Sydney Law School Writing Guide – Problem Questions -Torts 2018

Guide to Writing Responses to

Legal Problem Questions
This document is an earlier version of a resource that can be found on
Canvas under the tab “Learning Writing Resources > Problem Questions”
which provides guidance to students about legal writing and other legal
skills. https://canvas.sydney.edu.au/courses/11474
Remember that generally, good ‘legal’ writing is simply good writing. Good
writing is clear (well structured, with smooth transitions and appropriate
vocabulary), accessible (written in plain English, engaging), and attentive
to purpose and audience.

Contents
A.1. What is a problem question? ........................................................... 2
A.2. Why are problem questions given as assessment tasks? ................. 2
A.3. How do I approach a problem question? ......................................... 3
A.4. How do I write the answer to a problem question?......................... 8
A.5. Different approaches? ................................................................... 10
A.6. Samples – problem questions – tort law........................................ 10
A.7. Samples – problem questions – contract law ................................ 19

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 Sydney Law School Writing Guide – Problem Questions -Torts 2018

Note that this section [of Sydney Law School’s Legal Writing Materials] replicates a
handout ‘Answering Problem Questions’ provided in the Torts unit of study, developed
over many years with contributions from a number of academic staff at Sydney Law
School at different times.

A.1. What is a problem question?

A problem question is normally based upon a fact scenario that could occur in real life. It is
designed to let students demonstrate their capacity to identify legal issues and find the relevant
legal principles in primary materials, their understanding of a particular area of the law and
their skills in applying the law to a particular fact scenario in order to reach a conclusion about
the likely or reasonably arguable legal outcome.

Problem questions are often posed as assessments in law school, either in the form of take-
home assignments or in sit-down exams. You are asked to provide a response that is often
framed as an advice. eg Advise Peter whether he could succeed in a claim against Jana. This
form of assessment is sometimes called an ‘issue spotting’ exercise because the goal is to spot
and address each issue raised by a given fact scenario. However there is more to a good
response to a problem question than simply identifying all the legal issues that arise from it.

Problem questions are often provided as a law school assessment because they reflect the
typical activity in which most legal practitioners engage: the provision of legal advice. In
essence, the response to a problem question should take the form of an advice that is a balanced
and objective analysis of the current law as applied to the fact scenario. It should conclude with
a view of the likely outcome of the client taking, or themselves being subject to, legal action.

A good problem response will be logically structured, accurate, clear and comprehensive, with
each major issue dealt with systematically. Not all issues raised by a problem question will
deserve equal treatment, and students need to demonstrate good judgement in deciding which
issues are most important and require the deepest and lengthiest analysis. To reach a conclusion
about how the law would apply to a specific fact scenario, the problem should normally be
analysed using an IRAC (issue, rule application, conclusion) approach. This approach is helpful
for considering every issue, but there may well be some overlap between issues, meaning that
several issues can sometimes be addressed concurrently.

A.2. Why are problem questions given as assessment tasks?

Problem questions are frequently used in teaching law and generally follow the format of
asking students to discuss the legal consequences of a particular fact situation — often in the
style of advising one or more of the parties. Problem questions exercise and test students’
understanding of the legal principles in an area of the law, their ability to apply principles to
new facts and to present an answer logically. They are often designed to highlight difficult or
unresolved areas in the case law, and so require students to assess the different sides of a
particular issue.

In many ways, problems help develop the sorts of skills required by lawyers who must give
advice to clients based on their description of an event or dispute, or, in the case of judges, who
must make legal determinations based on the factual issues.

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However, hypothetical problem situations differ from the real situation of advising clients
because in the real world there are a range of other factors which may be equally as important
as the abstract application of legal principles. For instance, the cost and inconvenience of
litigation may mean that the best advice is not to pursue the matter, or to seek an out-of-court
settlement. Alternatively, in real life the facts have to be proved, so weak evidence or poor
witnesses may be detrimental to the case despite the strength of the legal argument. Sometimes
it is important to remember the full context of real legal problems, and in certain assessment
tasks or Units of Study students may be asked to take these things into account in answering
problem questions. It may ask you to give some informed commentary on the current
desirability or clarity of the current law, where you would be expected to draw on secondary
commentary as well as giving your own views.

Generally, however, the assessment task will at least start by simply requiring you to apply the
law to the facts as stated. Any extrinsic tasks, such as those listed above, should be expressly
stated as required by your lecturer or tutor or in the assignment itself before becoming a major
focal point of your response.

Problem questions are marked in reference to the assessment grading guidelines set out in each
unit of study outline. They may include some research component, requiring you to look further
than the sources set out in the course guide, or they may simply require you to answer the
problem on the basis of the prescribed materials. Obviously, a problem question set in an exam
assesses your understanding only of the prescribed materials that are listed in the course guide.

A.3. How do I approach a problem question?

There are some basic steps you can take to develop a thorough and logically presented problem
question response. Breaking the process into steps helps the writer avoid the feeling of being
overwhelmed by detail, and helps to ensure the issues are dealt with systematically and
comprehensively. You may feel that sometimes the process of separation — issues from
principles, principles from discussion or conclusion — is a little artificial. You are right, but
bear in mind that it is merely a method or tool to help you think things through thoroughly and
systematically.

In brief, the steps involved in analysing a legal problem are: identify the material facts and the
legal issues they raise, set out the relevant legal principles, give the “authority” for those
principles (i.e. give the reference or source- case law or a statute or in the absence of such a
primary authority, the views of a secondary authority such as a textbook), and apply the legal
principles to the facts. This is what judges do when they have to decide a case and when you
are reading cases you will see that some judges do this more clearly than others! Of course
judges have to come to a decision, whereas, as a lawyer or adviser, your task is to anticipate
and analyse the legal arguments from all parties and give advice on the likely success of those
arguments.

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Quick Tips

• Plan your answer

• Use headings
• Note what the question asks you
• Raise all the issues, even if they seem unimportant (but weight them by importance)
• Summarise but don’t repeat the facts, and only when necessary to let the reader know which issue
you are addressing
• Cite case authorities for propositions of law and refer to relevant statutory provisions
• Don’t go into all the legal principles or cases in detail unless crucial to resolving the issue

A.3.1. Preparation

Before you attempt a problem-based assignment, we would strongly advise you to do a general
survey of the legal principles which relate to the problem. This would be best done by
consulting one of the leading textbooks in the field and reading some of the leading cases, or
reading through applicable legislation. By doing a general survey first, you will get an idea of
all the potential issues that may arise and will be thus be better equipped to identify them as
issues in the particular problem. The general survey is also useful for your overall knowledge.
Remember of course that textbooks get out of date and that there may be important decisions
bearing on the issues which have been handed down since the book was published or which
may have been referred to in classes. Depending on the task, you may need to use your legal
research skills to check recent developments, such as whether the relevant cases or legislation
have been applied or considered in recent cases.

It is also worth considering not just the individual topics assessable in the problem question
response, but rather, the overall approach to a particular subject. For example, the course of
Public Law can be structured around the following topics: 1. Types of public power 2. The
source of each power 3. The limits on each power and 4. The avenues for challenging each
purported exercise of power. If the course has underlying themes and considerations then these
themes may inform the manner in which students approach the assessment task given,
including problem question responses.

A.3.2. Read the question

Read the question slowly and with attention. You pick up most of the nuances of the question
when you read it the first time and you should note these as you are reading. Try not to be too
critical when you read the question — read for information rather than trying to work out what
all the issues are. Do you completely understand the facts? Do any facts appear to be missing
or assumed by the question? Do the facts resemble a decided case?

Then read the question again! Pay attention to what it is, specifically, you are asked to do. You
may be asked to advise a particular party, or to advise generally. Or you may be asked particular
questions. Do not adopt the role of advocate to party A if you have been asked to advise
generally and vice versa. If something is given as a fact, you do not need to question its validity
— eg if you are told there is a contract, you do not need to consider the rules of contract
formation. If you are told someone was negligent, you can accept that fact as proven.

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If you are asked to advise the parties or discuss the issues that arise, remember that you are not
being asked to write the court’s judgment. You do not have to decide whether someone was
negligent or whether they did in fact cause the damage. Rather, you are advising the parties on
certain and uncertain aspects of the law, about relevant principles of law, about how the court
would determine issues of law and fact, and about how the principles or statutory provisions
might apply to your party’s situation.

A.3.3. Who are the parties?

Ascertain the possible permutations of parties — who has a claim against whom? Some of
these may be irrelevant if you are only asked to advise one party. Who will be the plaintiff and
defendant in your answer?

A.3.4. What are the possible causes of action?

Ascertain the law relevant to each claim. A legal remedy will only be available if the plaintiff’s
claim can fit a particular ‘cause of action’, such as trespass to land (torts) or promissory
estoppel (contracts). At this stage, brainstorming is better than trying to narrow down the
answer — list all causes of action that you think might even vaguely be relevant. Even if it is
unlikely that a claim or defence will be successful in the end, marks are often awarded for
recognising the possibility of a particular argument. Think how you would feel if you were a
client: you might wish to know why a particular cause of action or defence would not be
successful, as much as why one would be. For example, contributory negligence cannot
generally be raised as a defence to an intentional tort. That does not mean you have to list every
possible tort action or defence just to dismiss it: you should concentrate on the arguments that
might be raised on the facts. To be comprehensive you need to think of everything, but it is
then crucial that you exercise judgement in determining which actions are the strongest (and
which issues are likely to be the most contentious) and focus on those.

A.3.5. What are the requirements for each action?

Summarise the elements of each cause of action and note the relevant case authorities. The
elements of a cause of action are the steps or requirements that need to be satisfied in order to
prove that cause of action. For example, in order to prove a claim of negligence, the elements
of duty of care, breach of duty, causation and remoteness must be satisfied.

If the choice of principle depends on how the facts are interpreted, or the principles are
unresolved in the case law, list them all — that is, don’t get ahead of yourself by guessing
which principles will or won’t be relevant before you try applying the law to the facts. Are
there any defences available, or any special issues relating to remedies?

A.3.6. Are the elements satisfied?

Apply the law, element by element, to each set of facts and assess whether each is satisfied
(yes, no or maybe). Even if there is an obvious yes or no answer to one element (eg the entry
of Zula into the house of Yorrick clearly satisfies the ‘land’ element of trespass to land, as
houses are fixtures), include it anyway (but only briefly). If the answer is less obvious, but
there are no ambiguous issues, cite the case which supports your application of the law. If the
answer to one element is ‘yes’, continue working down the list. If one element of a cause of
action is not satisfied, then it will fail and you should move onto the next cause of action. But

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be careful in reaching this conclusion, particularly where the limits of elements such as duty of
care in negligence (torts) or unconscionability (contracts) are notoriously uncertain and well
worth arguing about.

If there is a ‘maybe’, an issue arises which will require interpretation of the law and/or the
facts. Issues are thrown up where the law is ambiguous or unclear: the facts of the problem are
usually chosen to highlight that ambiguity or uncertainty.

It may be appropriate to speculate about facts which are not given or which are unclear as this
may change the application of the law and the nature of your advice.

A.3.7. What are the issues?

Where it is unclear whether a particular element will be satisfied on the facts, formulate the
issue as a question which identifies those facts needed to satisfy the element. Try to express
the question at the most detailed level possible. For example, instead of ‘Is Michael trespassing
in Janet’s room?’ put ‘Does Janet, as a child in her foster parents’ house, have sufficient
possession of her room to support an action of trespass against Michael?’

In identifying the issues, consider the range of possible meanings for the statutory provision or
common law principles and how they relate to the possible interpretations of the facts. You
may also consider the generic usage or dictionary definitions of particular words in order to set
up arguments for and against each meaning of the ambiguous element.

Use common sense with regard to the amount of time/space you spend on the various issues
— obviously you will get more credit for how you discuss more difficult or controversial
issues. Your knowledge of the course will help you recognise these. Where marks are assigned
to each part of a question, use these as a guide for how much emphasis you give to each
issue. If a section is only worth 2 marks, even a Nobel-winning account of the issues will not
get you more.

This task of issue-spotting is a necessary, but not sufficient, requirement to achieve success in
a problem question response. That is, you will need to become adept at spotting the issues
within a problem question in order to move onto the next stage of determining and applying
the law relevant to the issues. However, it is this application stage where the most marks will
be awarded.

A possible method of usefully setting out these brainstormed issues is through diagrams and
mind maps. This may assist some students to visualise how issues and sub-issues fit together,
and how alternatives can emerge from different aspects of the issues identified.

A.3.8. What is the law relevant to the issues?

Set out the principles of law that are relevant to the issues you have identified, including the
cases from which they are drawn. Again, for your own benefit, write down as many as you
think may be relevant without jumping to the conclusion about which principle will be
applicable.

You may wish to identify those principles that are settled and those that are uncertain. For
example, you could write: ‘It is settled law that …’ or ‘It is well accepted that…’ or you could
write: ‘The law relating to…issue…remains unsettled/uncertain’ or ‘There are conflicting

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authorities as to whether ….issues…’ Professor William Morison, an eminent torts scholar

from this law school, used to advise students that it is as wrong to say that a rule is grey if in
fact it is black and white as it is to say that it is black and white when it is in fact grey!

A.3.9. Apply the law to the facts

Fact scenarios in problem questions often resemble decided cases, but are deliberately different
in key aspects. Consequently it is usually not possible to apply the principles directly to provide
a conclusive resolution of issues. Instead, you will need to make your own argument about
which precedent, if any, should be followed, and why. You may have to reason by analogy to
a case with a similar fact scenario and explain why the same (or a different) conclusion should
be reached. Akin to judicial reasoning, your arguments will be based on an analysis of
precedent, and/or an appeal to policy. (Looking at the way judges write their decisions will be
helpful in learning this skill.) Ask yourself, is this fact situation more like the one in case X or
case Y? How do they differ? Do they differ in relevant or irrelevant ways? What is the
important underlying principle which should be applied (or not)? Don’t forget the basic rules
of precedent, such as being aware of which jurisdiction the cases come from, or whether they
are Supreme/ High Court decisions.

Do not launch into an undirected discussion of principles, cases, social policy, etc; rather, refer
only to these sources to set the scene before discussion of an issue or in the process of assessing
the various arguments.

A.3.10. What is your conclusion?

Although it is not always necessary or possible to give a confident answer on the legal position
of parties, you should express an opinion as to the likely result if the matter was before a court,
or, if you are advising a client, her strongest argument for success, or, if appropriate, the
weakest parts of her case. Because you are not being asked to be the judge, you cannot decide
issues of fact which depend on a judgment about the evidence, eg as to whether the defendant
behaved reasonably. Remember not to be too certain about your conclusion — express it in
terms of likelihood or probability. It may be appropriate to refer to academic commentary and
policy discussions in supporting your answer.

If there is more than one issue for a particular cause of action, state a conclusion for the cause
of action as a whole.

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A.4. How do I write the answer to a problem question?

Most of the steps outlined in the approach section are designed to help you work out the answer
thoroughly, but the answer does not need to detail this entire process.

Problem question responses are marked in reference to the assessment grading guidelines set
out in each unit of study outline.

A.4.1. Structure and organisation

A.4.1.1. Headings and sub-headings

Organisation is important. While it might not be necessary in short responses, generally it is

helpful to use headings and sub-headings for different parties, causes of action and issues. This
will save a lot of words of explanation and assist the reader to follow your arguments. For
example:

ZIG v ALGERNON

Trespass to Land

Possession: Does Zig’s temporary presence on the land as a camper amount to possession?

A.4.1.2. Signposting

As with essay writing, use ‘signposts’ in your language to help the reader – e.g. ‘The central
issue is…’; ‘The only way that the contract will be enforceable is if….’

A.4.1.3. Introduction

Give a brief introduction to forecast the issues — that is, to indicate that the main focus of the
problem will be on assault/restitution, with uncertainty as to how particular facts may be
interpreted etc. (Note: you may not always need an introduction, or a long introduction,
depending on the structure of the question asked, and on the word limit you have been given.
There is no point including detail in an introduction which will be repeated in the text. A short
sentence outlining the issues to be raised may be enough. Or you may wish to go directly to
the first issue.)

A.4.1.4. Elements of the cause of action

For each party or cause of action that you are dealing with, state briefly the elements of the
cause of action, citing relevant case or statute.

Briefly state which elements are clearly satisfied or not satisfied. This indicates that these points
need no further discussion.

A.4.1.5. Issues

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Indicate that the remaining elements give rise to issues and briefly identify the issues. Then,
under separate headings, discuss each issue in turn:

1) Start with a statement of the issues in terms of law and the facts at issue
2) State the range of possible meanings or interpretations of the ambiguous provision or
common law principle
3) State arguments for and against each meaning, including a discussion of the relevant
authorities
4) Evaluate these arguments

The process of stating issues and facts may be repeated as you refine the issues, and reinterpret
the facts in light of the cases etc. Give the most space or time to the most controversial issues.

A.4.1.6. Conclusions

State an opinion or conclusion for each issue and then one for each cause of action overall, if
required, in the form of advice to the party.

A.4.2. Writing style, tone and purpose

Students should pay particular attention to the advice offered in the section of this resource on
general elments of good writing and particularly the direction to use plain English. Apart from
that advice, which is relevant for all forms of legal writing (problem questions, essays, case
notes etc), this section provides guidance in relation to writing in the third person; the level of
detail/explanation required; and discussing facts.

A.4.2.1. Writing in the third person

If asked to give advice, write in third person — eg ‘B will have an action for trespass/breach
of contract if…’ or ‘It is submitted that…’. Students should aim to write formally but clearly.
Starting a sentence with ‘I think’ is too informal for a problem question response and will not
accord with the rest of your response written in the third person.

A.4.2.2. Level of detail/explanation

As a guide to how much detail or explanation to include, assume that the reader is a lawyer,
but one without detailed knowledge of the area of law under consideration.

A.4.2.3. Discussing facts

In discussing the facts, it is sufficient to refer to the facts as stated in the question. Do not waste
words simply transcribing the facts! Do not invent additional facts! (This is distinct from
considering possible facts and their different outcomes where there are insufficient facts given
in the question to enable you to come to a conclusion. It is not helpful to say ‘it depends on
the facts’, but if there are significant ambiguities (and again, this is an exercise of judgement)
identify which facts would matter and why).

A.4.3. Use of authority: substantiation, quotations and citations

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In written problem assignments, you should give references for your sources in accordance
with the Australian Guide to Legal Citation, which can be downloaded at
http://www.law.unimelb.edu.au/mulr/aglc. In a handwritten exam, you should simply
underline case names and other sources for clarity, but full references are not required.

A.5. Different approaches?

Your approach will need to change for different types of assessment (sit-down exam or take
home assignment). If the problem question is set in examination conditions, you will only have
very limited time to analyse and answer the question. The general survey of the law on which
your answer will be based will be what you have learnt in classes — lectures and tutorials —
and in your private study, reading and revision. Examinations aim to assess you on what was
taught and set as reading for the course, so in preparing for an exam you need to pay close
attention to the syllabus for that course, plus what was emphasised by the lecturer in classes.
The problem question will require you to demonstrate that you understand the structure of the
law and fundamental issues in a particular legal field, and will probably also include a number
of difficult issues where the law is complex or unsettled. You should spend at least the reading
time working on the structure of your answer before putting pen to paper and use headings
generously to indicate to the examiner which parties you are referring to, and what aspects of
their claim or defence.

In written problem assignments, you should give references for your sources in accordance
with the Australian Guide to Legal Citation which can be seen at
http://www.law.unimelb.edu.au/mulr/aglc In a handwritten exam, you should simply underline
case names and other sources for clarity, but full references are not required.

A.6. Samples – problem questions – tort law

This section contains a torts problem question broken down into its constituent elements. (For
samples of answers to a contract law problem question, separated by grade, see A.7, below.)
Samples should be read in conjunction with the assessment grading guidelines set out in each
unit of study outline.

A.6.1. Breaking down a problem question

Note: This question was set some years ago when Ellis v Wallsend District Hospital was
extracted in the prescribed casebook for the Torts course (an extract is now in the
supplementary materials in the Course Guide). The answer has been updated to include
references to the Civil Liability Act 2002 (NSW) to illustrate how you should refer to
statutes in your answers, and to High Court decisions interpreting that legislation.

The references in the footnote include some general references and some “pinpoint” references
(e.g. references which pinpoint the page at which a point is made in a judgment. Footnote 1 is
an example.) See Australian Guide to Legal Citation which can be seen at
http://www.law.unimelb.edu.au/mulr/aglc. You are advised to use “pinpoint” references
wherever possible. The prescribed casebook usually gives you the page numbers of the law
report of the extracted judgments in square brackets in bold so that you can provide pinpoint
references to the judgment you are citing or quoting.

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You may find it most helpful to read the sample answer (step 10) first and then work through
the solution technique to see how we arrived at the answer.

The Question

Camilla is a specialist surgeon employed by a public hospital ('the Hospital'). She examined
one of the Hospital's patients, Rubin, and recommended a diagnostic operation to ascertain
whether Rubin had a malignant growth affecting his prostate gland. Camilla did not inform
Rubin before the operation that there was a small statistical possibility (about 5 per cent) that
the operation, although skilfully performed, would cause permanent sterility. In failing to give
this information Camilla overlooked a written instruction by the Hospital to its specialist
surgeons prohibiting operations of this kind unless full information about associated risks had
been given to patients.

The diagnostic operation was performed skillfully by Camilla at the Hospital, after Rubin had
given his consent, and it was ascertained that Rubin did not have a malignant growth. However,
as a result of the operation Rubin became permanently sterile.

Advise Rubin of the principles of tort law relevant to any claim he may wish to bring against
the Hospital.

Solution Technique — Step by Step

1. Read Having read the question carefully...

2. Parties Rubin v Hospital

(Rubin v Camilla? Note this question only considers claims against ‘the
Hospital’ so claims directly against Camilla will not be discussed. Nor does
the question ask you to consider contribution or indemnity claims between the
Hospital and Camilla so this issue will not be discussed. If, on the other hand,
the question asked you to ‘discuss all claims between the parties’, you would
need to consider these other issues.)

3. Claims Rubin v Hospital

• Vicarious liability of hospital depends on

1. The existence of an employment relationship between C and the

hospital where C is an employee rather than an independent
contractor.

2. C’s tortious acts or omissions (see below) in the course of

employment

Torts committed by Camilla (if 1. above is established)

• Negligence

• Battery

• Direct liability of hospital in negligence

Note: if a question asks you to consider ‘claims’, your answer should also
consider any available or arguable defences. The question will generally
indicate whether you should discuss the assessment of damages in detail but if

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it does not say so specifically, much will depend on whether the facts given
raise issues relevant to damages.

4. Elements Vicarious Liability

This raises principles of the common law.

1. Employee and not independent contractor

2. Acts/omissions done in the course of employment (Bugge v Brown,

Deatons v Flew and later cases)

Negligence

Requirements

1. Existence of duty of care (here under an established duty category)

2. Breach of duty (by breaching standard of care required)

3. Damage or loss that is caused by the negligence and not too remote

Battery

1. Direct interference with the person

2. Intentional or negligent interference

3. Lack of consent

4. Can an employee be vicariously liable for an intentional tort of an

employee? ( Deatons v Flew, Prince Alfred College v ADC)

5. Elements Rubin v Hospital Result

satisfied?
Hospital’s Vicarious Liability

1. Employee rather than an independent contractor? — Probably, but use of ISSUE 1

term ‘employed’ not necessarily determinative.

2. In course of employment? — Probably, but issue of whether failure to ISSUE 2

observe instruction may take C outside the sphere of employment.

Camilla’s Negligence?

1. Duty of Care? — As a medical practitioner, there is a duty to take Yes

reasonable care and skill in the provision of professional advice or
treatment. There are three aspects of a doctor’s duty of reasonable care_
to diagnose, to treat and to give advice and information about proposed
treatment. (Rogers v Whitaker)

2. Breach of Standard of Care? — Apply common law principles set out in

Wyong Shire Council v Shirt, which are now reflected in s 5B of the Civil
Liability Act 2002 ( NSW). Note also s 5C.

Principle: For C, the standard of care required is that of an ordinary skilled

specialist surgeon exercising and professing that special skill (Rogers v
Whittaker). No

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Facts: (a) C performed the operation itself skillfully, so no breach of duty

in relation to the operation; however: ISSUE 3

(b) there was a possible breach of duty by C failing to disclose the risk to
R. How does a court determine whether the risk was one which C should
have warned R about? See principles set out in Rogers: was it a risk that a
reasonable patient would wish to be informed about before undergoing the
procedure?

Note and analyse the impact of ss 5O and 5P of the Civil Liability Act
2002 (NSW) on the issue of breach of duty by a professional person.
While Section 5O introduces a modified ‘Bolam’ test for medical
treatment, s 5P effectively preserves the decision of Rogers v Whitaker in
medical failure to warn cases. ISSUE 4

3. Damage? — Physical damage by being made permanently sterile;

emotional damage by not being able to have children, exacerbated if R is
young and likely to start a family (missing facts).

Causation? — Now consider causation principles in ss 5D and 5E of the

Civil Liability Act 2002 ( NSW). Only satisfied if R’s loss would not have Yes
occurred ‘but for’ C’s negligence (see also March v Stramare) Not certain
that this is the case. If the damage is caused by C, then it must also be Yes
within the scope of C’s liability s 5D. (Wallace v Kam)
ISSUE 5
Camilla’s Battery?

1. Direct interference — clearly satisfied as was an invasive surgical

procedure ISSUE 6
2. Intentional — obviously satisfied on the facts Yes
3. Consent — yes. Does it matter of consent was not fully informed?

4. If a battery was committed, can an employee be vicariously liable for an

intentional tort of an employee? ( Deatons v Flew, Prince Alfred College
v ADC) [Issue 4]

Hospital’s Direct Liability in Negligence

1. Duty of Care? — A duty exists for hospitals to select appropriate

employees and to supervise employees in order to provide proper
treatment/advice to its patients. Is this duty ‘non-delegable’ on the facts
and if so what effect does that have on its liability?

2. Breach? — No evidence that C was unqualified and hospital appears to

have given appropriate instructions. But if the duty to provide proper
care etc was non-delegable, the breach by C’s failure to ensure the risk to
R disclosed could be treated as a breach by the hospital.

3. Damage and Causation — as above.

6, 7, 8. ISSUE 1 — Is C’s relationship with the hospital one of employer/

Discussion of employee?
Issues
Principle: The totality of the relationship between the parties must be
examined (Ellis v Wallsend District Hospital (1989)). The question whether a

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 Sydney Law School Writing Guide – Problem Questions -Torts 2018

AND person is the employee of another is a question of fact (Zuijs v Wirth Bros
(1955)). The ‘control test’ is one relevant factor (Stevens v Brodribb
Individual Sawmilling Co (1986)) — whether the hospital is in a position to tell C how to
Conclusions work – as is the power to dismiss her for failing to comply with instructions
(Zuijs v Wirth Bros).

Facts: On overall facts, she is probably an employee. No additional facts

provided to clarify whether C conducting her own business as a surgeon, so
Ellis may be distinguished. On ‘control test’, the written instructions probably
provide evidence that hospital did exercise control over its surgeons.

Conclusion: On the facts, C likely to be considered an employee.

ISSUE 2 — Did C’s failure to follow instructions take her outside the
sphere of employment?

Principle: To have this effect, violation of instructions must make the

employee’s conduct so remote and disconnected from his or her employment
as to put him or her virtually in the position of a stranger (Bugge v Brown).

Facts: C merely overlooked the instructions, so unlikely to fulfil this extreme

requirement.

Conclusion: C’s omission was in the course of employment. Conclusion 1 & 2

taken together mean the hospital would be held liable for C’s tortious
acts/omissions.

ISSUE 3 — Did C’s failure to disclose possible risk breach her duty to
exercise reasonable care and skill in the provision of medical advice?

Principle: Doctors have a duty to warn patients of material risk. Material = if,
in these circumstances, a reasonable person in the patient’s position would, if
warned of the risk, be likely to attach significance to it; or if the medical
practitioner is, or should reasonably be, aware that the particular patient
would, if warned of the risk, be likely to attach significance to it (Rogers v
Whittaker). Note s 5P Civil Liability Act 2002 ( NSW) effectively preserves
Rogers principle, by providing that s 5O does not apply to the giving of advice
and information in certain circumstances which would apply here.

Facts: There were serious consequences in this case, so a reasonable person

would be likely to attach significance to them; argument is even stronger if R
young and likely to start a family (missing facts).

Conclusion: C has probably breached a duty to warn R of the risks of the

operation.

ISSUE 4 — Causation — Would R’s loss not have occurred ‘but for’ C’s
omission to warn of risk?

Principle: The test to determine whether R would not have suffered loss but
for C’s omission is subjective and a question of fact See Civil Liability Act
2002 (NSW) ss 5D (3) and 5E (See also Ellis v Wallsend District Hospital,
Rosenberg v Percival) Facts: Insufficient evidence to decide.

Conclusion: This issue is inconclusive, as more evidence is required. Given

that it might be possible to prove that R would not have gone ahead had he
known of the risk, and considering conclusion 4, a claim in negligence might
be possible.

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ISSUE 5 — Does the fact that R was not fully informed of risk affect his
consent to physical interference as a defence to battery?

5. Principle: There will be no battery if a medical procedure is outlined in

broad terms and consented to (Rogers v Whittaker: consent need not be
fully informed consent to be effective consent to a battery claim; failure
to give relevant information leads to a negligence claim not a battery
claim.)

Facts: Despite the omission of full details about the risks, the procedure was
outlined to R in its broad terms and consented to.

Conclusion: As it would be the physical procedure itself that would constitute

the battery, and not its possible consequences, the description of the procedure
is sufficient to give rise to effective consent.

Note: Because there was no battery, it is unnecessary to discuss when an

intentional tort committed by an employee will be treated as in the course of
employment.(Deatons v Flew, Starks v RSM Security, Prince Alfred College v
ADC (HCA, 2016) )

ISSUE 6 — Is the hospital’s duty a non-delegable one, thus rendering it

personally liable in negligence for the failure to disclose the risk?

Principle: Where a patient comes directly to the hospital for medical

treatment, the hospital owes a ‘non-delegable’ duty of care to ensure that the
treatment it undertakes to provide is performed with reasonable care (Ellis v
Wallsend District Hospital). It will be liable if its delegate (even an
independent contractor or an employee acting outside ‘the course of
employment’) was in fact negligent. On the given facts, Rubin came directly
to the hospital and the hospital chose C to carry out the surgery. So even if C
was an independent contractor, the hospital would remain personally liable to
R for the breach of its duty by its delegate.

Facts: As above in relation to C’s negligence, the hospital failed to ensure that
R was fully informed of the material risks of the procedure.

Conclusion: The hospital would be personally liable to R for the breach of this
duty of care, if, as above the element of causation can be established.

9. Overall Negligence
Conclusions
for each R has a good claim in negligence against the hospital, both in relation to its
Cause of vicarious responsibility for the negligence of C (assuming that she is taken to
Action be an employee acting within the scope of her employment) under common
law, AND direct personal responsibility in relation to its non-delegable duty to
its own patients, provided in both cases that the element of causation can be
proved.

Battery

A claim of battery would be unlikely to be successful as the failure to warn of

the risk of consequences of the procedure would not mean that R was unaware
of the nature of the physical interference, and so he would be considered to
have given effective consent to the procedure.

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10. A Sample Answer (note that there is no fixed formula for answering problem
questions: this is an example only and there may be other formats or styles of very good
answers.)

Rubin v Hospital

Introduction
[Note that the need for and length of an introduction depends very much on the word limit and task
you have been given. Do not repeat the facts other than to identify the part of the facts you are
discussing. There is also no need to repeat points you will make in the body of the answer or in your
conclusions. The introduction below is quite long. It could be reduced to “This advice will consider
whether the hospital is vicariously or personally liable to Rubin for any injury he sustained as a result
of not being informed of the risk of surgery carried out by Camilla.” Or you might even start an
assignment by getting into the first issue: “The first issue that needs to be determined on the facts is
whether....”

Rubin has suffered loss and damage by being rendered permanently sterile as a result of the operation
by Camilla. An action may lie in negligence or in battery against the Hospital, however before the
Hospital can be held liable for his loss it must first be established whether Camilla has committed any
torts in treating Rubin or failing to inform him of the risks of the procedure. If so, then the Hospital
may be vicariously liable for Camilla’s tortious acts or omissions. There may be a further basis on
which the Hospital may be held liable, namely if it is itself in breach of a non-delegable duty of care
to ensure that care is taken with respect to advice and treatment given to its patients.

Vicarious Liability of the Hospital

As a general rule an employer will be vicariously liable for torts committed (a) by employees (b)
during the course of employment, 1 but not for torts committed by an independent contractor. 2

(a) Employer/Employee or Principal/Independent Contractor?

The facts provided state that Camilla is ‘employed’ by the Hospital. The use of the term ‘employee’ is
not necessarily determinative. However it may be relevant along with other factors to establish that
Camilla is an employee and not an independent contractor. The totality of the relationship between the
parties must be examined. 3 The question whether a person is the employee of another is a question of
fact. 4

One relevant factor is whether the Hospital exercised control over Camilla.5 The ‘control test’ will be
satisfied if the Hospital is in a position to tell Camilla how to work. Although Camilla is a specialist
surgeon and therefore in possession of specialised skills not necessarily held also by Hospital
management, the control test will be met if the Hospital is entitled to tell Camilla how to perform her
duties and is able to dismiss her for failing to comply with instructions.6 The written instruction
prohibiting the diagnostic operation in fact performed in the absence of full advice of the risks is
evidence that the Hospital did in fact exercise control over all of its specialist surgeons. No additional
facts are provided to clarify whether Camilla was conducting her own business as a specialist surgeon
and using the facilities of the Hospital, as was the case in Ellis v Wallsend District Hospital. 7

1
Bugge v Brown (1919) 26 CLR 110, 116 (Isaacs J, Higgins J concurring).
2
Hollis v Vabu Pty Ltd (2001) 207 CLR 21, 36; Ellis v Wallsend District Hospital (1989) 17 NSWLR 553.
3
Ellis v Wallsend District Hospital (1989) 17 NSWLR 553.
4
Zuijs v Wirth Bros (1955) 93 CLR 561.
5
Stevens v Brodribb Sawmilling Co (1986) 160 CLR 16.
6
Zuijs v Wirth Bros (1955) 93 CLR 561.
7
Ellis v Wallsend District Hospital (1989) 17 NSWLR 553.

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However, it would appear that on the basis of the facts provided, Ellis v Wallsend District Hospital
may be distinguished and that Camilla was an employee.

(b) In the Course of Employment?

The Hospital will only be vicariously liable for the acts done, or omissions made, by an employee
such as Camilla during the course of her employment. 8 Camilla’s negligent omission would appear
clearly to fall within the scope of her employment. The only fact that may suggest that Camilla was
not acting in the course of employment is her failure to observe the written instruction by the hospital.
An instruction or prohibition may limit the sphere of employment, but to have that effect it must be
such that its violation makes the employee’s conduct so remote and disconnected from his or her
employment as to put him virtually in the position of a stranger.9 It is also of relevance that Camilla
did not deliberately disobey the instruction, but rather overlooked it. Consequently, if Camilla can be
found to have been negligent or to have committed a battery, the Hospital can be held vicariously
liable for her acts or omissions.

Camilla’s Negligence

The elements of negligence require that Camilla have breached a duty of care that she owed to Rubin,
where that breach caused his damage or loss.

Duty of Care

Camilla, as a medical practitioner, owed a duty to Rubin to take reasonable care and skill in the
provision of professional advice and treatment. 10

Standard of Care and Breach

The standard of care required is set by the common law and is that of the ordinary skilled specialist
surgeon exercising and professing to have that special skill. 11 While the Civil Liability Act 2002
(NSW) now provides that a professional person does not incur a liability in negligence in the course
of providing a professional service if it is established that the person had acted in a manner that, at the
time the service was provided, was widely accepted in Australia by peer professional opinion as
competent professional practice, 12 this provision does not apply to liability arising in connection with
the giving of (or the failure to give) a warning, advice or other information in respect of the risk of
death of or injury to a person associated with the provision by a professional of a professional
service. 13 The facts tell us that Camilla performed the operation skillfully and therefore discharged the
duty so far as it required her to take reasonable care and skill in the provision of medical treatment.
However it is arguable that Camilla breached her duty of care to Rubin by failing to disclose to Rubin
the possible risk, though small, of the properly performed procedure resulting in permanent sterility.

A doctor has a duty to warn a patient of a material risk inherent in the proposed treatment. In the
leading Australian case of Rogers v Whitaker, a majority of the High Court stated:
A risk is material if, in the circumstances of the particular case, a reasonable person in the
patient’s position, if warned of the risk, would be likely to attach significance to it or if the

8
Bugge v Brown (1919) 26 CLR 110; Deatons v Flew (1949) 79 CLR 370.
9
Bugge v Brown (1919) 26 CLR 110.
10
Rogers v Whitaker (1992) 175 CLR 179, Wallace v Kam (2013) 250 CLR 375
11
Ibid.
12
Civil Liability Act 2002 ( NSW) s 5O.
13
Civil Liability Act 2002 ( NSW) s 5P.

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 Sydney Law School Writing Guide – Problem Questions -Torts 2018

medical practitioner is or should reasonably be aware that the particular patient, of warned
of the risk, would be likely to attach significance to it.14

Given the serious consequences that would flow if the risk eventuated, it is highly likely that a
reasonable person would attach significance to the risk, or alternatively that Camilla should have been
aware that Rubin would be likely to attach significance to it. The case will be even stronger if Rubin
was young and likely to start a family.

Causation

Once it is established that a duty of care was owed and that it was breached, it must be demonstrated
that the negligent failure to advise of the risks caused the loss and damage Rubin suffered. Although
the ‘but for’ test was not the definitive test of causation at common law, with causation said to be
ultimately a matter for a common sense judgment, 15 the but for test was the starting point so that the
general rule was that Camilla’s omission will be treated as a cause of Rubin’s loss if it would not have
occurred ‘but for’ Camilla’s negligence. 16 The Civil Liability Act 2002 (NSW) now requires the
plaintiff to prove that the negligence was ‘a necessary condition’ for the occurrence of the loss. This is
the same as the ‘but for test’. 17 S 5D also requires that it is appropriate for the scope of the negligent
party’s liability to extend to the loss so caused. 18 If Rubin would have gone ahead with the operation
regardless then Camilla’s negligent omission did not cause the loss Rubin suffered. In determining
whether Rubin would have undergone the operation had he been informed of its risks, the test is
subjective. 19. This means that it must be determined, as a matter of fact, what Rubin would have
decided to do after being provided with the required information, not what a reasonable person would
have done. There are, however, insufficient facts to determine what Rubin’s response would have
been to the risk, if disclosed. Since the introduction of the Civil Liability Act 2002 ( NSW), post-
operative statements by Rubin on what he would have done if warned of the risk are no longer
admissible except to the extent that they are against his interests. Recently a judge of the New South
Wales Court of Appeal noted in obiter dicta that by virtue of this provision, a ‘Court will be deprived
of … indisputably relevant evidence.’ 20

Camilla’s Battery

The definition of battery is: direct interference with the person of the plaintiff, via an intentional or
negligent act of the defendant, to which the plaintiff did not consent.

The operation clearly constituted an intentional interference with Rubin’s body. Rubin consented to
the operation. Although the consent was not fully informed in that Rubin was not told of the risks
inherent in the operation, he was advised in broad terms of the nature of the procedure to be
performed, and it can be argued that it was the procedure itself which constituted the physical
interference with his person, not the potential consequences. As the procedure was recommended by
Camilla, described to him in broad terms and consented to, Camilla will have a good defence to any
claim in battery brought by Rubin. 21

14
Rogers v Whitaker (1992) 175 CLR 179, 490 (Mason CJ, Brennan, Dawson, Toohey, McHugh JJ). The effect
of the Civil Liability Act 2002 (NSW) s 5P is that Rogers v Whitaker continues to set out the law with respect to
the giving of advice, information or warnings. Wallace v Kam (2013) 250 CLR 375,380
15
March v E and MH Stramare (1991) 171 CLR 605.
16
Ibid.
17
Wallace v Kam (2013) 250 CLR 375, 383[16]
18
Civil Liability Act 2002 ( NSW) s 5D; Wallace v Kam (2013) 250 CLR 375, 385
19
Ellis v Wallsend District Hospital (1989) 17 NSWLR 553; Rosenberg v Percival [2000] 205 CLR 434. See
Civil Liability Act 2002 (NSW) s 5D(3); Wallace v Kam 92013) 250 CLR 375, 383[17]
20
Elbourne v Gibbs [2006] NSWCA 127 [67] (Basten JA).
21
Rogers v Whitaker (1992) 175 CLR 179.

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The remaining issue is whether the Hospital is independently liable to Rubin.

Hopsital’s liability for breach of Non-Delegable Duty

Regardless of the status of Camilla as an employee or independent contractor, there is another

possible basis of liability that arises out of the relationship between the Hospital and Rubin. A hospital
owes an independent non-delegable duty to ensure that the treatment it undertakes to provide to its
own patients is performed with reasonable care. 22 Unlike in Ellis, 23 it was at the Hospital’s door that
Rubin knocked. The facts provided state that Rubin was one of the Hospital’s patients rather than one
of Camilla’s own patients, and therefore Ellis may be distinguished. The elements of the relationship
between the Hospital and Rubin, such as the undertaking by the Hospital to care, supervise and
control its own patients, makes it appropriate to impose a personal, non-delegable duty to ensure that
reasonable care and skill is taken for the safety of Rubin. 24 For substantially the same reasons given
above in relation to Camilla, by failing to ensure that Rubin was fully informed of the risks of the
procedure, the Hospital is in breach of this duty of care owed directly to Rubin.

Conclusion (Note: depending on the structure of the question asked, the structure of your answer and
the word limit, you may not need a general conclusion. Each section may have its own conclusion
rendering a general one superfluous.)

The overall conclusion is that Rubin may have a claim against the Hospital in negligence if the
element of causation — that he would not have gone ahead with the operation had he been informed
of the risks — can be shown. This is a matter to be proved as a subjective fact but Rubin’s case will
be hampered by the new statutory rules on the admissibility of his evidence set out in the Civil
Liability Act 2002 (NSW). The action in negligence arises as a result of the Hospital’s vicarious
liability for the negligence of Camilla and of the breach of their non-delegable duty to ensure that
reasonable care is provided to their patients.

The claim of battery is unlikely to be successful because in explaining to Rubin the general nature of
the operation, Camilla informed him of the nature of the physical interference to which he consented.
Information about the possible, but unlikely consequences, of the procedure would probably not be
considered relevant to his consent to the act of interference.

A.7. Samples – problem questions – contract law

In this section we have provided four sample answers to a problem question in contract law to
illustrate how answers can differ across grades. The sample answers should be read in
conjunction with the assessment grading guidelines set out in each unit of study outline.

A good way to use this resource is to read through the following problem question. After you
have read it, consider how you might answer it in point form and in terms of structure. You
should then read through the answers to the questions to give you an idea of what a pass,
credit, distinction and high distinction answer would look like. You should not think of these
answers as being model answers. (There is no such thing and, in any case, you have many
better examples in your casebook.) You should also not consider any of these answers as
necessarily right, they all have weaknesses and you should be guided by your own reading of
the cases and text and your own analysis. The answers given were written under exam

22
Ellis v Wallsend District Hospital (1989) 17 NSWLR 553.
23
Ibid 605 ( Samuels JA, with whom Meagher JA agreed).
24
Kondis v State Transport Authority (1984) 154 CLR 672.

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conditions; a higher quality and properly referenced answer would be expected in a take-
home assessment task.

The Problem scenario and question

Following lengthy negotiations for the acquisition of cable television rights to the 2012
Olympics, Alice and Bruce sign the following document:

Heads of Agreement — Cable Television Rights

This document records the completion of negotiations of the Heads of an Agreement by

virtue of which Alice and Bruce agree to execute a formal contract which gives effect to each
of the terms set out below.

1. Alice agrees to acquire from Bruce, and Bruce agrees to grant, the exclusive right to
exploit the licence that Bruce holds to televise the 2012 Olympics.

2. Alice agrees to televise all events at the 2012 Olympics and to provide facilities sufficient
to enable appropriate overseas telecasts.

3. Alice agrees to pay a sum of $3 million on the signing of the formal contract.

4. Alice agrees to pay such sum as Bruce considers to be sufficient in respect of the revenue
obtained from:

(a) approved sponsors; and (b) overseas telecasters.

5. Such other terms as may be agreed between the parties, acting in good faith and in a spirit
of co-operation appropriate to the event to which the Agreement relates. All such terms to be:

(a) necessary for the efficacy of the venture; and (b) of a kind normally found in contracts of
this type.

Alice decides that the price is too high and refuses to comment on a draft of the formal
contract prepared by Bruce's solicitors. The draft in fact contains a large number of additional
terms, including an obligation that Alice spend no less than $2 million in promoting the
telecast and obtaining sponsors.

Advise Bruce whether he has any contractual rights against Alice.

A.7.1. Pass (50-64%)

For B to have contractual rights against A it is necessary to prove a contract exists between A
and B. For there to be a contract it is necessary that the parties have reached an agreement.
This is done by using the tools of offer and acceptance. An offer is a statement evidencing an
intention to contract on certain terms without further negotiation and is distinguishable from
an invitation to treat. To determine whether there is an offer you apply an objective test from
the position of a reasonable person in the position of the party hearing the statement. An
acceptance on the offer must be unequivocal and be communicated to the offeror unless
communication is waived by the offeror. Acceptance can only be made by the person to
whom the offer is made and an offer will lapse if not accepted within a reasonable time. In
addition to there being an agreement there must be valuable consideration and an intention to
contract. We can dispense with the latter requirement because this is a commercial contract

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and there is a presumption that the parties intended to contract.

As noted above an offer is a statement evidencing an intention to contract on certain terms

without further negotiation. Applying this test it is possible to conclude that A has made an
offer, being an offer to acquire the rights to B’s licence in return for payment. A reasonable
person in B’s position would conclude that an offer has been made because the statements
made by A are clear and A has executed the document.

There has also been an acceptance as B has signed the Heads of Agreement which shows that
he has accepted A’s offer by accepting all the terms put up by A without changing any of
them. The mirror image rule is therefore made out.

For B to now enforce the contract it is necessary for consideration to move from B. B has
provided consideration in agreeing to grant the licence and agreeing to determine the price
under clause 4.

Even if there is an offer and acceptance and valuable consideration a contract will not be
enforced if it is uncertain or incomplete. For example, an agreement to enter into a lease
without agreement as to the term of the lease or the rent to be paid is uncertain, see Whitlock
v Brew.

In this case there are two uncertain aspects. First the final price is not certain as it is left to the
discretion of B to determine. A reasonable person in the position of A would be unlikely to
finally commit to such a provision as it leaves A in the position of not knowing how much
she will have to pay. In addition, the court could not fix this uncertainty by implying that a
reasonable price be paid as that is not what the parties agreed. Second, although there is a
good faith obligation the law requires there to be a mechanism by which gaps in the contract
can be filled as well as negotiations to be well advanced, see Coal Cliff Collieries Pty Ltd v
Sijehama Pty Ltd. Here the negotiations have barely begun and the mechanism is too
uncertain to be given effect to.

It is therefore concluded that there is no contract between A and B.

A.7.2. Credit (65-74%)

For B to have contractual rights against A it is necessary to prove there is a contract. For
there to be a contract it is necessary for the parties to have reached an agreement. This can be
proven by using the tools of offer and acceptance or by conduct. In this case the parties
express the document to represent the completion of negotiations for the Heads of
Agreement. From this it is reasonable to infer that an agreement has been reached with the
offer and acceptance being the promises made in the document that has been signed.

Although the parties may have reached an agreement this will not be upheld by a court unless
it can be said to be certain and complete. Whether or not it is certain and complete is
determined objectively from the position of the parties. In this case the ultimate purpose of
the transaction is the televised coverage of a sporting event which will require detailed
drafting. That detailed drafting is not in the heads of agreement and the issue is whether the
heads of agreement can stand on its own.

The agreement is expressed to made subject to the execution of a formal contract. The
meaning of such a provision was dealt with by the High Court in Masters v Cameron. The
court held that such a clause can have one of three meanings, first, that the parties intend to

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be immediately bound, second that the parties intend to be immediately bound but
performance is suspended until execution and third, the parties do not intend to be bound at
all until execution. There is a presumption that the latter applies. It is suggested that in this
case the agreement falls into this third category as it is expressed in terms that the formal
contract will be the contract that gives effect to clauses 1-5. The reference to the word ‘terms’
should not be taken to suggest that parties intend the heads of agreement to contain
statements to truth of which is guaranteed as that is giving to the term a technical legal
meaning that the parties would not have envisaged.

In addition to the above it can be seen that not even the price has been finalised; the final
price is left up to the discretion of B. This renders the agreement too uncertain. Moreover, the
agreement cannot be saved by severing this term as the price for the right is crucial to the
transaction. Severance would result in A being prima facie liable to only pay a 3 million
dollar upfront payment for the rights.

Clause 5 also gives rise to uncertainty. It reads like an agreement to agree which cannot be
given effect to as it is illusory. The placing of a duty of good faith, which is a developing
doctrine in Australian contract law, cannot save an agreement to agree as it does not provide
a criterion to make the parties agree. Even if the provision was construed as being no more
than an agreement to negotiate in good faith towards a final contract it would not be upheld
as negotiations for a final contract are not in evidence and the mechanism to resolve a break
down in negotiations is uncertain in its operation, see Coal Cliff Collieries Pty Ltd v Sijehama
Pty Ltd.

A.7.3. Distinction (75-84%)

Bruce’s case is dependent on there being a contract between A and B and for A to have
breached that contract. If there is no contract the second issue of breach does not arise. A
contract requires a certain and complete agreement to have been reached. Usually the
determination of whether or not an agreement has been reached starts off with investigating
whether or not an offer has been made. An offer requires evidence that a party is willing to
enter into a contract on certain defined terms without further negotiation. It can be readily
distilled from this description that inherent in the notion of offer is the requirement of an
intention to contract. Often in commercial contracts such an intention is presumed, however
the introduction of a clause that makes the agreement subject to the execution of a formal
contract makes such intention a matter of proof unless one draws a distinction between a
general intention to contract and an intention to be immediately bound.

The meaning to be given to the words ‘subject to contract’ or equivalent expressions depends
on the construction of the contract, that is, the presumed intention of the parties, see Masters
v Cameron. In this case the Heads of Agreement sets out the terms, which are to be given
effect to in a formal executed agreement. This suggests that the terms are only to take
contractual effect upon the execution of a formal contract. However, it may also suggest that
it is only the performance of those terms that are suspended and that the executed heads of
agreement is to have some immediate force. Courts have also recently accepted the
possibility of a ‘subject to’ provision being intended to give the preliminary agreement
immediate effect but to be later replaced by a more formal agreement. This may be no more
than an acceptance that commercial people operate by reference to these preliminary
agreements and some effect must be given to them if that is the intention of the parties. It is
nevertheless suggested that in this instance the requirement of an executed formal agreement
shows an intention not to be bound. When this clause is read in the context of the contract as
a whole, especially clause 5 which shows that further terms are to be agreed, then full force

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cannot be given to the word ‘contract’ in the phrase ‘agree to execute a formal contract’ and
what the parties have really agreed is no more than an agreement to agree which is illusory
and unenforceable, see Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd.

In addition to the above, clauses 4 and 5 render the agreement uncertain and incomplete.
Clause 4 leaves final price at the discretion of B. Although a contract can be formed despite a
party accepting an onerous burden, as A might be accepting here, the burden must still be
certain. There are no mechanics here for ascertaining the price and a court cannot imply a
term for the payment of a reasonable price as that would be at odds with the intention of the
parties; in addition, it may be that a reasonable price is not capable of being calculated given
the rare quality of the transaction.

Finally clause 5 is no more than an agreement to agree which cannot be upheld unless there
are some acts of part performance so as to give meaning to provisions that would otherwise
be uncertain. Here that uncertainty is not overcome by subclauses (a) and (b). Terms implied
by reference to business efficacy are limited to simple terms and would not complete this
complex contract. Moreover, subclause (b) refers to a standard that may not exist and
therefore cannot help in providing meaning to the provision. Although this depends on proof
it is difficult to see how a set of standard terms would exist for such a transaction. It follows
that the reference to good faith and co-operation cannot save the bargain as it has been held
that an obligation of good faith cannot overcome uncertainty, see Coal Cliff Collieries Pty
Ltd v Sijehama Pty Ltd.

A.7.4. High Distinction (85%+)

Whether or not B will have a cause of action for damages for breach of contract depends on
whether the Heads of Agreement is itself an enforceable contract. Since A and B have
executed the Heads of Agreement, they themselves may have come to an agreement, and
execution excuses the need to go through an offer and acceptance analysis to find an
agreement. Moreover, the language of the document reflects this conclusion; it records the
completion of negotiations for the ‘Heads of Agreement’. Nevertheless, as a matter of law,
the parties must have reached a certain and complete agreement R. Under the objective
theory of contract; it cannot be concluded that the parties have reached an agreement if it is
impossible to ascertain the meaning and legal effect of the terms agreed. Moreover, despite
the execution of a document, there will be no enforceable agreement if the contents of that
document evidence a positive intention not to contract. In this case, the determining factor
will be the efficacy of the good faith provision.

To reach and understand that point it is necessary to investigate some of the earlier provisions
of the agreement. Clauses 1-3 of the agreement set out the basic obligations of the parties.
The transaction involves the granting of rights to televise the Olympic Games. Such a
transaction would ultimately require the settling of complex provisions under a formal
contract. The parties have at most concluded an important part of their negotiations from
which they intimate they will not go back on: they have agreed on a basic pricing structure
and have agreed to negotiate exclusively with each other to finalise the deal, see Seppelt &
Sons Ltd v Commissioner for Main Roads. Although that does not evidence a concluded
contract to televise the games, it may be enough for B at this point if there is an effective
agreement to continue to negotiate. That is, the Heads of Agreement impose no present duty
unless it requires a commitment to negotiation, as it merely expresses an agreed expectation.
Clause 4 raises a problem for B as it shows that the ultimate price A must pay is at the
discretion of B, with no obvious controls on that discretion. From the aspect of valuable

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consideration this is the reverse of the situation in Placer Development Ltd v Commonwealth.
A has promised to pay but the amount is at the discretion of B, not A. Arguably, it is not a
case of A promising to do nothing nor a case of B promising to do nothing, the ultimate
consideration lying in the mutual promises contained in clause 1. Nonetheless, there is a
strong argument that A’s consideration consists not only in the promises contained in clause 1
but also in clauses 2,3 and 4, and that clause 4 provides illusory consideration even though it
is B who must determine the amount, and not A, because there is no mechanism for working
out the figure; it is equivalent to A promising nothing. If these clauses do reflect the intended
consideration then it would not be possible to sever clause 4 from the more certain promises
in clauses 1,2 and 3 as that does not represent the intention of the parties.

Moreover, the granting this discretion to B may evidence a lack of intention to contract with
B. However, that lack of intention may only relate to the final transaction and does not negate
the possibility of an intention to contract on the terms of the Heads of Agreement. The entire
agreement is expressed to be subject to the execution of a ‘formal contract which gives effect
to each of the terms’. The effect of such provisions depends on construction, that is, the
reasonable intention of the parties, see Masters v Cameron. Such provisions may evidence an
intention to immediately contract, in some cases with performance being suspended until
such execution, or they may evidence a lack of an intention to immediately contract. The
provision states that the formal contract is for the purposes of giving effect to the terms set
out in the Heads of Agreement. So it is arguable that the parties intend that the clauses are to
have no effect until such a document is executed or at least performance is suspended until
such time. Despite this, the subject to provision may also be simply referring to the more
detailed contract, it being a document that will include the obligations agreed under the
Heads of Agreement. Moreover, concluding that the subject to provision implies a lack of
intention to contract until execution appears at odds with clause 5, which at least impliedly
requires the further negotiations of the parties which must take place prior to the execution of
the formal contract. It is at least arguable that the ‘subject to’ provision does not inhibit the
Heads of Agreement taking immediate effect.

Despite the above, clause 5 does introduce the principal difficulty for B. First, it is drafted in
terms of an agreement to agree. Generally, such agreements are considered illusory, see May
& Butcher Ltd v R, Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd. The rare instances in
which they have been upheld are where the parties have evidenced a commitment to the
transaction by partly performing and, in particular, by performing those obligations that are
now being claimed by one party to render the contract void for uncertainty, see Foley v
Classique Coaches. Perhaps such cases are now best seen are examples of estoppel, but in
any case there is no evidence of reliance by either party in this case.

There is then an issue as to whether an express obligation of good faith and co- operation can
save what would otherwise be an agreement to agree. It is submitted that it cannot; one
cannot agree to negotiate to agree. If I am wrong on that point there is still an issue as to
whether the good faith provision can save the uncertainties raised by the other clauses. At
present in New South Wales a good faith negotiation provision can only be used to uphold
the bargain if the negotiations for the agreement are well advanced and if there is a
mechanism for resolving disputes should negotiations break down, see Coal Cliff Collieries
Pty Ltd v Sijehama Pty Ltd. The Heads of Agreement expresses the ultimate intent of the
parties but lacks any detail in what would be a complex transaction. It is irrelevant that
negotiations may in fact be well advanced; this must be reflected in the terms of the Heads of
Agreement as that is the transaction that B wants upheld as a contract.

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The mechanism provided to resolve negotiation breakdowns will not save the situation.
Terms ‘necessary’ for the venture only captures those terms that are obvious. This
mechanism will not allow for the implication of the complex terms that are necessary for this
transaction. Reference to an external standard only helps if it exists; the Olympics are a rare
event and the parties vary each time and technology varies between games. It is doubtful that
one could produce a set of standard terms for such a contract, see Whitlock v Brew; nor that
there is a trade in such contracts, see Three Rivers Trading Co Ltd v Gwinear & District
Farmers Ltd.

Finally, B might argue that clause 5 could be upheld as a contract in its own right on the basis
that it constitutes an agreement to negotiate. However, the language itself does not reflect
such an agreement so as to sever it, and at present such clauses have only been considered are
being relevant to the efficacy of the entire agreement on the principles discussed above. It
follows that B has no contractual rights against A.

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