2020 Final Exam PDF

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intensive class final exam paper...

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THE UNIVERSITY OF MELBOURNE Juris Doctor

LAWS50026 Obligations TAKE-HOME EXAMINATION MAY OFFERING 2020 To be downloaded:

12 June via LMS from 12:00 AEST

To be submitted:

12 June via LMS before 15:00 AEST INSTRUCTIONS FOR CANDIDATES

Please read ALL of these instructions carefully, they may vary between subjects. 1. Mark value. This examination is worth 70% of your total assessment for this subject. 2. Questions. There are two (2) questions in this exam (each question consists of two sub-questions). You must answer BOTH questions. Each question is worth 35% of your overall result (50% of the exam) 3. Word limit. There is no word limit for this exam. 4. Referencing. Footnotes and a bibliography are not required for this exam. 5. Cover sheet. As of 2020, you don’t need to use a Law School coversheet. Put these details on the first page of your submission (and in the header or footer): a. Your student ID number (not your name) b. Subject code and subject name c. A word count 6. Plagiarism & Originality. Answers must be the sole, original work of each student. Consequently, students are strictly prohibited from consulting each other or any other person in relation to this exam. All pieces of assessment will be put through an electronic plagiarism check and will be retained for future plagiarism checking. This exercise is subject to all the rules governing assessment in the Melbourne Law School and the university. It is your responsibility to be aware of all those rules, including the rules on academic misconduct. See www.academichonesty.unimelb.edu.au for more information. 7. Late Submission: Late submissions are not accepted; please ensure you begin submitting your assessment at least 10 minutes before the end of the examination. 8. Queries. If you have any queries regarding the exam, please contact the Academic Support Office at [email protected] within one hour of its first release and state what the query is and why you think it needs to be resolved. Questions that warrant an answer will be published with an answer on the LMS. Students are not permitted to make direct contact with the lecturer about the examination paper. Please note that any clarification or corrections will be sent as a Canvas announcement. Please ensure LMS Canvas notifications are enabled and you check your student email account. 9. Submission: All papers must be submitted electronically via LMS Canvas under Assignments, please ensure you submit under the correct subject and assignment. If you encounter problems submitting via LMS you MUST follow the instructions regarding accessing Canvas Support on the Canvas assignment link.

Question 1: (35 marks) Penelope owns Pemberton’s Pastries Pty Ltd, a very successful catering business. Penelope had always intended to be actively involved in the running of the business until 2025, when she would turn 70. However, these plans changed in late 2018 when Penelope won the lottery, earning her a $10 million cash prize. Penelope received the winning ticket as a gift from her grandson Ricardo. Penelope contacted Ricardo as soon as she won the lottery on 1 November 2018. Penelope and Ricardo had the following conversation: Penelope:

I can’t believe it. I’ve just won $10 million, and it’s all thanks to the lucky ticket that you gave me. I would like to split the prize with you.

Ricardo:

I won’t hear of it Nan. The ticket was a gift.

Penelope:

I thought you might say that. I would like to express my gratitude in another way then. I’ve decided to retire earlier than planned, at the end of next year. When I do, I will transfer ownership of Pemberton’s Pastries to you. I will also give you and your brother $500,000 as soon as I receive the prize money. I insist!

Ricardo:

That would be amazing. Thank you Nan.

Aware that running Pemberton’s Pastries would be incredibly demanding, Ricardo sold his house, quit his job and went travelling for a year. When the person who purchased his house finalised payment, Ricardo decided to donate $250,000 to an animal welfare charity. Ricardo’s friend told him about an animal welfare organisation that rehomes stray cats, which the friend thought was called Cat Rescue. Ricardo donated $250,000 to Cat Rescue. When it received Ricardo’s donation, Cat Rescue spent $300,000 on a new animal shelter and kept the remaining $200,000 in reserves. Cat Rescue staff also decreased their fundraising efforts so that they could work more closely with the animals. During his year way, Ricardo spent the remaining money he received for the house. Ricardo was comfortable doing so because he planned to use the $500,000 Penelope promised him for a deposit on a new house. He was also confident that the profits he would earn as owner of Pemberton’s Pastries would easily cover loan repayments. While Ricardo was on his trip, Penelope lost interest in Pemberton’s Pastries, and the business suffered as a result. Ricardo’s brother Finn, who was unaware of the promise Penelope made to Ricardo, quit his high-paying job so that he could work full-time at Pemberton’s Pastries. Pemberton’s Pastries thrived under Finn’s leadership and is now more profitable than ever. When Ricardo returned from his trip, Penelope told him that because of all the work Finn had done to improve the business, she would not be transferring the business to him (Ricardo) as promised. He also found out that the charity his friend was talking about was in fact called Rescue Cat. After doing some research, Ricardo discovered that Cat Rescue (the organisation he donated money to) has a terrible reputation. He contacted Cat Rescue and asks for the donation to be returned so that he could donate the money to Rescue Cat. Cat Rescue refused to return the donation.

Ricardo comes to you for advice. He would like to know whether: (a) he can recover the donation from Cat Rescue. (15 marks) (b) a court is likely to order that Penelope transfer ownership of Pemberton’s Pastries to him as promised (in providing this advice, you should assume that Ricardo cannot recover the $250,000 from Cat Rescue). (20 marks)

Question 2: (35 marks) Robbie owns Rotisserie Roosters Pty Ltd, a chain of fast food stores that sells barbequed chickens and accompanying side dishes (salads, chips, soft drinks etc). The business has not fared well in recent times. At the beginning of 2019, Robbie met with Patrice, the CEO of Petroleum Palace Pty Ltd. Petroleum Palace operates a nationwide petrol station chain. It has traditionally made a significant portion of its revenue from in-store, impulse purchases. However, in-store sales are declining and Patrice is looking for ways to reverse this trend. At the meeting, Robbie suggested that Rotisserie Roosters could sell roast chickens and a small selection of salads at Petroleum Palace outlets. Patrice liked the idea. She suggested that Rotisserie Roosters sub-lease a small part of each Petroleum Petrol outlet for roughly $1,500 per week. Robbie told Patrice that $1,500 sounded a bit high. Patrice told Robbie they could “haggle about price later”. Patrice told Robbie that, at minimum, an average of 2,000 to 2,500 customers pass through the each store each day. This is untrue – only Petroleum Palace’s busiest stores see this many customers come through the store each day. By the end of the meeting Robbie and Patrice managed to agree upon most terms of the proposed sub-lease. However, they could not agree upon the rental price. Before negotiations over price were finalised, Robbie and Patrice signed the following agreement on 1 March 2019: Lease between Rotisserie Roosters and Petroleum Palace 1. Rotisserie Roosters will lease a 20 square metre area at each of Petroleum’s Palaces retail outlets. 2. Petroleum Palace will ensure that the area referred to in clause 1 is suitable for cooking and retailing cooked chickens and pre-prepared salads. 3. Rotisserie Roosters will pay Petroleum Palace a reasonable rent, payable in arrears at the end of each month. 4. Rotisserie Rooster’s obligation to pay rent, and Petroleum Palace’s obligation to provide vacant possession of the area referred to in clause 1, commence upon the signing of the formal contract referred to in clause 8. [Clauses 5, 6 and 7 relate to joint advertising and restrictions on what Rotisserie Roosters could sell from Petroleum Palace’s stores]. 8. This agreement is made subject to the preparation of a formal contract of sale which shall be acceptable Rotisserie Roosters’ solicitors, and include the above terms and conditions.

On 2 April Robbie received an email from Patrice. The email was sent to Robbie in error. It was addressed to Hua Li, who runs Heavenly Hens Pty Ltd, one of Rotisserie Roster’s main competitors. The email read as follows: Dear Hua I had an interesting chat with Robbie from Rotisserie Roosters. He has a brilliant idea, namely that barbecued chickens could be sold from Petroleum Palace retail outlets. We are yet to finalise the deal, but Robbie seems willing to pay roughly $1,000 per month for 20 square metres of retail space. We have signed something, but I don’t consider myself bound. If you will agree to pay $1,500 a month, the sub-lease is yours. Kind Regards Patrice On 5 April Robbie called Patrice and asked her about the email. Patrice did not deny sending the email but told Robbie that Hua had responded to the email and was not interested in the proposed sub-lease. Patrice promised Robbie that she would honour the agreement they had signed, telling Robbie that she was confident there would be a Rotisserie Rooster outlet in all Petroleum Petrol stores by the end of the year. What Patrice told Robbie is untrue. By the time Robbie called Patrice, Patrice and Hua were close to finalising a deal. After he spoke to Patrice, Robbie began the process of closing Rotisserie Rooster retail outlets. The first eight Rotisserie Rooster stores closed on 30 June. The leases at each of these eight stores expired on 30 June and were not renewed. Had they been operated until the end of 2019, these stores would have generated a $2.5 million profit. Robbie thought incurring this loss was preferable to re-signing a lease, only to break it soon after once Rotisserie Rooster outlets opened in the Petroleum Palace outlets. On 1 September Robbie sent a contract prepared by Rotisserie Rooster’s solicitor to Patrice. Upon receiving the contract, Patrice called Robbie and told him that she had decided to lease the space in her retail outlets to Heavenly Hens.

Robbie comes to you for advice. He would like to know: (a) whether Rotisserie Rooster has contractual rights against Petroleum Palace. (15 marks) (b) whether Rotisserie Rooster could recover the lost revenue ($2.5 million) from Petroleum Palace under the Australian Consumer Law. (20 marks)...