1.
Cass was the owner of a gymnasium called Pro-Fit on Church Street in Parramatta since April 2016. Due to an increase in recent competition in the surrounding area, business had declined, and the gymnasium had not made a profit in months.
In January 2018 she approached her friend Alex for a loan of $250,000 and they agreed to draw up a loan agreement which included the following:
- Alex will receive a share of the profits and losses to the extent of 50% and be working in the business from Friday to Sundays.
- Alex has the right to examine the business books at will and receive a quarterly business statement.
- Alex has the right to be consulted and contribute to any major decisions regarding the business.
With the injection of money into the business, Cass and Alex decided that the way to improve trade was to buy state of the art equipment and to undertake a television and radio and print media marketing campaign to recruit new members. Most of the money was spent on this and the business improved and made a profit. Alex spent considerable time working at the gymnasium and came to know many of the equipment suppliers some of whom thought he was in a partnership with Cass.
- Discuss whether Cass and Alex are in a business partnership.
- In June 2019, Cass takes some time away from the gym to have a long overdue surgery. Alex, without consulting Cass decides that the treadmills they have purchased for the gym are not of the best quality and purchases 10 new Titanium USA Predator Curve Treadmills at a total cost of $80,000.00 from Commercial Fitness Equipment (CFE). On Cass’ return she notices the new treadmills and whilst sorting through the mail she finds a letter of demand from CFE addressed to her demanding immediate payment of the Tax Invoice for $80,000.00.
- Cass also notices that there are only 8 new treadmills rather than 10 in the gym. Alex, has set up a side business at his home (that Cass does not know about) offering personal training to existing members at a lower cost and has taken 2 of the treadmills to use for this purpose.
- In November 2019 James starts working at the gym on the weekends as a safety monitor. On Saturday he was told that one of the lat pulldown machines was malfunctioning and that he was to put an “Out of Order’ sign on the machine immediately. He had an argument with his girlfriend the night before and was so preoccupied on his phone that he completely forgot to put up the sign. While Jess, one of the members, was using the machine, the weight unexpectedly dropped and caused an injury to her back. As a result of the injury Jess is claiming $2000.00 from Pro-Fit for medical bills.
Using IRAC, answer (a) and advise Cass and Alex on their potential rights and liabilities in (b),(c) and (d). In doing so, discuss fully all relevant legal issues that arise in the circumstances. Your answer must be supported with relevant legislation and case law authorities.
2.
Moses is a business student at WSU. During his time at the campus he is faced with a variety of situations which are recorded in each of the separate scenarios below. Moses wants your advice as to whether a contract has been formed in each of the scenarios.
- Whilst in the Co-Op on campus at WSU Moses sees a Business Law text book on a promotional table marked “All Items $5.00”. Moses knew that the text book would be extremely useful for his study and so went to the cash register and handed the cashier $5.00. The cashier told Moses that the text book was $100.00 and that he could not have the text book for $5.00.
- Moses’ sister Mona is concerned about his marks, and promised that she would give him $500.00 if he attended all his lectures and tutorials and achieved a Distinction in his Legal unit. Moses worked hard all term attending all classes and achieved a Distinction. When he asked Mona for the $500.00 she refused to pay.
- Sam, an engineering student at WSU, has a of pair light blue ASIC Gel Quantum 360’s that Moses has shown an interest in as they are his size and have sold out in the stores. Sam says to Moses, “I will sell them to you if you give me $400.00 right now”. Moses replies, “You’ve got a deal, but I will need to pay you in weekly instalments of $100.00”. Sam walks off without saying anything further. The next day Moses finds out that Sam sold the shoes to his friend Luca for $350.00. He approaches Sam and says, “We had a deal, you owe me the shoes”.
- Moses is in a hurry to get to his part-time employment on time. Lately, due to study commitments he has been late to work on several occasions and has been warned by his supervisor if this happens again he will lose his job. He gets into his car and notices that the car engine will not start as he left the car lights on and the battery went flat. Traci, a student at the same campus offered to drive Moses to work and Moses accepted. When Moses got to work on time, he was so grateful that he promised Traci he would buy her a lottery ticket. Moses did not give Traci the lottery ticket and when Traci claimed he had to, he told Traci that he is not obliged to give it to her.
Using IRAC, advise Moses whether a contract has been formed in each of the situations. In doing so, discuss fully all relevant legal principles that arise in the circumstances.
Your answer must be supported with relevant legislation and case law authorities.
3.
Speedstar Pty Ltd (Speedstar) runs an indoor go-kart track. On entering the track, Jovan was handed an Entry Form entitled “Speedstar Agreement-Terms of Entry”. Jovan read through the Agreement and noted the following terms:
- At all times the invitee must wear a helmet. If at any time the invitee removes their helmet whilst on the track Speedstar will fine the invitee $200.00 and remove them from the premises immediately.
- Speedstar will use their best endeavours to provide an invitee with their preferred kart.
- Speedstar will not be liable for any damages to the invitee caused as a result of Speedstar’s negligence.
(i).Advise Jovan of the terms of the contract and support your classification with relevant legal authorities (cases) for each of the terms.
(ii). Describe the consequences of classifying the terms in the way you have done in (i).
