise Toasi whether there is any way he can argue that Koroas statement to build a swimming pool
was either a term of the contract or formed a separate contract.

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Question 4 12.5 marks

Answer any 2 sub-questions. Each is worth 6.25 marks

Question 4(a) (6.25 marks)

Corrin states that the English common law presumption that domestic and social agreements are not
intended to have legal force can easily be rebutted. In light of recent Pacific case law do you think it can
be argued that some courts in the Pacific are evolving English common law rules and principles to take
into account the impact of Pacific cultural attitudes about family?

Question 4(b) (6.25 marks)

Tokelau has partially codified contract law through the introduction of the Contract Rules 2004. Do you
think this approach could usefully be introduced in other jurisdictions in the Pacific, or is it better to
leave contract law to common law?

Question 4(c) (6.25 marks)

How do you think the objective test of contract formation should be applied in your country in order to
take into account the local context?

Question 4(d) (6.25 marks)

In your opinion should Pacific jurisdictions introduce legislation to modify the common law doctrine of
privity of contract? Why/why not?

THE END

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