Session 2 2017
Word length: maximum 2500 words
If the word length is exceed, marks may be deducted where the excess is caused by irrelevant material.
QUESTION 1 (13 marks)
Vera is a well- known painter of landscape scenes of high artistic merit. She wishes to sell her latest painting which she called “Dawn “. She considers this to be her best painting in the previous 10 years. She asked Siddo to sell the painting for her for $40,000. She told him that she was prepared to accept less than $40,000 for a quick sale but under no circumstances sell it for less than $32,000 without her written approval.
Assume the following alternative circumstances:
a. Siddo sold the painting to Queenie for $20,000. 4 marks
b. Siddo bought the painting for himself for $32,000. He later sold it for $38,000 to Elly, a friend of his. 5 marks
c. Siddo sold the painting to Isobel for $32,000. Isobel loves Vera’s paintings and considered that she was getting a bargain at $32,000. She was overjoyed with her purchase and said to Siddo: “I am so pleased that you gave me this opportunity to buy such a beautiful painting that I am giving you $3000 for yourself”. She then gave him $3000. 4 marks.
You are required to:
Discuss the legal position of the parties in each of the above separate circumstances.
Refer to relevant legal authority in support of your answer.
Question 2 (12 marks)
Joan is an intelligent 17-year-old who came to Australia a few years ago. With the help of friends she bought a small courier business and with great skill she has operated and increased the profits of the business. She needed a new car for her personal pleasure as well as for occasional use when her delivery van, which she needed for her courier business, is in for repair or servicing. That happens about three months out of each year.
She went to Frank’s Used Cars Pty Ltd in Sydney and discussed with the owner, Frank, cars that may be suitable for her needs. She decided to buy a second-hand Swift sedan for $49,000 and paid $4,000 deposit. Frank agreed to provide the balance of the purchase price through a loan from his company. Frank told her that the car would give worry-free service for at least twelve months without the need for major repairs.
An agreement was signed which provided that Joan would repay the price to the company over twelve equal consecutive monthly instalments, with an interest component included at a rate of 25%. Frank required security for the repayment of the loan and interest and asked for a guarantee of the contractual obligations from Joan’s parents, Karl and Maria, who arrived from Poland 12 months ago to join their daughter. Karl is a lecturer in biology at a large university and has a good knowledge of English. Maria is intelligent but has little education and can barely read or write speak English.
Joan told her parents that the amount of finance was only $25,000 and that the loan repayments will not extend beyond 3 months. She said that she can then repay everything because the bank has agreed to provide her with finance in 3 months’ time. In fact, she had not approached any bank for a loan. Frank knows of this conversation but does not know about the level of knowledge of English of either parent, nor that are the parents close to divorce. Karl and Maria signed the guarantee in Frank’s office and were given a copy of the guarantee for their records.
Six months after the purchase the car needed major repairs. Joan stopped payments under the agreement. Frank sent a letter to Karl and Maria and threatened that unless they paid all instalments within 7 days he would sue Joan and them for the whole debt.
You are required to:
Advise Joan, Karl and Maria of their legal position regarding their possible rights and liabilities.
The marks allocated to the discussion of the legal rights and liabilities of each party are as follows:
Joan 5 marks
Frank (Frank’s Used Cars Pty Ltd) 5 marks
Karl and Maria 2 marks
You are not required to discuss the National Consumer Credit Legislation (V&L 24.1) nor any Act of Parliament that relates specifically to motor dealers (see V&L 22.140).
Do not discuss Karl and Maria’s possible rights/actions against Joan.
Assume all relevant events take place in New South Wales.