Answer Guide to Problem Question Week 1 T1 2021 PDF

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ANSWER GUIDE TO PROBLEM QUESTION - WEEK 1Note: This answer guide is not a definitive or exhaustive answer to the problem question or an authoritative statement of the law. Rather, it is an outline and summary of the issues that the problem question may raise and is intended to be used by students as...

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ANSWER GUIDE TO PROBLEM QUESTION - WEEK 1 Note: This answer guide is not a definitive or exhaustive answer to the problem question or an authoritative statement of the law. Rather, it is an outline and summary of the issues that the problem question may raise and is intended to be used by students as a guide for how to approach problem questions. Please also note that the answer guide uses the headings ‘issue’, ‘rule’, ‘apply’ and ‘conclusion’ to show students how to apply the ‘PIRAC’ problem question answering methodology, but students should not use these headings in their assessment tasks. Rather, students should use headings that reflect the legal issues they are discussing. Rhonda's lost bike (question 2, pages 87-88 textbook) Ultimate issues: Was a binding contract formed between Rhonda and Bruno, or between Rhonda and Libby? If a contract was formed, Bruno/Libby will have a contractual claim to the reward. Subsidiary issues: Were the preconditions required for formation of a contract - agreement, consideration, intention to create legal relations, capacity, formalities - satisfied? For the purpose of this question, we focus on whether the parties reached an agreement (the first precondition for the formation of a contract). Ultimate issue: Was a binding contract formed between Rhonda and Bruno? Agreement Rules An agreement involves a meeting of the parties’ minds that one party promised to do something in return for the other party doing something or promising to do something, and courts use an objective test to determine whether an agreement exists, i.e. they ask whether a reasonable person looking at the parties would conclude that they had entered an agreement (Smith v Hughes). A court will find that parties reached an agreement and a contract has been formed if one party communicated an offer to another and the other party accepted that offer. Offer Issue: did Rhonda make a valid offer and is a notice of a reward a valid offer? Rule An offer is a promise to do something if the offeree responds in a particular way in return. Courts use an objective test to determine whether an offer has been made, i.e. they ask whether a reasonable person in the position of the offeree would find that there was an

intention to make an offer and that a binding agreement would be formed on acceptance of the offer. Offers can be made to the whole world and can be accepted by any person who performs the condition on the faith of the advertisement (Carlill v Carbolic Smoke Ball Co) Apply Probably a reasonable person in the position of Bruno/Libby would find that there was an intention by Rhonda to make an offer and that a binding agreement would be formed on acceptance of the offer. This case is similar to Carlill in that Rhonda’s advertisement was an offer to the whole world. Issue: Are all advertisements to the whole world offers? Rule An advertisement will be characterised as an offer if it is ‘clear, definite and explicit, and leaves nothing open to negotiation’, and acceptance of it will complete the contract’ (Lefkowitz v Great Minneapolis Surplus Store) Apply Rhonda’s offer is clear, definite and leaves nothing open to negotiation – it promises a certain amount in exchange for the bike. Therefore, it most likely is an offer. Acceptance Issue Facts - Bruno had not seen Rhonda’s advertisement when he found the bike and brought it home, though Libby informed him of the advertisement before he returned the bike to Rhonda. Did Bruno validly accept Rhonda’s offer? Rule Acceptance is an offeree’s affirmative response to an offer. A contract only arises if the offeree performs the requested acts on the faith of, in reliance on, or in response to the offer, so a party cannot accept an offer about which it was not aware (Crown v Clarke). Apply Bruno was not fulfilling the terms of the offer by taking the bike home, so the fact that he

was unaware of the notice at that time is not relevant. Libby advised Bruno of Rhonda’s advertisement and Bruno subsequently returned the bike to Rhonda on the basis of the advertisement and to claim the reward (ie distinguish from Crown v Clarke). Issue Did Bruno’s return of the bike constitute acceptance of Rhonda’s offer, and did he sufficiently communicate his acceptance of her offer? Rule If the offer stipulates a particular method for communicating acceptance of it, observation of that method will be effective in completing the contract, even if the method requires doing an act rather than actual communication (Manchester Diocesan Council for Education v Commercial and General Investments Ltd). In certain circumstances, an offer may be accepted by conduct if an objective bystander would conclude from the offeree’s conduct that he/she accepted the offer and signalled that acceptance to the offeror (P’Auer AG v PolybuildTechnologies; Empirnall Holdings v Machon Paul Partners) Apply Rhonda’s offer stipulated that the bike needed to be returned to her, which suggests that this is the method for communicating acceptance of her offer of her reward. Bruno complied with that stipulation and an objective bystander would likely conclude from his returning of the bike that he accepted the offer and signalled that acceptance to Rhonda. Revocation of offer Issue Fact - Rhonda purported to withdraw the reward, that is, to revoke her offer, by stating that she did not want the bike and therefore would not pay anyone $1,000 for returning it. Did Rhonda effectively revoke her offer so that Bruno could not accept it? Rule Revocation of an offer terminates an offer so that it can no longer be accepted. However, a revocation of an offer is only effective if it occurs and is communicated to the offeree before the offeree accepts the offer (Dickinson v Dodds; Byrne v Van Tienhoven) Apply Bruno accepted Rhonda’s offer, by returning the bike, before Rhonda sought to withdraw the offer, so her purported revocation of the offer was ineffective.

Ultimate issue: Is there a binding contract between Libby and Rhonda? Issue Did Libby accept Rhonda’s offer? Rule A contract only arises if the offeree performs the requested acts on the faith of, in reliance on, or in response to the offer: Crown v Clarke. An offeror can stipulate a particular method for communicating acceptance. In this case, the observation of that method will be effective to complete the contract: Manchester Diocesan Council for Education v Commercial and General Investments Ltd. Acceptance of an offer must be communicated to the offeror to be effective: Felthouse v Bindley. Apply Libby did not return the bike to Rhonda, she did not follow R’s stipulated method for acceptance of her offer, and she did not communicate any acceptance of the offer to R, so she did not validly accept it. Conclusion A binding contract was formed between Rhonda and Bruno, so Bruno has a contractual claim to the reward. A contract was not formed between Rhonda and Libby, so Libby has no contractual claim to the reward....