FNS50215 – Diploma of Accounting

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Assessment Cover Sheet

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1. A contract is an agreement that:
a. Creates rights and obligations that are legally enforceable.
b. Must be proven by some form of written evidence.
c. Creates moral and social obligations that are legally enforceable.
d. Can be enforced in a court if the parties have entered into a pre-enforcement covenant.
2. Which of the following is not an essential feature of a contract under seal (a deed)?
a. A seal, or the words ‘signed, sealed and delivered’.
b. Signatures of the parties that are witnesses and dated.
c. Physical delivery of the deed to each of the parties.
d. A printed or written document that states its purpose, names the parties and states the terms.
3. Samuel promised to be Hannah’s date at her high school formal. At the last minute he broke his promise
and went instead with Tarice. Hannah was embarrassed and heartbroken. Which of the following
statements in relation to intention is correct?
a. She cannot sue Samuel because they only had a commercial agreement.
b. She can sue Samuel because he broke a legally binding contract.
c. She can sue Samuel if he is 18 years or older.
d. She cannot sue Samuel because they only had a social agreement.
4. In Rose & Frank Co v Crompton the court decided that an ‘honour clause’ which expressed the true
intention of the parties:
a. Supported the presumption that the parties were legally bound by the clause.
b. Rebutted the presumption in relation to business agreements.
c. Had no effect on business agreements.
d. Rebutted the presumption in relation to domestic and social agreements.
5. Which of the following is not a rule relating to revocation (withdrawal) of an offer?
a. A revocation can be communicated by a reliable source. It does not have to be communicated by
the offeror.
b. A revocation must be communicated in writing, which includes a fax or an email.
c. When the parties communicate by mail a revocation is not valid unless it is received before the
offer is accepted.
d. An offer may be revoked at any time before it is accepted.
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6. Under statute in all states and territories people cease being minors when they turn:
a. 15 years of age.
b. 21 years of age.
c. 18 years of age.
d. 16 years of age.
7. Hung left school when he was 16 years old and started a business of shopping for people and delivering
the purchases to their homes. He leased a small car by claiming he was 20 years old. Hung became ill and
his business failed. The leasing company has sued him for breach of contract. Under the common law in
regard to minors, the likely outcome would be that:
a. Hung is liable because the contract was a beneficial contract of service.
b. Hung is not liable because the leasing company knew his real age, or should have made proper
checks about his claims.
c. Hung is not liable because the contract was a trading contract.
d. Hung is liable because the contract was a contract for necessaries.
8. Under common law, if both parties to a contract are mistaken about the quality or value of the subject
matter of the contract, the most likely result is that:
a. The contract remains valid.
b. There has been a mistake about the nature of the contract document.
c. The contract is void ab initio.
d. There has been a bilateral distortive mistake.
9. Non est factum is a defense used by persons who want to void a contract. In plain English, the term
means:
a. ‘This is not a factor’ – the mistake should not be considered in this legal action.
b. ‘This is not a fact’ – I am not responsible for this mistake.
c. ‘This is not my deed’ – the document I signed was fundamentally different from the one I thought I
was signing.
d. ‘Not in my right mind’ – my judgment was affected by a foreign substance which prevented a true
meeting of the minds.
10. ‘A’ entered into a contract with B when she was under the undue influence of B. The common law view
is that A has not:
a. Intended to enter the contract.
b. Given consideration for the benefits obtained under the contract.
c. Understood all the terms of the contract.
d. Given genuine consent to the contract.
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11. In an action for undue influence, defendants may be obliged to prove they did not obtain a benefit by
exploiting their special relationship with the plaintiff. In which of the following relationships does the law
presume that this special relationship exists?
a. Coach and athlete.
b. Doctor and patient.
c. Editor and author.
d. Brother and sister.
e. All of the above.
12. Which of the following statutes or common law rules allows a court to sever (cut out) an unreasonable
restraint of trade clause from a contract?
a. The contract can ‘stand alone’ (is valid) without the restraint of trade clause
b. The NSW Restraints of Trade Act, 1976
c. The Competition and Consumer Act 2010.
d. All of the above.
e. A and B only.
13. I am a case where a court decided that because of one party’s special skill and knowledge, the
statement that party made before the formation of a contract was a term of the contract. What is my
name?
a. The Dick Bentley case.
b. The Oscar Chess case.
c. The White Ants Invasion case (Van Den Esschert v Chappell).
d. De Laselle v Guilford.
14. When a warranty in a contract has been breached what remedies are available to the innocent party?
a. Termination of the contract or an order for specific performance or both remedies.
b. Damages and injunctions.
c. Termination of the contract or damages or both remedies.
d. Damages only.
15. Delrado signed a contract that contained an exclusion clause but he reasonably believed he was signing
an entry form for a competition and not entering into a contract. What is the most likely legal result?
a. The exclusion clause is probably not valid.
b. The contract is probably valid because Delrado is legally obliged to read any document before
signing it.
c. The contract is probably valid but Delrado is entitled to damages.
d. The exclusion clause is probably valid provided it was written in plain English.
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16. Liabilities under a contract can be assigned (transferred) from one party to another by ‘novation’. This
means that all the parties agree:
a. To replace the old contract with a new one that contains the same terms but allows a third party to
be substituted for one of the original parties.
b. To enter into an additional contract and pay novo damages to one or more parties.
c. To replace the old contract with a new one that contains different terms.
d. To discharge (end) the original contract and try to find new business partners
17. A release or waiver of a contract means that:
a. Both parties who have partially performed their obligations agree to release each other from their
remaining obligations
b. Neither party has performed their obligations but they agree to release each other from their
obligations.
c. The contract is released for sale on the open market to the highest bidder.
d. One party who has performed all its obligations releases the other one from its obligations.
18. Which of the following is an example of a merger in relation to contracts?
a. A formal contract is merged into a material one.
b. A simple contract is discharged and merged back into the original contract.
c. A formal contract is discharged and merged into a new simple contract.
d. A simple contract is discharged and merged into a formal contract that replaces the original
contract.
19. Which of the following is not a way in which a contract can be discharged?
a. Operation of law
b. Attempted performance
c. Agreement between the contracting parties
d. Nominal performance.
e. Actual performance
20. Explain whether there has been ‘substantial performance’ in the following situations:
(a) When Hotboil Ply Ltd installed a gas hot water system for Shelley, it damaged the copper hot
water pipe. The installation cost $800 and the repairs cost $80.
(b) Compour Ply Ltd contracted to deliver 1O cubic meters of cement to Larry’s work site. It
delivered 10.2 cubic meters. Larry wants to reject the contract.
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21. Chart the passage of a Bill through the Federal Parliament to its gazettal as legislation.
22. List the three functions of Government referred to in the doctrine of ‘separation of powers. Give an
example of the roles of each and why does the Australian system not achieve true separation of power.
23. What are the four main rules that a court may use to assist it to interpret legislation and when are
courts able to resort to other material to assist them?
24. Li hired Sally, a real estate agent, to sell Li’s block of land. Li wanted at least $100,000 for the land. A
few weeks later, Sally tod Li that her husband would buy the land for $100,000. After Li had agreed to sell
the land to Li’s husband, she discovered that Sally hadn’t advertised the land and hadn’t told her clients
that the land was for sale. Li also discovered that the land had been resold immediately for $130,000.
Does Li have any claim against Sally and, if so, what remedies could she seek?
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Assessment Outcome
Satisfactory: Not satisfactory:
Reassessment details (if applicable):
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(Attach supplementary documentation used in re-assessment)
Reassessment outcome, if applicable:
Satisfactory: Not satisfactory:
Feedback to student:
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