PBL Practice Exam – 60 questions | 2022 LATEST UPDATE

PBL Practice Exam – 60 questions Suggested time frame to complete: 15 minutes reading time, 90 minutes writing time. Remember for the actual final exam that:  If asked any question that is related to a particular piece of legislation, you will be provided with the relevant sections of the legislation in hard copy. There is no need to memorise legislation.  You are not required to recall case “citations” (ie. year numbers, law reports etc) but you will need to be able to recall at least one party’s name for the purposes of selecting the case from a list of cases in a multiple choice answer. You will not be given case summaries in the exam – you need to remember the facts, the legal issue and the outcome, although it may be helpful to summarise these in your exam “cheat sheet”. 1. Unfair terms in consumer contracts are invalid if the contract is a standard form contract and the term is unfair. A “consumer contract”: is a contract for the supply of goods or services, or for the sale of an interest in land, to an individual who is acquiring the goods, services or interest in land predominantly for their own personal, domestic or household use or consumption. is a contract involving supply to an individual, not a corporation. is a contract prepared by one party and presented to the other on a take it or leave it basis. is a contract between an individual and a retail store. 2. Choose the correct statement regarding the role of judges in creating law: Judges create law directly by passing legislation. Judges create law indirectly by examining Bills and reporting back to the House of Representatives as members of standing committees. Judges create law indirectly when they decide specific cases brought before them. Judges create law when they write articles on the law in academic journals. Questions 3, 4 and 5 relate to the legislative excerpt below. Read the legislative excerpt below and then answer these questions. Competition and Consumer Act 2010 (Cth) Schedule 2 – The Australian Consumer Law Chapter 1 – Introduction … Part 2-3 – Unfair contract terms 23 Unfair terms of consumer contracts (1) A term of a consumer contract or small business contract is void if: (a) the term is unfair; and (b) the contract is a standard form contract. (2) The contract continues to bind the parties if it is capable of operating without the unfair term. (3) A consumer contract is a contract for: (a) a supply of goods or services; or (b) a sale or grant of an interest in land; to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption. (4) A contract is a small business contract if: (a) the contract is for a supply of goods or services, or the sale or grant of an interest in land; and (b) at the time the contract is entered into, at least one party to the contract is a business that employs fewer than 20 persons; and (c) either of the following applies: (i) the upfront price payable under the contract does not exceed $300,000; (ii) the contract has a duration of more than 12 months and the upfront price payable under the contract does not exceed $1,000,000. 24 Meaning of unfair (1) A term of a consumer contract is unfair if: (a) it would cause a significant imbalance in the parties’ right and obligations arising under the contract; and (b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and (c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on. (2) In determining whether a term of a consumer contract is unfair under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following: (a) the extent to which the term is transparent; (b) the contract as a whole. (3) A term is transparent if the term is: (a) expressed in reasonably plain language; and (b) legible; and (c) presented clearly; and (d) readily available to any party affected by the term. (4) For the purposes of subsection (1)(b), a term of a consumer contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise. 25 Examples of unfair terms (1) Without limiting section 24, the following are examples of the kinds of terms of a consumer contract that may be unfair: (a) a term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract; (b) a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract; (c) a term that penalises, or has the effect of penalising, one party (but not another party) for a breach or termination of the contract; (d) a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract; … 3. Edgar goes to a department store and buys a standard household fridge for use in his fruit shop. He is asked to sign a pre-prepared contract and he does so without asking any questions. Is the contract for the purchase of the fridge a “consumer contract” under subsection 23(3) of the ACL? Choose the correct answer. Yes, because the fridge is designed and intended for domestic or household use. No, because Edgar does not acquire the fridge for the purpose of personal, domestic or household use or consumption. Yes, because the fridge is not an industrial or commercial fridge. There is not enough information to decide. 4. Suppose that there is a “consumer contract” that contains a term which could cause a significant imbalance in the parties’ rights and obligations arising under the contract, and would also cause financial detriment to one of the parties if it were to be relied on. Is this enough to make the term “unfair” under section 24 of the ACL and, if it isn’t, what else would need to be proved (and by whom) for the term to be “unfair”? This term is not unfair unless it satisfies all three conditions in subsection 24(1) of the ACL. In order to satisfy the test in subsection 24(1), it would need to be also shown that the term is not reasonably necessary in order to protect the legitimate interests of the party to be advantaged by the term. This term is unfair because it satisfies two of the three conditions in subsection 24(1) of the ACL. 5. Suppose that a term in a particular “consumer contract” permits one party (but not the other party) to avoid performance of the contract. Does this necessarily mean that the term is “unfair” under section 24 of the ACL? Choose the correct answer. Yes, such a term is an example of what an unfair term is under section 24 of the ACL, as is made clear by paragraph 25(1)(a) of the ACL and by the heading to section 25 of the ACL. No, because there is nothing unfair about a term that permits one party (but not the other) to avoid performance of the contract. No, because such a term is merely an example of a term that “may” be unfair under section 24 of the ACL – the examples of terms listed in section 25 are ones that are likely to be unfair but not necessarily so. 6. In Partridge v Crittenden [1968] 2 All ER 421 the court decided that: Advertisements, other than advertisements by manufacturers, are usually invitations to treat. Advertisements are usually offers for sale. Advertisements coming from manufacturers are not usually invitations to treat. Advertisements are construed as mere puffs. 7. In Australia, what is the status of the decision in Partridge v Crittenden [1968] 2 All ER 421? Choose the correct answer. Binding precedent Inapplicable due to the parol evidence rule Persuasive precedent Neither binding nor persuasive precedent 8. In which of the following situations is an intention to be legally bound unlikely to be inferred? Choose the correct answer. Sofia promises to babysit the child of her friend, Celeste, so that Celeste and her husband can go to the theatre. Bob promises to pay the plumber $300 to fix broken plumbing at his house. Rodolfo, a promoter, promises to pay Eugene (a world-famous opera star) $100,000 for each show he agrees to perform in a tour of Australia. Tonto, a personal trainer, agrees to provide training and instruction for three sessions a week at the local gym for $400 per session. 9. Ted offers to mow Lucy’s lawn on Sunday. Lucy accepts Ted’s offer, saying that this will be in return for the coffee and cake she bought him at last week’s work conference – she did this because of fruitful collaboration on a joint work project. Is the promise made by Ted to mow Lucy’s lawn legally enforceable? Choose the answer that best reflects the legal position on this issue. Yes, because Lucy’s purchase of cake and coffee last week is regarded as executed consideration. No, because Lucy only provides past consideration. Yes, because Lucy’s purchase of cake and coffee is the price she paid for Ted’s promise. Yes, because this is an exchange of promises, which amounts to good consideration. 10. Assume now that the Ted offers to mow Lucy’s lawn this coming Sunday for $100 and that Lucy accepts his offer. Ted then drinks too much on Friday night and rings Lucy on Saturday morning to say he is feeling ordinary and that he won’t now be mowing her lawn on Sunday as agreed. When does the breach of contract first take place? Choose the correct answer. On Saturday morning when Ted tells Lucy he won’t be mowing the lawn on Sunday. On Sunday when Ted doesn’t mow the lawn as agreed. When Lucy and Ted concluded their contract. 11. Eric employs Tom as his personal assistant and security guard on weekdays, and gives him the specific task of protecting, maintaining and, if necessary, recovering his collection of priceless guitars. Several months later, he discovers that one of his guitars has gone missing, and he offers Tom a reward of $100,000 to find his priceless guitar. Tom finds the guitar in the course of his duties and returns it to Eric. Is Eric bound to pay Tom the $100,000 reward? Choose the answer that best reflects the legal position on this issue. Yes, because Tom’s act of finding the guitar provided the necessary consideration to make the promise to pay the $100,000 reward enforceable, consistently with the decision in Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256. Yes, because Tom gives executed consideration. No, because Tom does not give good consideration as he only did what he was already bound to do as Eric’s security guard, consistently with the decision in Stilk v Myrick (1809) 170 ER 1168. 12. Would your answer to the previous question be different if (instead) Tom had found the guitar whilst off duty on the weekend? Choose the answer that best reflects the legal position on this issue. No, because he was still employed when he found the guitar. Yes, because Tom would then give past consideration. Yes, because Tom would give good consideration as he would do something beyond what he was already legally bound to do, consistently with the decision in Stilk v Myrick (1809) 170 ER 1168. 13. Romeo offers to sell Juliet his car for $10,000. Juliet responds: “I’ll accept your offer to sell me your car if it’s newly painted and if you deliver it to my front door”. Is there a contract between Romeo and Juliet? Choose the correct answer. Yes, because Juliet has accepted Romeo’s offer to sell his car for $10,000. No, because there is no intention to be legally bound. There is not enough information to decide. No, because they haven’t reached agreement – Juliet has not given her unqualified assent to the terms offered by Romeo. 14. Sandy writes to John offering to buy his Van Gogh painting for $1m. John responds by letter to Sandy, offering to sell the painting for $1.2m. Sandy writes back to John, saying that she’ll buy the painting for the price of $1.2m if he sets it in a golden coloured frame and he communicates his acceptance of her offer by postal letter. On reading this latest letter from Sandy, John writes a letter and sends it back immediately, accepting her terms. However, before receiving John’s letter Sandy telephones John to tell him she has changed her mind and is withdrawing her offer because his asking price is too high. John’s letter had arrived in Sandy’s letterbox before she called John, but Sandy only found the letter after the call was made. Is there a contract between Sandy and John at this stage? Choose the correct answer. No, because Sandy has validly withdrawn her offer to buy the painting for $1.2m. No, because John’s acceptance of Sandy’s offer is not effective as it has not been communicated to her yet, consistently with the decision in Henthorn v Fraser [1892] 2 Ch 27. Yes, because acceptance was effective when John sent his latest letter to Sandy, consistently with the decision in Henthorn v Fraser [1892] 2 Ch 27. Yes, because acceptance was effective as soon as John’s letter arrived at Sandy’s letterbox, consistently with the decision in Henthorn v Fraser [1892] 2 Ch 27. 15. Jane, a sixteen-year-old, has an upcoming job interview to be an attendant at the Sydney Opera House. She wants to look sophisticated so she goes down to her local jewellery store which reluctantly sells her a very expensive pair of gold earrings. Jane promises to pay the store a week after the job interview. Jane gets the job but refuses to pay the jewellery store. Can the store enforce its contract with Jane? Choose the correct answer. Yes, because Jane is a minor. Yes, because a court is likely to decide that earrings are a “necessity” in this case. No, because a court is likely to decide that earrings are not a “necessity” in this case. 16. Pierre negotiates with Sylvester for the sale of Pierre’s tea house business in Byron Bay. In the course of negotiations, Pierre says the following to Sylvester: “If you buy this business in Byron Bay, you’ll be the happiest person in the whole wide world, life will be a dream – it’ll be impossible to wipe the smile from your face”. What is the nature of the statement made by Pierre to Sylvester? Choose the answer that best reflects the legal position on this issue. It is a representation. It is puffery. It is a contractual term. It is the expression of an opinion. 17. Olaf signs a document which is placed in front of him without reading it first. He knows that the document is a contract for the purchase of a boat from one of his old business associates. Before doing so, his old business associate suggested that Olaf read it first but Olaf went ahead and signed it anyway, saying that he had known him for years and trusts him. It later turns out that the contract has some terms Olaf is very unhappy with. Is Olaf bound by these terms? Choose the answer that best reflects the legal position on this issue. No, because they weren’t brought to his attention before signing the document, consistently with the decision in L’Estrange v F Graucob Ltd [1934] 2 KB 394. No, because contractual terms that are not in the interests of a party are not enforceable. Yes, because he signed the document knowing it to be contractual in nature, consistently with the decision in L’Estrange v F Graucob Ltd [1934] 2 KB 394. No, because contractual terms that are not in the interests of one party are interpreted in accordance with the contra preferentum rule. 18. Which of the following statements regarding the interpretation of terms limiting or excluding liability is correct? Such terms are generally given a wide or generous interpretation. Where such terms are ambiguous, they are construed in favour of the party standing to benefit from them. Where such terms are ambiguous, they are interpreted against the interests of the party standing to benefit from them. 19. State legislation states that drivers will be subject to a $1000 fine for driving a vehicle that is not roadworthy. Jane agreed to transport flowers for Penelope, a florist. When delivering the flowers in her run down, old van, Jane was stopped by police who fined her for contravening this legislation. When Penelope discovered this, she refused to pay Jane for delivering the flowers. Can Penelope do this? Choose the correct answer. Yes, because the State legislation was infringed, consistently with Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215. No, because although the State legislation penalised driving an unroadworthy vehicle it did not prohibit the performance of contracts in breach of it, consistently with Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215. Yes, because Jane failed to exercise reasonable care. 20. Toby works as an assistant in Penelope’s Florist Shop which is located in Carlton. Toby’s employment contract contains a term which would restrain Toby from working as an assistant in another florist throughout all of metropolitan Melbourne for three years if he were to leave Penelope’s employment. Is this restraint of trade clause likely to be enforceable? Choose the answer that best reflects the legal position on this issue. Yes, because Toby has benefitted from his employment with Penelope so she should be able to enforce such a clause. Yes, because this clause is not likely to go beyond what is reasonably necessary to protect the legitimate interests of Penelope, consistently with the decision in Lindner v Murdock’s Garage (1950) 83 CLR 628. No, because this clause is likely to go beyond what is reasonably necessary to protect the legitimate interests of Penelope, consistently with the decision in Lindner v Murdock’s Garage (1950) 83 CLR 628. No, because this is a contract that is contrary to legislation, consistently with Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215. 21. Would your answer to the previous question be different if (instead) the term restrained Toby from working as an assistant in another florist in Carlton for one year if he were to leave Penelope’s employment? No, because this clause is still likely to go beyond what is reasonably necessary to protect the legitimate interests of Penelope, consistently with the decision in Lindner v Murdock’s Garage (1950) 83 CLR 628. Yes, because in this case the clause is not likely to go beyond what is reasonably necessary to protect the legitimate interests of Penelope, consistently with the decision in Lindner v Murdock’s Garage (1950) 83 CLR 628. No, because this clause would be too far-reaching, consistently with the decision in Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215. No, because this contract is still contrary to legislation, consistently with Fitzgerald v F J Leonhardt Pty Ltd (1997) 189 CLR 215. 22. Andy bought an iPad from Computershack Pty Ltd. Before making the purchase, Andy told the sales assistant that he wanted a tablet he could take in the shower with him. The sales assistant said that the iPad would be suitable. In fact, the iPad is not waterproof. The first time Andy used the iPad in the shower, it shut down. He has been unable to restart it since. Computershack denies that it is obliged to repair or replace the iPad, but offers to repair the iPad for $200. Which of the following statements is correct? Computershack has not complied with the guarantee set out in section 54 of the Australian Consumer Law because the iPad is not of acceptable/merchantable quality. Computershack has not complied with the guarantee set out in section 58 of the Australian Consumer Law because it refused to repair the iPad for free. Computershack has not complied with the guarantee set out in section 55 of the Australian Consumer Law because the iPad is not suitable for use in the shower. The consumer guarantees do not apply as it would be obvious to a reasonable person that an iPad should not be used in the shower. 23. Choose the incorrect statement relating to equitable remedies: One of the equitable remedies is an order for specific performance. One of the equitable remedies is an injunction. Equitable remedies are generally available as an alternative to common law remedies at the option of the party suffering breach of contract. Equitable remedies are only available in special circumstances and at the discretion of the court. 24. Choose the incorrect statement regarding damages: Damages can only be claimed for losses flowing from the breach of an innominate term or a breach of condition. To successfully claim damages, the innocent party must be able prove both a breach of contract and that the losses were caused by that breach. Damages for breach of contract are calculated to place the innocent party in the same financial position as if the contract had been properly performed. In some cases, damages can be awarded for both direct and consequential losses. 25. Raj is a highly regarded Australian restaurateur. He calls Jacques, a famous French chef, to come to Australia to promote a number of gastronomic events at his restaurant. Raj wants to explore a fusion of Indian and French cuisine. Raj and Jacques agree to share profits from the gastronomic events and make a series of TV cooking shows by filming them. However, shortly before the events are due to commence, Jacques rings Raj and tells him he won’t be coming – he’s had enough of food and cooking. What costs or losses can’t Raj claim? Loss of profits on the planned TV cooking shows. Cost of advertising related to the gastronomic events. Cost incurred in bringing out his extended family from India to watch the gastronomic events. Loss of profits on the gastronomic events. 26. Choose the incorrect statement regarding the remedy of specific performance: It will not be ordered where the promise breached is to supply something that is freely available. It is not available in all circumstances as a remedy for breach of contract. It will not be ordered where this would require the parties to continue in an ongoing relationship. It will be ordered even where damages are an adequate remedy for the breach of contract. 27. Bernadette is only 19 years old and has already become quite a well-known ballerina. Many think she has a particularly bright future ahead of her. Odette, her ballet teacher since she was 5 years old, thinks so too. Odette persuades Bernadette to give her exclusive rights to write a book about her life story. Which category of undue influence is most likely to apply on these facts? Choose the answer that best reflects the legal position here. One involving no general controlling influence. One involving a proved general controlling influence, like in Johnson v Buttress (1936) 56 CLR 113. One involving the presumption of a general controlling influence, like in Allcard v Skinner (1887) 36 Ch D 145. 28. Sergei is a world-famous tennis player. He has recently been in protracted negotiations with a large sportswear manufacturer over a potential ten-year endorsement deal. He has not been very happy with the amount the manufacturer has offered for his endorsement. Sergei then plays in the Australian Tennis Open, but has to forfeit his match because of severe sun stroke. Larry, the CEO of the large sportswear manufacturer (who was watching the match in the stands), sees this situation as an opportunity to conclude the endorsement contract with Sergei. He quickly goes down into the change rooms and persuades him to sign the contract. Which one of the following grounds for setting aside a transaction would most clearly apply to this fact situation? Duress Unconscionable dealing Undue influence Illegal restraint of trade 29. Jock owns two cocker spaniels, one is black and the other one is tan. Priscilla wrote Jock a letter offering to buy a cocker spaniel from him. Jock responded to Priscilla by letter, agreeing to sell his cocker spaniel. When the black cocker spaniel arrives Priscilla is surprised. She thought she was offering to buy Jock’s tan cocker spaniel, but Jock understood her to be offering to buy the black one. What sort of mistake has occurred on these facts? Mutual mistake Common/bilateral mistake Unilateral mistake No mistake 30. Tom enters into a contract with Bob for Bob to drive the get-away car in a heist they are planning. They intend to steal some priceless paintings from Mrs Marple’s Gallery. On the night of the planned robbery, Bob has an abrupt change of heart and rings Tom, telling him he simply can’t go ahead with the contract (it turns out that Mrs Marple was his art teacher in primary school). Can Tom enforce the contract against Bob? Choose the correct answer. Yes, because Mrs Marple’s paintings are not very good. Yes, because Bob entered the contract knowingly. No, because the contract is illegal and therefore unenforceable. 31. Tom buys a very expensive household stove for $41,000 for his home kitchen. Does Tom acquire this stove as a consumer under section 3 of the ACL? Choose the correct answer. Yes, because the stove is a kind of good ordinarily acquired for personal, domestic or household use or consumption. No, because the price of the stove exceeds $40,000. No, because the stove is not a trailer. Yes, because Tom acquires the stove for commercial purposes. 32. Would it make a difference to your previous answer if the stove was an industrial stove to be used in a baking factory? Choose the correct answer. No, because it can still be used in the household. No, because a consumer can still buy an industrial stove. Yes, because an industrial stove is not a good of a kind ordinarily acquired for personal, domestic or household use or consumption. 33. Kevin buys a vehicle mainly for business use in his job as a courier. The amount he pays for the vehicle is $50,000. Does Kevin acquire the vehicle as a consumer under section 3 of the ACL? Choose the correct answer. Yes, because Kevin acquired the vehicle for occasional use in the transport of goods on public roads. No, because Kevin acquired the vehicle for more than $40,000. No, because Kevin is clearly not using the vehicle in the capacity of a consumer. There is not enough information to decide. 34. Elvin buys seven new LCD televisions for $5,000 each. He does so in order to re-sell them. They are currently in short supply and he sees an opportunity to make a quick profit. Does Elvin acquire the televisions as a consumer under section 3 of the ACL? Yes, because the amount he pays for each television does not exceed $40,000. Yes, because televisions are goods of a kind ordinarily acquired for personal, domestic or household use or consumption. No, because he acquired the televisions for the purpose of re-supplying them. 35. Choose the correct statement regarding the relevance of “intention” to a finding of a breach of section 18 of the ACL: The existence of a deliberate intention to mislead is not relevant to establishing that conduct was misleading or likely to mislead. In order to establish a breach of section 18, it is necessary to show that the person responsible for the misleading or deceptive conduct intended it to be misleading or deceptive. Even though no intention to mislead or deceive is required to demonstrate a breach of section 18, if the misleading conduct complained of was accidental, it is unlikely that there has been a breach of section 18. 36. “Elegance”, a world-famous fashion label, is unhappy because an Australian coffee shop is advertising and selling its in-house brand of coffee under the name “Elegance”. The word “Elegance” is registered as a trade mark by a famous fashion label all over the world, but the Australian coffee shop trades under the registered business name of “Elegance Coffee”. The fashion label “Elegance” is well known for its sophisticated fashions for men and women – it also sells a range of perfumes and accessories, but does not sell any food items (and nor do any of its rivals). In its advertising, the Australian coffee shop stresses the refined and stylish nature of its branded coffee. Is this conduct likely to breach section 18 of the ACL? Choose the answer that best reflects the legal position on this issue. Yes, because prospective purchasers of “Elegance” coffee are likely to be misled or deceived into thinking that “Elegance” coffee is somehow linked with or authorised by the “Elegance” fashion label, as any qualifying statements about the stylish nature of the coffee are not part of the dominant message of the coffee advertising, consistently with ACCC v TPG Internet (201) 250 CLR 640. No, because fashion and coffee have nothing whatsoever in common. No, because it would be unreasonable to conclude that the advertising of the Australian coffee shop actually suggests a business connection between it and “Elegance” the fashion label, consistently with McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 33 ALR 394. 37. Gary is a real estate agent. He is trying to sell a large mansion on behalf of its owners. A potential purchaser, Eric, asks Gary whether the lawn at the back of the mansion is big enough to accommodate a full-sized tennis court. Gary does not answer, but instead hands Eric a pamphlet on the property. The pamphlet includes a surveyor’s diagram of the property, which gives dimensions of the backyard and makes it clear that it can accommodate a tennis court. In the pamphlet, there are also 4 pages of writing that describe the property in detail. At the bottom of one of these pages is the following statement, in very small font: “Gary Real Estate does not guarantee the accuracy of the information contained in this pamphlet and advises potential purchasers to make their own enquiries.” Eric does not read the pamphlet, but buys the mansion anyway. He then discovers that the surveyor’s diagram was inaccurate, and that the backyard is not big enough to accommodate a tennis court. It is likely that Gary breached s 18 of the Australian Consumer Law? Yes, because it is necessary under s 18 to show that Eric was in fact misled. Given that Eric did not even read the disclaimer here, it is clear that Eric was misled by Gary’s pamphlet. No, because Eric could have carefully inspected the property before buying it and should have measured the size of the backyard. This is consistent with the decision in McWilliam’s Wines v McDonalds System of Australia (1980) 33 ALR 394. Yes, because the disclaimer in this case is unlikely to be effective: it was in very small font, and was placed inconspicuously alongside other writing. This situation should be distinguished from that of Butcher v Lachlan Elder (2004) 218 CLR 592. 38. Vincenzo is a newly arrived in Australia and has recently become an employee of “Elegance Coffee”. He asks one of his colleagues, a barista at “Elegance Coffee”, for advice on how to use a toaster he has at his rented accommodation, saying that he is having trouble using it as it’s very different to the ones they have in Italy. The barista provides Vincenzo with wrong advice and as result he suffers a severe burn to one of his hands. Does section 18 of the ACL potentially apply to “Elegance Coffee” in respect of the advice provided by its barista? Choose the answer that best reflects the legal position of this issue. Yes, because if the barista’s advice was correct Vincenzo wouldn’t have suffered injury. Yes, because an integral part of the trading or commercial activities of “Elegance Coffee” is the provision of advice and information to its regular customers and employees, consistently with the decision in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594. No, because the giving of the advice by the barista was not a part of the trading or commercial activities of “Elegance Coffee”, consistently with the decision in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594. 39. Vincenzo’s friend, Monica, comes to visit from Italy. She stops by “Elegance Coffee” to buy a bag of coffee beans from her friend. She asks Vincenzo for advice on which type of beans have the strongest flavour, and Vincenzo tells her the Grade A beans are the strongest. Monica buys the Grade A beans, but later discovers that Elegance Coffee has an even stronger product, Grade AA beans, but that Vincenzo had not recommended them because he personally found this flavour too strong. Has Elegance Coffee breached s 18 of the Australian Consumer Law? Choose the answer that best reflects the legal position on this issue. No, because the giving of advice by Vincenzo was still not a part of the trading or commercial activities of “Elegance Coffee” which supplies its customers with coffee and not advice, consistently with the decision in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594. No, because Monica should have taken more care when making her enquiries, consistently with the decision in Yorke v Lucas (1985) 158 CLR 661. Yes, because advice in relation to the consumption of coffee sold is an integral part of the trading or commercial activity of “Elegance Coffee” in selling coffee, consistently with the decision in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594. 40. Does the presence of a right to unilaterally vary a term of a contract necessarily mean that there has been a contravention of section 21 of the ACL? Choose the correct answer. No, because it is only one of the matters listed in section 22 of the ACL which a court may have regard to when deciding whether there has been a contravention of section 21. Yes, because it is one of the things a court considers when deciding whether section 21 of the ACL has been breached. Yes, because it is one of the examples of unconscionable conduct in section 22 of the ACL. 41. Edward loves fishing. He goes to the kitchenware section of a large department store and asks the store staff whether a particular knife is suitable for use in cleaning fish. The store attendant assures Edward that the knife is suitable for this purpose. Edward then goes on a fishing trip, but the knife breaks the moment he tries to use it to clean some fish he has caught. It turns out that the knife is only suitable for cutting fairly soft things like cake or bread. Can Edward rely on the assurance of the store attendant in an action against the department store? Choose the answer that best reflects the legal position on this issue. No, because he should have gone to a specialised fishing shop and bought a knife there in order to obtain the protections in section 55 of the Australian Consumer Law. No, because he should have been aware that the knife wasn’t suitable for cleaning fish by simply inspecting it, as required by section 55 of the Australian Consumer Law. Yes, because section 55 of the Australian Consumer Law would apply to guarantee that the knife was reasonably fit for the purpose for which he acquired it. 42. Would your answer to the previous question be different if (instead) Edward simply bought the knife without obtaining any advice from the department store? Choose the answer that best reflects the legal position on this issue. Yes, because a consumer loses the benefit of the guarantee in section 55 of the Australian Consumer Law if they don’t reveal to the supplier the particular purpose for which they want goods and reasonably rely on the skill and judgment of the supplier. No, because he still should be able to use the knife to clean fish to a degree, as required by section 55 of the Australian Consumer Law. No, because it wouldn’t be fair and equitable. Yes, because it would be fair and equitable for the department store to be protected against being sued in this situation. 43. Choose the correct statement regarding tort law: Compensatory damages are the only remedy available in tort law. In tort law, legally binding obligations arise by agreement of the parties. The essential focus of tort law is wrongful conduct which causes harm. All liability in tort is confined to very specific recognised types of conduct designed to protect a right that is clearly identified and not very broad. 44. Identify the correct statement: The tort of deceit is concerned to protect against accidental fraud. The tort of negligence provides protection against harm caused by many different kinds of careless conduct. The tort of defamation is concerned to protect against accidental fraud. 45. Choose the correct statement regarding the essential elements for establishing liability in negligence: To establish liability in negligence, it must be shown that a duty of care is owed, that this duty is breached and that as a result of this breach reasonably foreseeable injury or loss is suffered. To establish liability in negligence, one of the elements that must be shown is that injury or loss was suffered as a result of deliberate conduct. To establish liability in negligence, two elements must be shown: it must be demonstrated that a duty of care is owed and that this duty is breached. To establish liability in negligence, it must be shown that no contributory negligence exists on the part of the plaintiff. 46. Patricia and Wendy agree to have coffee at their favourite coffee shop. Patricia is running a little late so Wendy orders and pays for Patricia’s favourite, a caffe latte with a raspberry muffin (baked by a local bakery which supplies the coffee shop). When Patricia arrives she bites into the muffin and breaks one of her teeth – she discovers that the muffin contains a small metal screw. Does the local bakery owe Patricia a duty of care? Choose the correct answer. Yes, because there was foreseeable harm in the context of a recognised duty situation (manufacturer/consumer), consistently with the decision in Donoghue v Stevenson [1932] AC 562. No, because there is no contractual relationship between Patricia and the local bakery. This situation is distinguishable from Donoghue v Stevenson [1932] AC 562. No, because Patricia should have been more careful when biting into the muffin. 47. Which of the following does not involve a recognised “duty situation”? Choose the correct answer. Bob is driving too quickly and collides with Jenny’s car and she injures her wrist as a result. Sebastian walks into Oleg’s wine shop and slips on a small puddle of white wine, injuring his leg. Beatrice’s employer, “Elegance Coffee”, does not give her proper instructions on how to operate the coffee machine and she suffers a minor burn to her hand as a result. Tony vigorously tackles Trevor on the football field during a match and Trevor suffers an arm injury as a result. 48. A contractual party is entitled to terminate for the other party’s breach if the term is: a warranty. an intermediate/innominate term and the breach was deliberate. a condition and there is less than substantial performance. contained in a deed. 49. In Bolton v Stone [1951] AC 850, Stone’s claim failed because: The cricket club only owed a duty to spectators who attended the grounds. It did not owe a duty of care to Stone. The cricket club did not breach the duty of care it owed to Stone – there was no need to take precautions given the very small risk that someone would be struck by an errant ball. The duty of care owed by the cricket club did not require the club to provide a protective helmet to Stone, consistently with Woods v Multi-Sport Holdings Pty Ltd (2002) 208 CLR 460. 50. Spilt milk lies in the aisle of a supermarket for about half an hour. The manager of the supermarket had spotted this when the spill occurred but forgot to tell one of the employees to mop up the mess. A customer in the store slips on the spilt milk and suffers an injury. Which of the following statements best explains whether the supermarket will be liable in negligence to the customer? The supermarket clearly owes a duty of care to its customers. However in this case, there was no breach because the manager simply forgot to ask someone to clean up the mess, and to prove that negligence has occurred it needs to be shown that the negligent conduct was deliberate. The supermarket is unlikely to owe a duty of care to its customers, as it does not fall into one of the preexisting duty relationships and is unlikely to be placed in this category in the future. The supermarket owed the customer a duty of care and breached this duty by failing to meet the reasonable standard of care expected in this situation: that is, the probability of harm occurring here was high, the was the potential for serious harm, and it would not have been difficult for the supermarket to avoid the harm by simply cleaning up the mess. 51. In a commercial agency situation, a contract does not generally come into existence between which two parties? Choose the correct answer. Agent and principal Agent and third party Principal and third party 52. Choose the incorrect statement regarding “authority” to act as an agent: Authority may be expressly granted to an agent. Authority may be granted to an agent by implication. Both express actual authority and implied actual authority involve situations where the principal gives the agent power to represent them. A person without actual authority may represent that an agent has apparent authority. 53. Choose the incorrect statement regarding written authority: An agent can only be validly appointed and given authority if this is done in writing. If an agent is appointed for longer than one year or to do acts going beyond one year, the appointment must be evidenced in writing. An agent must be appointed in writing if they are to sell or buy land. Written authority is a type of express authority. 54. Doris is appointed to manage the business of “Elegance Coffee”, but is orally instructed not to make purchases for the business for amounts over $1,000 without obtaining the written approval of the owner of the business beforehand. One of the coffee machines breaks down and Doris orders an expensive part from Italy (costing $2,000) needed to fix the machine without obtaining approval from the owner. Which is the only authority Doris could potentially have to enter the contract to purchase the expensive part? Express actual authority, consistently with Freeman & Lockyer v Buckhurst Park Properties (Mangal) [1964] 1 All ER 630 Implied actual authority, consistently with Australia & New Zealand Bank Ltd v Ateliers de Constructions de Charleroi [1966] 1 NSWR 19 Apparent authority, consistently with Freeman & Lockyer v Buckhurst Park Properties (Mangal) [1964] 1 All ER 630 55. Cedric represents Samuel, an art collector. Samuel instructs Cedric that he is prepared to buy a certain painting by Brett Whiteley provided the asking price does not exceed $1m. Cedric attends the auction at which the Brett Whiteley painting is to be sold and bids on behalf of Samuel. When the bidding reaches $990 000, Cedric becomes very nervous. He wants to ensure that Samuel gets the painting. He therefore puts in a successful bid for $1.01 million dollars. Has Cedric breached any of duties owed to Samuel, and if so, which duty? No, he has not breached any duty to Samuel, consistently with Freeman & Lockyer v Buckhurst Park Properties (Mangal) [1964] 1 All ER 630. Yes, he has breached the duty to act in good faith by bidding over the limit proposed by Samuel, consistently with Lintrose Nominees v King [1995] 1 VR 574. Yes, he has breached the duty not to mix Samuel’s money with his own, by bidding $1 million of Samuel’s money and $0.01 million dollars of Cedric’s own money, consistently with Australia and New Zealand Bank v Ateliers [1966] 1 NSWR 19. Yes, because Cedric failed in his duty to follow Samuel’s instructions, consistently with Bertram, Armstrong & Co v Godfray (1830) 12 ER 364. 56. Which of the following statements regarding the duties of an agent to their principal is incorrect? An agent has a duty to act in good faith. An agent must indemnify the principal for any loss suffered by the principal. Consistently with the decision in Bertram, Armstrong & Co v Godfray (1830) 12 ER 364, agents have a duty to perform tasks in accordance with instructions. An agent must keep their money and property separate from the money and property of their principal, unless otherwise authorised (expressly or impliedly) by their principal. 57. Which of the following statements regarding the duties owed by a principal to their agent is incorrect? A principal must reimburse their agent for all expenses the agent incurs. If an agent is acting within their authority, lawfully and not negligently, a principal must compensate the agent for losses and liabilities they incur. The principal must pay the agreed fees to the agent when the agent has lawfully carried out the tasks agreed. 58. Nga purchased a t-shirt from a department store. After the sale was processed, the sales assistant handed Nga a written copy of the store’s terms and conditions. Are these terms and conditions part of the contract for the sale of the t-shirt? Choose the correct statement. The terms and conditions are part of the contract because they were expressly drawn to Nga’s attention. The terms and conditions will be part of the contract if Nga in fact reads them. The terms and conditions are not part of the contract. It is not possible to tell whether the terms are part of the contract without knowing more about the nature of the terms and conditions. 59. Jane has a cold. She asks her friend Portia whether she (Portia) could go down to the pharmacy and buy her some aspirin. Portia agrees, and Jane subsequently reimburses Portia for the cost of the aspirin. However, some two months later Portia tells Jane she has bought some more aspirin for her and asks to be reimbursed on this occasion as well. Must Jane reimburse Portia? Choose the answer that best reflects the legal position on this issue. No, because once Portia completed the specified task of buying the aspirin when Jane was ill, she had no authority to do anything further because her agency power ended. Yes, because it would be morally wrong for Jane not to reimburse Portia when Portia so kindly bought the aspirin for her. Yes, because a principal must reimburse their agent for all expenses the agent has incurred and Jane did not expressly terminate her agency relationship with Portia. 60. Ivan, a professional golfer, asks Peter to act as his agent (in respect of financial matters) for a salary of $5000 per month. Peter agrees and begins to work for Ivan. Unfortunately, five months later, Ivan is diagnosed with early-onset dementia, and is told that he will be incapable of making decisions for himself within 2-3 years. He still wants Peter to continue in the role of agent. Imagine that you are Ivan’s legal adviser here – what advice would you give him in this situation? Ivan has lost mental capacity and as such cannot employ Peter as his agent any longer. Ivan has told Peter that he wants Peter to act as his agent regardless of the situation, so an irrevocable agency has been created. Ivan should sign an Enduring Power of Attorney document to ensure that Peter can act as Ivan’s agent in financial matters even if Ivan’s health declines.