QUESTION ONE ISSUE: Would Kevin be successful in a claim for Negligence against Jenny? RULE: Elements of negligence • As established in Donoghue v Stevenson, to succeed in negligence a plaintiff must prove each of the three following steps: (a) that the defendant owed them a duty of care, (b) that the defendant breached the duty of care, and (c) that the breach of the duty of care caused the plaintiff damage that was reasonably foreseeable. APPLY: Duty of care • Does Jenny owe Kevin a duty of care? • Existing duties; employers owe a duty of care to their employees: Paris v Stepney Borough Council. • It is also worthwhile considering the two legal requirements to establish a duty of care. First, it is necessary to show that the risk of injury was reasonably foreseeable: Bourhill v Young. This follows from the Donoghue v Stevenson “neighbour” test, requiring reasonable foreseeability of injury to the plaintiff through the defendant’s failure to take care. This test defines neighbour as ‘anyone who is so closely and directly affected by my acts, that I ought reasonably to have them in contemplation as being so affected by my acts or omissions’. There is a foreseeable risk of injury to workers in Jenny’s farm when lifting heavy bags of potatoes. • Secondly, as shown in Sullivan v Moody, the salient features of the case must justify the existence of a duty of care. Relevant factors here are Jenny’s control over the work conditions at her farm and Kevin’s vulnerability as to the work conditions. In these circumstances, there is a strong argument that Jenny owed a duty of care to Kevin. Breach of Duty • The question is whether Jenny has acted as a reasonable employer would in the circumstances. The reasonable person test was discussed in Imbree v McNeilly. • The court will consider relevant factors to determine whether Jenny has breached the duty of care. These include the probability of harm (Bolton v Stone), the seriousness of the harm (Paris v Stepney Borough Council), common practice (Mercer’s case), and the cost of eliminating the risk (Latimer v AEC). • Given the high probability of harm in lifting bags of potatoes, the seriousness of the potential harm having regard to his earlier injury in the same work, industry practice regarding work safety and the low cost of minimising the risk, Jenny’s employment of Kevin in this type of activity and/or her preventing him from lifting bags of potatoes is likely to be a breach of the duty of care. Damage • It must be shown that damage was caused by the breach and that it is appropriate to extend the defendant’s liability to the harm. For causation, the “but for” test is usually applicable: Yates v Jones and Chappel v Hart. • But for Jenny’s breach of the duty of care, Kevin would not have suffered the back injury. • Furthermore, the harm suffered by Kevin is a reasonably foreseeable consequence of Jenny’s carelessness Rowe v.

1. QUESTION ONE
ISSUE:
Would Kevin be successful in a claim for Negligence against
Jenny?
RULE:
Elements of negligence
• As established in Donoghue v Stevenson, to succeed in
negligence a plaintiff must prove each of the three
following steps: (a) that the defendant owed them a duty of
care, (b) that the defendant breached the duty of
care, and (c) that the breach of the duty of care caused the
plaintiff damage that was reasonably foreseeable.
APPLY:
Duty of care
• Does Jenny owe Kevin a duty of care?
• Existing duties; employers owe a duty of care to their
employees: Paris v Stepney Borough Council.
• It is also worthwhile considering the two legal requirements to
establish a duty of care. First, it is necessary to

2. show that the risk of injury was reasonably foreseeable:
Bourhill v Young. This follows from the Donoghue v
Stevenson “neighbour” test, requiring reasonable foreseeability
of injury to the plaintiff through the
defendant’s failure to take care. This test defines neighbour as
‘anyone who is so closely and directly affected
by my acts, that I ought reasonably to have them in
contemplation as being so affected by my acts or
omissions’. There is a foreseeable risk of injury to workers in
Jenny’s farm when lifting heavy bags of
potatoes.
• Secondly, as shown in Sullivan v Moody, the salient features
of the case must justify the existence of a duty
of care. Relevant factors here are Jenny’s control over the work
conditions at her farm and Kevin’s
vulnerability as to the work conditions. In these circumstances,
there is a strong argument that Jenny owed a
duty of care to Kevin.
Breach of Duty
• The question is whether Jenny has acted as a reasonable
employer would in the circumstances. The
reasonable person test was discussed in Imbree v McNeilly.
• The court will consider relevant factors to determine whether
Jenny has breached the duty of care. These
include the probability of harm (Bolton v Stone), the
seriousness of the harm (Paris v Stepney Borough
Council), common practice (Mercer’s case), and the cost of
eliminating the risk (Latimer v AEC).
• Given the high probability of harm in lifting bags of potatoes,
the seriousness of the potential harm having

3. regard to his earlier injury in the same work, industry practice
regarding work safety and the low cost of
minimising the risk, Jenny’s employment of Kevin in this type
of activity and/or her preventing him from lifting
bags of potatoes is likely to be a breach of the duty of care.
Damage
• It must be shown that damage was caused by the breach and
that it is appropriate to extend the defendant’s
liability to the harm. For causation, the “but for” test is usually
applicable: Yates v Jones and Chappel v
Hart.
• But for Jenny’s breach of the duty of care, Kevin would not
have suffered the back injury.
• Furthermore, the harm suffered by Kevin is a reasonably
foreseeable consequence of Jenny’s carelessness
Rowe v McCartney – it is not too remote or far-fetched
(Overseas Tankship v Morts Dock & Engineering
(The Wagon Mound No. 1)).
Defences
• Voluntary assumption of risk: As Kevin was fully aware of the
risk of injury and as he continued to lift bags
of potatoes despite Jenny’s warnings, Jenny may successfully
use voluntary assumption of risk as a defence
to avoid all liability: Rootes v Shelton.
• Contributory Negligence: Jenny may in the alternative
successfully argue that Kevin contributed to his injury
through his own actions as he chose not to use the machine

4. provided. His damages will be reduced to the
extent he contributed to his injury: Ingram v Little.
CONCLUSION:
Having established the three elements of negligence (duty of
care, breach and damage), Kevin may recover damages
from Jenny for his back injury. However, his damages may be
fully or partly reduced depending on the success of
Jenny’s defence claims.
QUESTION TWO
ISSUE:
The issue here is whether Lucy and/or Clara have contractual
rights to Max’s car.
RULE:
• To establish a binding contract three elements in the formation
of contract must be proven: Agreement,
intention and consideration.
APPLY:
Offer
• Max wrote to his friend Lucy offering to sell her his car for
$3,000. This is a definite statement undertaking

5. both to sell and to be bound by that promise. It has been
communicated. It is therefore a valid offer (Carlill v
Carbolic Smoke Ball).
• However, even though Max promised to keep his offer open
until August 19, he may revoke his offer at any
time. His promise does not constitute an option as Lucy did not
provide consideration to keep the offer open
until August 19 (Goldsborough Mort v Quinn).
Acceptance
• Lucy posts a letter of acceptance on August 15. Under the
postal rule, acceptance occurs on the sending of
the letter of acceptance (Adams v Lindsell). Thus, acceptance
occurs on August 15, even though Max did
not receive the acceptance letter until August 19. As long as the
other two elements for the formation of
contract are fulfilled (intention and consideration, discussed
below) there is a binding contract between Max
and Lucy on August 15.
• Later on August 15, Max accepts Clara’s offer to purchase the
same car for $4,000. As long as the other two
elements for the formation of contract are fulfilled (intention
and consideration, see below) there is also a
binding contract between Clara and Max on August 15 for the
same car.
• Immediately after accepting Clara’s offer Max purports to
revoke his offer of sale to Lucy by leaving a
message on Lucy’s answering machine. But an offer cannot be
revoked if acceptance has already taken
place. Max’s revocation of his offer is sent after Lucy has
already accepted Max’s offer by post. As a

6. revocation of offer is only effective when it is received (Byrne
v Van Tienhoven), Max’s revocation of his offer
is too late and thus ineffective.
Intention
• As Max and Lucy are friends, it may be argued that they do
not intend to be contractually bound (Balfour’s
case). However, the presumption that there is no intention to be
bound when the parties are friends can be
rebutted. The amount of money involved ($3,000) and the use of
written communications when transacting
suggests that Max and Lucy did intend to be contractually
bound: Wakeling v Ripley.
• Intention is not an issue in Max’s transaction with Clara. They
are in a boss-worker relationship and are
presumably not close. It is therefore presumed the agreement
was intended to be legally binding: Edwards v
Skyways Ltd.
Consideration
• Consideration is the price paid for another’s promise: Carlill v
Carbolic Smokeball. Max provided
consideration to Lucy by way of a promise to sell Lucy his car
in exchange for Lucy’s promise to pay him
$3,000.
• In the other transaction, Clara promised to pay Max $4,000 in
exchange for Max’s promise to sell Clara his
car.
• In both transactions the parties have provided sufficient

7. consideration: Thomas v Thomas.
CONCLUSION:
Max has therefore entered into two contracts for the sale of his
car, one with Lucy for $3,000 and one with Clara for
$4,000. Max will be in breach of whichever of the contracts he
fails to satisfy.
LAW2442 Commercial Law: Mid-Semester Test (F) 1
GRADUATE SCHOOL OF BUSINESS AND LAW
MID-SEMESTER TEST (F)
COURSE: LAW2442 COMMERCIAL LAW
DATE: Week 7 Tutorial
TIME ALLOWED: 50 minutes
TOTAL OF PAGES: Nine (9)
INSTRUCTIONS TO CANDIDATES:

8. 1. The candidate’s name and student number must be entered on
the test
paper.
2. This test has two questions. Candidates are required to
answer both
questions. Both questions carry equal marks.
3. Answers must be written on the provided test paper.
4. Students are not permitted to leave the tutorial room with the
test paper.
5. Grammar and expression will be taken into account when
assessing
answers.
6. Only those enrolled in LAW2442 Commercial Law may sit
for this test.
7. This test is open book.
8. Electronic materials are not allowed.
9. This paper carries 40% of the marks allocated in this course.
NAME
:………………………………………………………………………
…….
STUDENT NO.:
………………………………………………………….…

9. TUTOR’S
NAME:………………………………………………………………
…
DAY AND START-TIME OF
TUTORIAL:……………………………………..
LAW2442 Commercial Law: Mid-Semester Test (F) 2
QUESTION ONE
Kevin, who is aged 34, was employed on Jenny’s farm as a
labourer. In 2014
he suffered an injury to his back when lifting heavy bags of
potatoes. He
underwent spinal surgery and was off work for nearly 12
months. Kevin
received compensation for this injury. Kevin returned to work
on the farm in
2015. Jenny knew of the injury and the operation.
In 2016, Kevin began to complain that his back was getting sore
again, and
Jenny told him not to lift heavy things and to be careful. She
provided a small
lifting machine to assist him to carry out his job. However

10. Kevin thought the
machine was too slow so he continued to lift the bags by
himself.
Early in 2017, while Kevin was lifting bags of potatoes onto a
trailer, his back
was again injured, and he had to undergo more surgery. This
time the injury
was too great, and he will be unable to do any more labouring
work for the
rest of his life.
REQUIRED
Advise Kevin as to whether he would be successful in
negligence against
Jenny. Please explain fully, using relevant legal authority.
(20 marks)
LAW2442 Commercial Law: Mid-Semester Test (F) 3
QUESTION TWO
Max writes a letter to his close friend, Lucy, and offers to sell
her his car for

11. $3,000. Lucy calls Max and explains that she needs a little
time to think it
over. Max tells her, “I’ll give you till Monday August 19 to let
me know
whether you want the car.”
On Thursday August 15, Lucy posts a letter to Max agreeing to
buy the car at
the specified price.
Later that Thursday, Max is approached by his work boss,
Clara, who wishes
to purchase Max’s car. Clara offers $4,000. Max immediately
accepts and
leaves a message on Lucy’s answering machine telling her that
he has
decided to sell the car to Clara instead.
Lucy hears Max’s message on Friday August 16 and Lucy’s
letter to Max is
not delivered until Monday August 19.
REQUIRED:

12. Advise Max as to his contractual obligations in respect of the
car.
LAW2442 Commercial Law: Mid-Semester Test (F) 1
GRADUATE SCHOOL OF BUSINESS AND LAW
MID-SEMESTER TEST (F)
COURSE: LAW2442 COMMERCIAL LAW
DATE: Week 7 Tutorial
TIME ALLOWED: 50 minutes
TOTAL OF PAGES: Nine (9)
INSTRUCTIONS TO CANDIDATES:
1. The candidate’s name and student number must be entered on
the test
paper.

13. 2. This test has two questions. Candidates are required to
answer both
questions. Both questions carry equal marks.
3. Answers must be written on the provided test paper.
4. Students are not permitted to leave the tutorial room with the
test paper.
5. Grammar and expression will be taken into account when
assessing
answers.
6. Only those enrolled in LAW2442 Commercial Law may sit
for this test.
7. This test is open book.
8. Electronic materials are not allowed.
9. This paper carries 40% of the marks allocated in this course.
NAME
:………………………………………………………………………
…….
STUDENT NO.:
………………………………………………………….…
TUTOR’S
NAME:………………………………………………………………
…
DAY AND START-TIME OF

14. TUTORIAL:……………………………………..
LAW2442 Commercial Law: Mid-Semester Test (F) 2
QUESTION ONE
Kevin, who is aged 34, was employed on Jenny’s farm as a
labourer. In 2014
he suffered an injury to his back when lifting heavy bags of
potatoes. He
underwent spinal surgery and was off work for nearly 12
months. Kevin
received compensation for this injury. Kevin returned to work
on the farm in
2015. Jenny knew of the injury and the operation.
In 2016, Kevin began to complain that his back was getting sore
again, and
Jenny told him not to lift heavy things and to be careful. She
provided a small
lifting machine to assist him to carry out his job. However
Kevin thought the
machine was too slow so he continued to lift the bags by
himself.
Early in 2017, while Kevin was lifting bags of potatoes onto a

15. trailer, his back
was again injured, and he had to undergo more surgery. This
time the injury
was too great, and he will be unable to do any more labouring
work for the
rest of his life.
REQUIRED
Advise Kevin as to whether he would be successful in
negligence against
Jenny. Please explain fully, using relevant legal authority.
(20 marks)
LAW2442 Commercial Law: Mid-Semester Test (F) 3
QUESTION TWO
Max writes a letter to his close friend, Lucy, and offers to sell
her his car for
$3,000. Lucy calls Max and explains that she needs a little
time to think it
over. Max tells her, “I’ll give you till Monday August 19 to let
me know

16. whether you want the car.”
On Thursday August 15, Lucy posts a letter to Max agreeing to
buy the car at
the specified price.
Later that Thursday, Max is approached by his work boss,
Clara, who wishes
to purchase Max’s car. Clara offers $4,000. Max immediately
accepts and
leaves a message on Lucy’s answering machine telling her that
he has
decided to sell the car to Clara instead.
Lucy hears Max’s message on Friday August 16 and Lucy’s
letter to Max is
not delivered until Monday August 19.
REQUIRED:
Advise Max as to his contractual obligations in respect of the
car.

17. QUESTION ONE
ISSUE:
Would Kevin be successful in a claim for Negligence against
Jenny?
RULE:
Elements of negligence
• As established in Donoghue v Stevenson, to succeed in
negligence a plaintiff must prove each of the three
following steps: (a) that the defendant owed them a duty of
care, (b) that the defendant breached the duty of
care, and (c) that the breach of the duty of care caused the
plaintiff damage that was reasonably foreseeable.
APPLY:
Duty of care
• Does Jenny owe Kevin a duty of care?
• Existing duties; employers owe a duty of care to their
employees: Paris v Stepney Borough Council.
• It is also worthwhile considering the two legal requirements to
establish a duty of care. First, it is necessary to
show that the risk of injury was reasonably foreseeable:
Bourhill v Young. This follows from the Donoghue v
Stevenson “neighbour” test, requiring reasonable foreseeability

18. of injury to the plaintiff through the
defendant’s failure to take care. This test defines neighbour as
‘anyone who is so closely and directly affected
by my acts, that I ought reasonably to have them in
contemplation as being so affected by my acts or
omissions’. There is a foreseeable risk of injury to workers in
Jenny’s farm when lifting heavy bags of
potatoes.
• Secondly, as shown in Sullivan v Moody, the salient features
of the case must justify the existence of a duty
of care. Relevant factors here are Jenny’s control over the work
conditions at her farm and Kevin’s
vulnerability as to the work conditions. In these circumstances,
there is a strong argument that Jenny owed a
duty of care to Kevin.
Breach of Duty
• The question is whether Jenny has acted as a reasonable
employer would in the circumstances. The
reasonable person test was discussed in Imbree v McNeilly.
• The court will consider relevant factors to determine whether
Jenny has breached the duty of care. These
include the probability of harm (Bolton v Stone), the
seriousness of the harm (Paris v Stepney Borough
Council), common practice (Mercer’s case), and the cost of
eliminating the risk (Latimer v AEC).
• Given the high probability of harm in lifting bags of potatoes,
the seriousness of the potential harm having
regard to his earlier injury in the same work, industry practice
regarding work safety and the low cost of
minimising the risk, Jenny’s employment of Kevin in this type

19. of activity and/or her preventing him from lifting
bags of potatoes is likely to be a breach of the duty of care.
Damage
• It must be shown that damage was caused by the breach and
that it is appropriate to extend the defendant’s
liability to the harm. For causation, the “but for” test is usually
applicable: Yates v Jones and Chappel v
Hart.
• But for Jenny’s breach of the duty of care, Kevin would not
have suffered the back injury.
• Furthermore, the harm suffered by Kevin is a reasonably
foreseeable consequence of Jenny’s carelessness
Rowe v McCartney – it is not too remote or far-fetched
(Overseas Tankship v Morts Dock & Engineering
(The Wagon Mound No. 1)).
Defences
• Voluntary assumption of risk: As Kevin was fully aware of the
risk of injury and as he continued to lift bags
of potatoes despite Jenny’s warnings, Jenny may successfully
use voluntary assumption of risk as a defence
to avoid all liability: Rootes v Shelton.
• Contributory Negligence: Jenny may in the alternative
successfully argue that Kevin contributed to his injury
through his own actions as he chose not to use the machine
provided. His damages will be reduced to the
extent he contributed to his injury: Ingram v Little.

20. CONCLUSION:
Having established the three elements of negligence (duty of
care, breach and damage), Kevin may recover damages
from Jenny for his back injury. However, his damages may be
fully or partly reduced depending on the success of
Jenny’s defence claims.
QUESTION TWO
ISSUE:
The issue here is whether Lucy and/or Clara have contractual
rights to Max’s car.
RULE:
• To establish a binding contract three elements in the formation
of contract must be proven: Agreement,
intention and consideration.
APPLY:
Offer
• Max wrote to his friend Lucy offering to sell her his car for
$3,000. This is a definite statement undertaking
both to sell and to be bound by that promise. It has been
communicated. It is therefore a valid offer (Carlill v
Carbolic Smoke Ball).

21. • However, even though Max promised to keep his offer open
until August 19, he may revoke his offer at any
time. His promise does not constitute an option as Lucy did not
provide consideration to keep the offer open
until August 19 (Goldsborough Mort v Quinn).
Acceptance
• Lucy posts a letter of acceptance on August 15. Under the
postal rule, acceptance occurs on the sending of
the letter of acceptance (Adams v Lindsell). Thus, acceptance
occurs on August 15, even though Max did
not receive the acceptance letter until August 19. As long as the
other two elements for the formation of
contract are fulfilled (intention and consideration, discussed
below) there is a binding contract between Max
and Lucy on August 15.
• Later on August 15, Max accepts Clara’s offer to purchase the
same car for $4,000. As long as the other two
elements for the formation of contract are fulfilled (intention
and consideration, see below) there is also a
binding contract between Clara and Max on August 15 for the
same car.
• Immediately after accepting Clara’s offer Max purports to
revoke his offer of sale to Lucy by leaving a
message on Lucy’s answering machine. But an offer cannot be
revoked if acceptance has already taken
place. Max’s revocation of his offer is sent after Lucy has
already accepted Max’s offer by post. As a
revocation of offer is only effective when it is received (Byrne
v Van Tienhoven), Max’s revocation of his offer
is too late and thus ineffective.

22. Intention
• As Max and Lucy are friends, it may be argued that they do
not intend to be contractually bound (Balfour’s
case). However, the presumption that there is no intention to be
bound when the parties are friends can be
rebutted. The amount of money involved ($3,000) and the use of
written communications when transacting
suggests that Max and Lucy did intend to be contractually
bound: Wakeling v Ripley.
• Intention is not an issue in Max’s transaction with Clara. They
are in a boss-worker relationship and are
presumably not close. It is therefore presumed the agreement
was intended to be legally binding: Edwards v
Skyways Ltd.
Consideration
• Consideration is the price paid for another’s promise: Carlill v
Carbolic Smokeball. Max provided
consideration to Lucy by way of a promise to sell Lucy his car
in exchange for Lucy’s promise to pay him
$3,000.
• In the other transaction, Clara promised to pay Max $4,000 in
exchange for Max’s promise to sell Clara his
car.
• In both transactions the parties have provided sufficient
consideration: Thomas v Thomas.

23. CONCLUSION:
Max has therefore entered into two contracts for the sale of his
car, one with Lucy for $3,000 and one with Clara for
$4,000. Max will be in breach of whichever of the contracts he
fails to satisfy.
QUESTION ONE
ISSUE:
Would Kevin be successful in a claim for Negligence against
Jenny?
RULE:
Elements of negligence
• As established in Donoghue v Stevenson, to succeed in
negligence a plaintiff must prove each of the three
following steps: (a) that the defendant owed them a duty of
care, (b) that the defendant breached the duty of
care, and (c) that the breach of the duty of care caused the
plaintiff damage that was reasonably foreseeable.
APPLY:
Duty of care
• Does Jenny owe Kevin a duty of care?

24. • Existing duties; employers owe a duty of care to their
employees: Paris v Stepney Borough Council.
• It is also worthwhile considering the two legal requirements to
establish a duty of care. First, it is necessary to
show that the risk of injury was reasonably foreseeable:
Bourhill v Young. This follows from the Donoghue v
Stevenson “neighbour” test, requiring reasonable foreseeability
of injury to the plaintiff through the
defendant’s failure to take care. This test defines neighbour as
‘anyone who is so closely and directly affected
by my acts, that I ought reasonably to have them in
contemplation as being so affected by my acts or
omissions’. There is a foreseeable risk of injury to workers in
Jenny’s farm when lifting heavy bags of
potatoes.
• Secondly, as shown in Sullivan v Moody, the salient features
of the case must justify the existence of a duty
of care. Relevant factors here are Jenny’s control over the work
conditions at her farm and Kevin’s
vulnerability as to the work conditions. In these circumstances,
there is a strong argument that Jenny owed a
duty of care to Kevin.
Breach of Duty
• The question is whether Jenny has acted as a reasonable
employer would in the circumstances. The
reasonable person test was discussed in Imbree v McNeilly.
• The court will consider relevant factors to determine whether
Jenny has breached the duty of care. These
include the probability of harm (Bolton v Stone), the

25. seriousness of the harm (Paris v Stepney Borough
Council), common practice (Mercer’s case), and the cost of
eliminating the risk (Latimer v AEC).
• Given the high probability of harm in lifting bags of potatoes,
the seriousness of the potential harm having
regard to his earlier injury in the same work, industry practice
regarding work safety and the low cost of
minimising the risk, Jenny’s employment of Kevin in this type
of activity and/or her preventing him from lifting
bags of potatoes is likely to be a breach of the duty of care.
Damage
• It must be shown that damage was caused by the breach and
that it is appropriate to extend the defendant’s
liability to the harm. For causation, the “but for” test is usually
applicable: Yates v Jones and Chappel v
Hart.
• But for Jenny’s breach of the duty of care, Kevin would not
have suffered the back injury.
• Furthermore, the harm suffered by Kevin is a reasonably
foreseeable consequence of Jenny’s carelessness
Rowe v McCartney – it is not too remote or far-fetched
(Overseas Tankship v Morts Dock & Engineering
(The Wagon Mound No. 1)).
Defences
• Voluntary assumption of risk: As Kevin was fully aware of the
risk of injury and as he continued to lift bags
of potatoes despite Jenny’s warnings, Jenny may successfully

26. use voluntary assumption of risk as a defence
to avoid all liability: Rootes v Shelton.
• Contributory Negligence: Jenny may in the alternative
successfully argue that Kevin contributed to his injury
through his own actions as he chose not to use the machine
provided. His damages will be reduced to the
extent he contributed to his injury: Ingram v Little.
CONCLUSION:
Having established the three elements of negligence (duty of
care, breach and damage), Kevin may recover damages
from Jenny for his back injury. However, his damages may be
fully or partly reduced depending on the success of
Jenny’s defence claims.
QUESTION TWO
ISSUE:
The issue here is whether Lucy and/or Clara have contractual
rights to Max’s car.
RULE:
• To establish a binding contract three elements in the formation
of contract must be proven: Agreement,
intention and consideration.

27. APPLY:
Offer
• Max wrote to his friend Lucy offering to sell her his car for
$3,000. This is a definite statement undertaking
both to sell and to be bound by that promise. It has been
communicated. It is therefore a valid offer (Carlill v
Carbolic Smoke Ball).
• However, even though Max promised to keep his offer open
until August 19, he may revoke his offer at any
time. His promise does not constitute an option as Lucy did not
provide consideration to keep the offer open
until August 19 (Goldsborough Mort v Quinn).
Acceptance
• Lucy posts a letter of acceptance on August 15. Under the
postal rule, acceptance occurs on the sending of
the letter of acceptance (Adams v Lindsell). Thus, acceptance
occurs on August 15, even though Max did
not receive the acceptance letter until August 19. As long as the
other two elements for the formation of
contract are fulfilled (intention and consideration, discussed
below) there is a binding contract between Max
and Lucy on August 15.
• Later on August 15, Max accepts Clara’s offer to purchase the
same car for $4,000. As long as the other two
elements for the formation of contract are fulfilled (intention
and consideration, see below) there is also a
binding contract between Clara and Max on August 15 for the
same car.

28. • Immediately after accepting Clara’s offer Max purports to
revoke his offer of sale to Lucy by leaving a
message on Lucy’s answering machine. But an offer cannot be
revoked if acceptance has already taken
place. Max’s revocation of his offer is sent after Lucy has
already accepted Max’s offer by post. As a
revocation of offer is only effective when it is received (Byrne
v Van Tienhoven), Max’s revocation of his offer
is too late and thus ineffective.
Intention
• As Max and Lucy are friends, it may be argued that they do
not intend to be contractually bound (Balfour’s
case). However, the presumption that there is no intention to be
bound when the parties are friends can be
rebutted. The amount of money involved ($3,000) and the use of
written communications when transacting
suggests that Max and Lucy did intend to be contractually
bound: Wakeling v Ripley.
• Intention is not an issue in Max’s transaction with Clara. They
are in a boss-worker relationship and are
presumably not close. It is therefore presumed the agreement
was intended to be legally binding: Edwards v
Skyways Ltd.
Consideration
• Consideration is the price paid for another’s promise: Carlill v
Carbolic Smokeball. Max provided
consideration to Lucy by way of a promise to sell Lucy his car
in exchange for Lucy’s promise to pay him
$3,000.

29. • In the other transaction, Clara promised to pay Max $4,000 in
exchange for Max’s promise to sell Clara his
car.
• In both transactions the parties have provided sufficient
consideration: Thomas v Thomas.
CONCLUSION:
Max has therefore entered into two contracts for the sale of his
car, one with Lucy for $3,000 and one with Clara for
$4,000. Max will be in breach of whichever of the contracts he
fails to satisfy.
LAW2442 Commercial Law: Mid-Semester Test (F) 1
GRADUATE SCHOOL OF BUSINESS AND LAW
MID-SEMESTER TEST (F)
COURSE: LAW2442 COMMERCIAL LAW
DATE: Week 7 Tutorial
TIME ALLOWED: 50 minutes
TOTAL OF PAGES: Nine (9)

30. INSTRUCTIONS TO CANDIDATES:
1. The candidate’s name and student number must be entered on
the test
paper.
2. This test has two questions. Candidates are required to
answer both
questions. Both questions carry equal marks.
3. Answers must be written on the provided test paper.
4. Students are not permitted to leave the tutorial room with the
test paper.
5. Grammar and expression will be taken into account when
assessing
answers.
6. Only those enrolled in LAW2442 Commercial Law may sit
for this test.
7. This test is open book.
8. Electronic materials are not allowed.
9. This paper carries 40% of the marks allocated in this course.

31. NAME
:………………………………………………………………………
…….
STUDENT NO.:
………………………………………………………….…
TUTOR’S
NAME:………………………………………………………………
…
DAY AND START-TIME OF
TUTORIAL:……………………………………..
LAW2442 Commercial Law: Mid-Semester Test (F) 2
QUESTION ONE
Kevin, who is aged 34, was employed on Jenny’s farm as a
labourer. In 2014
he suffered an injury to his back when lifting heavy bags of
potatoes. He
underwent spinal surgery and was off work for nearly 12
months. Kevin
received compensation for this injury. Kevin returned to work
on the farm in
2015. Jenny knew of the injury and the operation.
In 2016, Kevin began to complain that his back was getting sore

32. again, and
Jenny told him not to lift heavy things and to be careful. She
provided a small
lifting machine to assist him to carry out his job. However
Kevin thought the
machine was too slow so he continued to lift the bags by
himself.
Early in 2017, while Kevin was lifting bags of potatoes onto a
trailer, his back
was again injured, and he had to undergo more surgery. This
time the injury
was too great, and he will be unable to do any more labouring
work for the
rest of his life.
REQUIRED
Advise Kevin as to whether he would be successful in
negligence against
Jenny. Please explain fully, using relevant legal authority.
(20 marks)

33. LAW2442 Commercial Law: Mid-Semester Test (F) 3
QUESTION TWO
Max writes a letter to his close friend, Lucy, and offers to sell
her his car for
$3,000. Lucy calls Max and explains that she needs a little
time to think it
over. Max tells her, “I’ll give you till Monday August 19 to let
me know
whether you want the car.”
On Thursday August 15, Lucy posts a letter to Max agreeing to
buy the car at
the specified price.
Later that Thursday, Max is approached by his work boss,
Clara, who wishes
to purchase Max’s car. Clara offers $4,000. Max immediately
accepts and
leaves a message on Lucy’s answering machine telling her that
he has
decided to sell the car to Clara instead.
Lucy hears Max’s message on Friday August 16 and Lucy’s
letter to Max is

34. not delivered until Monday August 19.
REQUIRED:
Advise Max as to his contractual obligations in respect of the
car.