CLAW1001 Foundations of Business Law Semester One, 2015

Problem-Based Assignment Feedback

Overview:
This semesters problem based assignment asked students to formulate a response to a legal problem question containing
a number of different issues. Whilst there were a number of different ways to break down the question, the allocation of
marks for the assignment was based on the three contracts that were entered into by the parties, and roughly reflect the
importance of each of the issues.
1.
2.
3.

Candy v Blair: Contract for the supply of coffee beans (8 marks)

Candy v Blair: Contract for the lease of the coffee machine (5 marks)
Candy v Ariel: Contract for the sale of business (7 marks)

Additionally, there were 5 marks allocated towards structure, referencing, spelling/grammar, expression, adherence to word
count and other such general matters.

Candy v Blair: supply of coffee beans

It was clear in this case that an agreement had been formed between the parties. A clear offer was made by Blair which was
accepted by Candy, and there was valid consideration in the form of regular payments from Candy in return for deliveries of
beans from Blair. Although this was an oral contract, writing is not a necessary element for contracts of this kind and
therefore writing was not an issue. Because these issues were not really in dispute, no marks were allocated for discussing
offer, acceptance and consideration, and it was not necessary to discuss them.
To achieve full marks in this section students needed to thoroughly discuss the following live issues:

Blairs pre-contractual statement that sales would go through the roof

o The key question here was whether or not the statement was contractual. Based on the wording and
nature of the statement it was likely not stated with the intent to be part of the contract, and in any case
was made prior to contract formation.
o The statement could have been merely a puff, or, if it was a representation made with intent to induce a
contract, the issue of misrepresentation could have been argued, though this would have been unlikely
to have succeeded.
o Negligence or negligent misstatement on Blairs behalf was not really an issue in this question as such
issues go beyond the scope of contract law.
Intention to create legal relations
o It was important to realise that there may be an issue on intention to create legal relations this was not
simply a commercial agreement due to the nature of the friendship between Candy and Blair and the
fact that the agreement took place over lunch. The social setting and the relationship between the
parties needed to be discussed to determine whether there was indeed true intention to form legal
relations.
o A lot of students missed out on this issue or did not engage with rebutting the relevant presumptions in
enough detail. Some students discussed the issue of intoxication, which was a creative approach, but
was not the key issue here as, on the facts, the parties were not intoxicated.
Blairs post-contractual statement that he would let Candy out of the contract early
o Is this statement binding upon Blair? There were two approaches to this: the first was to say that the
term formed some sort of collateral contract, however it was hard to establish formation as any
consideration provided by Candy would have been past.
o The other approach was to discuss promissory estoppel, which was spotted by most students and
generally dealt with quite well.

Overall students dealt with most of the issues in this question relatively well but few students were able to spot all of the
issues.

Candy v Blair: lease of coffee machine

Once again, it was clear that a contract had been formed between the parties as in this case there was a written lease
agreement. Most students correctly pointed out that the signature rule applies to this contract and that Candy will be bound
by it even though she had not read the contract. The main issue here was whether or not Candy could get out of the
contract given that Blair left the end date of the lease blank.
A large number of students argued that this was a unilateral mistake on Blairs behalf. This was an incorrect approach,
however, as for mistake to apply Blair would need to have been mistaken as to what the terms of the lease were. Clearly on
the facts he was not, as he consciously made the decision to leave the end date of the lease blank.
The correct approach here was to consider whether the lack of an ending date rendered the contract incomplete. It is
possible that the lack of an end date for the lease would have resulted in the contract becoming void for incompleteness.
Another consideration was whether, instead of ruling that the contract was void for incompleteness, a court could imply a
term into the contract that allowed either termination with reasonable notice by the parties (for which there was a
considerable amount of case law which could be found by researching) or whether Blairs standard five year terms could be
imported into the contract as an implied term.
To do well in this section, students needed to discuss both the issue of incompleteness and the possibility of implied terms.
Research was a key element in both of these issues.

Candy v Ariel: sale of business subject to finance

The key question arising in this issue was that of the subject to finance clause in the contract. Many students argued that
this subject to finance clause was somehow related to conditional acceptance due to its similarity to the term subject to
contract, however this was an incorrect approach to take as the contract had clearly already been formed.
The main issue, which could have been determined by conducting research into subject to finance clauses, was one of
whether Clause 37 operated as a condition precedent to the contract or not, and if it did, whether or not it applied to the
extent of at least compelling Candy to make reasonable efforts to obtain finance. Many students considered the precedent in
the case of Meehan v Jones (1982) 149 CLR 571 in discussing this issue, but evidence of research over a variety of cases
was required in order to maximise marks in this section.

Structure, referencing, etc

Generally speaking the structure of the vast majority of assignments was excellent, with most students receiving 4 or 5
marks for this section. The IPAAC/IRAC methods of legal problem solving were appropriately applied by the vast majority of
students and the issues were clearly split up into separate paragraphs. It is important, however, to note that there was no
need to have separate sub-headings for each of the IPAAC/IRAC elements e.g. there is no need to have a heading for
Authority and then another heading for Analysis under each issue.
More care needed to be taken with referencing, however, with students commonly forgetting either to italicise case names or
to put full stops at the end of citations. Citing appropriate sources was also a major concern, with weaker students rarely
straying beyond the textbook. Demonstrating knowledge of a variety of cases was an important aspect of this assignment.
There were also a number of students whose responses suffered from poor spelling or grammar, and it is recommended
that students proofread their work thoroughly prior to submitting.