RMIT Classification: Trusted

RMIT
Classifi
cation:
Truste
Week 6: Term, Representations, and Incorporation
d
Tutorial Questions

Question 1

John signed a contract with his friend Hanh for buying her bakery shop in HCMC. The parties met, negotiated
and John agreed to buy Hanh’s bakery shop for $100,000. They signed an agreement as follows:

“John will pay Hanh $100,000 for the bakery shop at the address 123 Nguyen Hue Street, and Hanh will give
John complete ownership of the bakery and its contents. The parties will transfer ownership on Saturday, 16
December 2014”.

During negotiations John asked Hanh if she could include a pizza oven and bread slicers in the agreement and
she agreed. They did not put that sentence in the contract. John was very excited about buying the bakery shop
and because he was in a hurry and trusted his friend Hanh, he signed the contract without reading it.

When he got a hold of the bakery shop, he discovered that there were no pizza oven and bread slicers. He called
Hanh and asked her to deliver a pizza oven and bread slicers. She refused.

Required: John is very unhappy and wants to sue Hanh. Will he be successful?

Key legal issue: Did Hanh breach the contract?

Sub-issues:

- Did Hanh breach the written contract ? [NO] (‘he signed the contract’)

- Did she breach the incorporated terms? [YES]

- Did they have remedies? (Condition or Warranty)

Question 2

Tony has for many years operated a successful clothing manufacturing and importing business. His business
continues to grow and thrive, and he decides to extend his factory premises. Tony discusses with Brett, a
building contractor, his requirements and they sign a lengthy written contract in which the factory extension
will be constructed of solid brick with a slate roof and wooden window frames clearly listed as specifications.

The written contract does not mention a completion date. However, it is agreed verbally that the extension be
completed by 1 April 2020. Time of completion is critical, and Tony advises Brett that finishing on time is very
important because Tony needs to accommodate the new cutting machines that he has purchased and meet the
growing number of orders submitted by clients, including local retailers.
 RMIT Classification: Trusted
RMIT
Classifi
cation:
It is 1 September 2020 and Brett has not yet completed the building extension. Additionally, Tony
discovers that the terms of the contract
Truste relating to the materials used for construction of the roof
and the window frames are not being d complied with. The roof is being constructed of tin and
the window frames aluminium. The building itself is solid brick.

Required: Advise Tony of any contractual remedies he may have.

Key legal issue: Did Brett breach the contract?

Sub-issues:

-Did Brett breach the written contract? Yes

+term is broken -> materials analysis: Condition: enough for him to terminate + damages

-Did Brett breach an incorporated term? Yes

-Remedies: Condition: T+D

Question 3

Minh has just arrived in Australia from Vietnam. He speaks little English and has little experience of the
Australian educational culture. He has two small children who were about to enter primary school. One
evening, George, a salesperson working for Mannys Musical Superstore (Mannys), visited Minh and asked if
he could talk to Minh and his wife. After chatting for some time, George has successfully persuaded Minh of
the need to have a Yamaha Piano for his children. To encourage them to buy the piano he has repeatedly told
Minh and his wife falsely that having a piano was an essential requirement for their children to enroll in a
primary school in Victoria.

During the discussion, Minh also told George that he wanted a reliable and high-quality piano which could last
for at least 5 years. George assured Minh verbally that “Well, we are selling the best pianos in the world. They
are all made in Japan and could last for at least 10 years”.

Minh was very excited. He then signed a contract to buy the Yamaha Piano from George for $25, 000 without
reading the contract and without consulting anyone.

The piano was delivered to Minh the next day. When Minh first saw it, he touched the middle C Key on the
keyboard, and the whole piano was broken down and separated in two piles: timber and metallic components.
A small fire broke out. The guest room and the furniture in there were partly damaged. Minh suffered severe
injuries, including third-degree burns, to his head, face, arms and hands as a result of the fire.

An independent enquiry found out that the piano was not made in Japan, but Mannys imported cheap
components from a developing country in Asia and assembled it in Melbourne. The price that Minh had to pay
was also four times higher than normal market standards.

Advise Minh if he has any legal arguments against George under common law?

Key legal issues:

1) Did George breach the contract?

Condition: T+Ds

2) Unconciousibility
 RMIT Classification: Trusted
RMIT
Classifi
cation:
‘Minh has just arrived in Australia from Vietnam. He speaks little English and has little
experience of the Australian educational
Truste culture.’
d
-> Terminate only

3) Misrepresentation

False statement: ‘To encourage them to buy the piano he has repeatedly told Minh and his wife falsely that
having a piano was an essential requirement for their children to enroll in a primary school in Victoria.’

-> Terminate only

4) Unilateral mistake

Unknown materials (‘To encourage them to buy the piano he has repeatedly told Minh and his wife falsely that
having a piano was an essential requirement for their children to enroll in a primary school in Victoria.’ And
‘’)

-> Terminate only

Undue influence (optional because of unconciousibility)

Four times higher than normal market standards (unfair price: take any advantages)