In this tutorial we are discussing questions from past exam

papers and attempting to “pick the issues”. What follows

is not a set of fully worked out solutions, but rather a guide
to approach, focusing on building those skills of question
selection, reading and answering which you will need in
the exam.

Exam instructions

Review the exam instructions and make sure you are

familiar with what to expect: 5 questions out of 6 options.
Work out your timing for each question before you go into
the exam and stick to it. Five mediocre answers are
always better than one brilliant essay and four non-
attempts.

Question 1

Arthur took his car to be repaired at Miller's Garage Ltd

(MGL) on 1 February 2002. It was agreed that the repairs
would be completed in time for Arthur to collect the car the
next day at 9-00 am.
Note the contract between the parties for the car to be ready to collect at
9.00a.m.
Arthur told MGL that the car had to be ready by that time
as he needed it to drive to a town about 80 kilometres
away to exchange contracts for the purchase of a block of
land from Vicky who was prepared to sell it to him for a
price that was $20,000 below market value.
Note what Arthur stands to lose if he doesn’t exchange contracts. Is he
losing money or the chance to make money? You need to look at the facts
of the question very carefully.
Arthur also told MGL that Vicky insisted that she would only sell the land to Arthur if
Arthur exchanged the contract for sale by 10-00 am on 2 February 2002.
Note that Arthur has told MGL at the time of making the contract why he
wants the car ready by 9 and what he stands to lose if it is not ready.
Why is his statement to MGL important and why is its timing important?
Look at the time Arthur wants the car ready. Look at the time he wants to
exchange contracts with Vicky. Look at the distance he needs to travel.
Always ask yourself when reading a problem question, why is the
examiner telling me this? Why is it relevant? Occasionally it won’t be
relevant – but consider relevance first before ignoring information.
When Arthur called in on 2 February 2002 to collect his
car from MGL, he discovered that the repairs had not
been completed on time. In fact the repairs were only
completed at midday on that day.
Remember the terms of the contract: this is the breach.
As a result of not having his car Arthur was unable to
exchange contracts with Vicky because there was no
other way to get to Vicky's place except by private
transport.
Can Arthur mitigate his loss? He needs private transport to get to Vicky
in time.

In relation to the above facts:

This question is divided into 2 parts each worth 10 marks. Each part has
different facts for you to work with. Allocate your time so you cover each
part equally.

(a) (a) What damages for breach of contract, if any,

can Arthur recover from MGL in relation to the fact
that he was unable to exchange contracts with
Vicky? (10 marks)

The breach of contract is given to you. Do not discuss

whether there is a contract or whether it has been
breached. The question directs your attention to the loss
suffered because Arthur was unable to exchange
contracts with Vicky - do not consider whether any other
loss was suffered as a result of the breach. (Just as you
must read the facts carefully, you must also read the
question carefully.)

What is the general law with respect to damages? What

issues with respect to damages will you have to consider?
What cases will you use as authorities, to support your
argument?

What loss did Arthur suffer? Has he actually lost $20,000

or only the chance to make $20,000? How certain was the
chance? (Look at the timing – he gave himself only one
hour to travel 80kms)
Is it certain that if Arthur’s car had been ready he would
have been able to reach Vicky and exchange contracts in
time. (Chaplin v Hicks; Howe v Teefy)

Consider the rules in Hadley v Baxendale.

Does this loss arise naturally from the breach?
Was the loss actually contemplated as a probable result of
the breach?
Consider the extensive communications between Arthur
and MGL about the exchange of contracts. MGL must
have known.

Could Arthur have mitigated his damage? The question

tells us that Vicky is only accessible by private transport –
what options did he have to get to Vicky in time?

What is your conclusion?

(b) Would your advice in (a) be any different if there was

a large sign at the entrance to MGL's premises which said:
'MGL excludes all liability for any losses suffered by its
customers in the event of any breach of a contract
between MGL and any of its customers for repair of
vehicles owned by such customers'? (10 marks)

This part is introducing new facts, do not rewrite your

answer to part a) and look at the issue of damages again.
Essentially the question becomes, could MGL exclude
their liability for damages by the sign?
What is the general law with respect to exclusion clauses?
What issues with respect to exclusion clauses will you
have to consider?
What cases will you use as authorities, to support your
argument?

Has the exclusion clause been incorporated into the

contract between Arthur and MGL?
• Did the clause form part of a signed document?
• Did Arthur receive notice of the clause at or before
the time the contract was made? Consider it was at
the entrance to the premises and he would have had
to see it as he entered. There is nothing in the
question to indicate it was obscured.
• Did Arthur have a course of dealing with MGL
sufficient that he would or should be on notice about
the clause (assuming of course, that the sign is not
new, and there is nothing in the question to suggest
that it is.) Consider whether there is any evidence in
the question of prior dealings between Arthur and
MGL.

Assuming that the clause has been incorporated into the

contract by notice at time of entry to the garage, how
would it be interpreted? What are the general principles of
interpretation? What cases will you use as authorities to
support your argument?

Look at the wording of the clause. Is there any ambiguity

in the wording? If so, it will be interpreted strictly against
MGL (contra proferentem). The clause applies to any loss
suffered by customers from a breach of a repair contract.
Is this the loss suffered here by Arthur?

What is your conclusion?

Question 2

NOTE: Just because this question contains a boat called

The Himalaya don’t assume that the question necessarily
contains a Himalaya clause. The names of parties (or
boats) in contract questions are not necessarily clues as
to issues raised by the question.

Mark entered into a contract with Harbour Pleasure

Cruises Ltd (HPC) for the purpose of hiring one of HPC's
cruise boats, the Himalaya, between the hours of 7.00 pm
on 31 December 2001 and 3.00am on 1 January 2002.

Note the period the contract is to cover and the parties to the contract.

At the time of contracting Mark advised HPC that the

hiring was so that Mark and his wife Wendy could enjoy
an evening on Sydney Harbour and have a prime position
to view the fireworks display that was to be held that
evening as part of the celebrations welcoming in the year
2002.

Note that Mark has explained the reason for the hire at the time of
entering the contract.

The agreed hiring fee was $5,000 which was paid on the
date of signing the contract. In return for that fee HPC was
to provide the cruise boat Himalaya, a licensed captain to
drive the boat, and a chef to prepare a set meal for Mark
and Wendy.

Note the terms of the contract.

When Mark and Wendy turned up at the appointed time to

begin their cruise on the Himalaya, HPC advised them
that they were unable to carry out their contract with Mark
because they had hired the boat to another person earlier
that day for that day and evening.

In relation to the above facts:

Each part of the question must be answered, but note that they are not all
worth the same number of marks. Allocate your time according to the
marks.

(a) What damages, if any, would Mark be able to

recover from HPC for breach of contract? (8
marks)

You are not asked to decide whether there is a breach of contract. You
are asked to accept the breach as given and look only at the damages.

What is the general law with respect to damages? What

issues with respect to damages will you have to consider?
What cases will you use as authorities, to support your
argument? This question is worth 8/20 marks – would you
have time or would it be appropriate to consider all of the
law of damages or should you quickly review it yourself
and select the relevant issues for discussion here?

Look at the terms of the contract and the loss suffered by

Mark. What aspect(s) of that loss will sound in damages?
Consider the costs of the hire, $5,000, and then whether
he can recover anything for non economic loss, ie. Loss of
enjoyment etc (Baltic Shipping v Dillon). After deciding
whether or not damages for non economic loss are
available, next consider whether such loss is too remote
from a contract for the hire of the boat. What was
communicated at the time of making the contract?
Consider the second limb in Hadley v Baxendale.
 (b) Does Wendy have any claim against HPC? (5
marks)

Note that this part is worth 5/20 marks.

Look carefully at the facts of the question, and the contract
in question. Wendy is not a party to the contract. The
contract is between Mark and HPC. What is the law about
claims by people who are not parties to the contract?
(Doctrine of privity.) Are there any exceptions? Consider if
Wendy can claim under one of the exceptions to the privity
rule; e.g. is she a joint promisee under the contract? (They
were both to enjoy an evening on Sydney Harbour; the
chef was to prepare dinner for Mark and Wendy.) Look at
Coulls v Bagots Executor.

(c) Would your advice in (a) above be different if, on

the day that Mark and Wendy turned up to begin
their cruise, they were advised by HPC that the
cruise could not take place because on the
previous day the Himalaya had been destroyed by
terrorists? (7 marks)

Note that this part contains new facts and is worth 7/20
marks. The breach is no longer because HPC has hired it
to someone else but because the boat has been
destroyed.

The question is asking you about damages, as in question

(a) above. But the facts also raise the question of whether
the contract has been frustrated. What is the general law
with respect to frustration? What issues with respect to
frustration will you have to consider?What cases will you
use as authorities, to support your argument?

Is performance now impossible? Look at the contract – it

is for the boat, the captain and the chef.
Is the fact that the boat is not available, a supervening
event such that the contract cannot be performed or, if
performed, is radically different from that which was
contemplated by the parties? Caldwell v Taylor.

Is the entire underlying purpose of the contract impossible

or is there part that can still be performed? (Herne Bay v
Hutton; contrast Krell v Henry)
Note that the purpose was made clear at the time of
hiring- it was to see the fireworks from the boat. Are the
fireworks still able to be seen by Mark? Can the chef still
cook Mark and Wendy dinner?

If frustrated, what is the outcome for the parties? What

about the $5,000 already paid? Consider the Fibrosa
case (total frustration required) and finally consider the
Frustrated Contracts Act 1978.

Question 3

Answer BOTH parts of this question. Each part is worth 10 marks.

Note you have been given the first part of a two part question.
Remember, in an exam you would have to answer both parts of the
question. The questions are separate questions and do not relate to each
other – treat them as two separate essays. As they are worth half a
question each, allocate your time accordingly.

(a) Under the terms of the Rare Books Act, 2001 (‘the Act’), it is an
offence, punishable by a fine of $500 for a person in the course of
their trade or business to buy or sell, agree to buy or sell, or
otherwise deal in, rare books without a licence issued pursuant to
the Act. A rare book is defined as any book listed in the schedule
to the Act.

Note this is not a statutory interpretation question. It will require you to

look at and assess the statute and perhaps use some of the techniques you
have learned in Legal Institutions, but you do not need to go through the
section and apply the rules of interpretation in detail.
 Bill, who has no licence, but who occasionally sells books in his
antique store, contracted to buy for his business, from George, a second
hand, multi-volume encyclopaedia on American military involvement in
Central America during the nineteenth century for a sum of $1,500.
Note that Bill has contracted to buy a book from George. Bill is not
buying the book for personal reasons, but in the course of his trade. He
is thus required by the Act to have a licence to buy rare books, but he
does not possess such a licence. (Note: the section covers ‘agree to buy’)

The terms of the contract were that Bill would take immediate delivery
of the encyclopaedia, but that title to the books would not pass until the
last of three equal monthly instalments was paid.
Note when title to the books will pass to Bill.

The encyclopaedia was listed in the schedule to the Act as a rare book.
So you do not need to consider whether the books are ‘rare’ within the
Act. All elements of the section are now satisfied.

After receiving one monthly instalment payment, George decided he did

not want to sell the encyclopaedia to Bill. He is prepared to give Bill
back the first instalment. Bill wants to proceed with the purchase, as he is
confident of making a tidy profit by selling the encyclopaedia though his
business.

Only one payment has been made so consider whether title has passed.

George seeks your advice as to whether he is legally obliged to

proceed with the contract with Bill or whether he is able to reclaim
the encyclopaedia from Bill.

This is only half a question. So allocate your time accordingly.

Look at the current state of performance of the agreement. It has not been
completed and title has not passed.
Consider the status of the books being sold. They are rare books under
the section, and so cannot be bought or sold without a licence. Bill does
not have a licence. A fine is prescribed if the section is breached. In
contracting to buy the books, has Bill breached the section? If so, what
is the effect of such a breach?
Does it mean that the contract between Bill and George is illegal?
If so, where does that leave George? Can title pass to Bill? Is the contract
enforceable by Bill? (Yango v First Chicago)