The purpose of this assignment is to:

• Learn how to review a contract to identify the rights and obligations of parties and check it complies with legal requirements.

• Learn how to apply the law of contract to common business situations.

• Develop your legal analysis skills (using the ILAC method to apply the law).

Part A

We are employing a new personal assistant for the managing director to work full time at Major Mart Ltd. Major Mart Ltd operates a shopping mall known as Major Mall anda hypermarket in the Mall under the name Major Mart. Your task is to prepare the personal assistant's employment contract ready for the Head of Human Resources, Harriet Rush, to give to her. You will also need to prepare for Harriet a short covering letter explaining the clauses you have included in the contract.

Instructions:

1. Prepare an employment contract

Prepare the contract using the Employment Agreement Builder on the Department of Labour website (link below and on Moodle). Your agreement should comply with the requirements in section 65 of the Employment Relations Act 2000, legal minimum standards and re?ect the terms and requirements set out in the bullet points below

• Working Hours - Monday - Friday 9.00am - 5.30pm
• Commencement Date : 1st June 2015
• Salary - $30,000 per annum
• Trial Period : 4 weeks
• Term: 12 months from commencement date to relieve Susan who is on parental leave
• personal assistant will have access to con?dential information. There will need to be clauses in the contract to protect the company's interests

Please include other clauses that you think are appropriate and useful for the Company.

2. Write a Covering Letter

Write a short letter (no more than one page) to Harriet Rush, Head of Human Resources. In your letter explain the obligations of the parties, why you have included the clauses you have chosen for the contract and how these meet the needs of the Company, in particular termination of the contract and confidentiality.

Part B

Major Mart's previoussales manager leftto work for a rival supermarket in the vicinity and solicitedMajor Mart's customers to shop and staff to work at the rival hypermarket. His contract includes the following clause:

The Sales Manager shall not for a period of one (1) year after ceasing to be employed by the Company for whatsoever reason, without the prior written permission of the Company, whether as a partner, officer, employee, director, other equity owner, contractor, consultant, representative or agent, carry on business in competition with the Company within a radius of 500 kilometres from any of the Company's hypermarkets. The provisions of this clause shall survive the termination of this Agreement for whatsoever reason

Please advise Harriet Rush whether the Company can take any action against the previous marketing manager.

Task Two: Applying Contract Law to Business

Major Mart has promotion stands and individual shops in the Mall. Theirpromoters and shop ownersmeet from time-to-time to discuss issues or problems they may encounter. Please read the following scenarios and apply the law of contract to each.

Part A: Short Answer Questions

Question One Intention to Create Legal Relations

The owner of StorageSolution Ltd is Linda Rider and Sarah Sly is the General Manager of Major Mart. Linda and Sarah are best friends and meet regularly for drinks at the Mall. Sarah complains that the hypermarketdon't have enough space to store some of its products. Linda agrees to let Sarah use an empty storage unitat its premisesfor two weeks in return for Storage Solution Ltd being able to promote its service at the hypermarket for the same duration. Sarah writes out the details on a bar napkin with the words ‘binding in honour only' and they shake hands.

Advise Linda whether there is a binding contract. Explain your answer, referring to relevant legal principles and case law.

Question Two Offer and Acceptance

Sarah was shopping at one of the shops in the Mall. She asked the shop owner, Jane, "How much do you want for the lounge suite?" Jane said "not less than $3,500.00". Business was rather quiet and Jane was in need of money to pay her rent.

Sarah then said I'll give you $2,800.00; Jane replied "You can have the lounge suite for $3,000.00" eventhough her cost is $3,500.00. Sarah was delighted but was suddenly not sure that she had enough money to pay for it. She told Jane she would let her know by midday the next day if she still wanted to go ahead with the purchase.

Next morning, Jane managed to sell the lounge suite above her cost price.

Sarah returned to the shop at 12 noon and Jane told her the lounge suite has been sold.

Sarah is very upset. She thought that Jane was obliged to sell her the lounge suite.

Is there a valid contract between Jane and Sarah?

State the relevant legal rules with case law.

Question Three Consideration

Brenda runs a charity shopat the Mall. One of her customers finds a print of a painting. He asks Brenda, "how much do you want for this?"

Brenda answers "Umm... would you give me $50. I'm not sure what it's worth, but it's quite ugly, so $50 will do." The customer says "Yes, I'll take it." The customer paid for the print and said he will collect it the next day. That evening another customer toldBrendathat theprintis a Picassorare limited edition, worth $10,000.

Is there a legally binding contract for the print? Refer to relevant case law in your answer. 

PART B: ILAC Questions

Question FourCapacity

A well known finance company,Quick Money Ltd (QML) advertised extensively on radio and TV. Its slogan was "We aim is to make you richer when you borrow from us - not poorer". This statement also appeared on the website of the Quick Money Ltd. Roger saw a BMW car he liked and he "just had to have that car." So Roger borrowed $55,000 from QML and bought the car. However, within weeks Roger was stopped by the police for driving above the alcohol limited and without a licence and the Police impounded the car. It was subsequently repossessed by QML and resold, leaving a balance owing of $15,000.

Roger works as a trainee manager for his father's company (Aim High Ltd). The company owns several building along Queen Street, Auckland. His father and sister are registered as directors with the Registrar of Companies, New Zealand. His mother, while not registered as a director, was given a business card with the title "Marketing Director"

When Roger filled in the loan application form, herecorded his age as 17 years and 9 months old.

QML requested for a surety for the loan. Roger managed to persuade his father to provide a guarantee through Aim High Ltd. As his father was not available to sign the guarantee, Roger's mother signed the guarantee, attaching her business card to the Guarantee.

At the time that the car was repossessed Roger was unemployed. He was living with his parents and had been accepted to start a certificate in building course at a tertiary institution in Auckland. He had plans to apply for a student loan.

Instructions:

Discuss whether QML can recover the balance owing of $15,000 from Roger and Aim High Ltd.In your answer consider the legal requirements for a minor and company entering into a contract.

Use ILAC format and cite relevant case law in your answer

Question Five Unconscionable Bargain

Daisy is an elderly lady who is selling her house to move in with her daughter and son-in-law. Daisy has dementia (a disease of the brain that effects memory and understanding) and becomes confused and easily upset. Daisy has engaged real estate agent Mary Marx to help her sell the house. Sally, an estate agent, lives next door to Daisy and visits Daisy for coffee every Monday morning. Daisy told Sally that she will be moving in with her daughter and son-in-law and needs to sell her house. Sally offers to be Daisy's estate agent. Sally brings an offer of $600,000 from an unknown buyer and advises Daisy to accept it, telling her it is a good price. Based on Sally's advice Daisy signs the contract. Daisy's family discover that Sally has made the offer herself secretly and it is $200,000 under value.

Instructions:

Discuss whether Daisy's daughter would be successful in an application to the court to have the contract voided for unconscionable bargain. In your answer consider the legal requirements for an unconscionable bargain and whether Daisy's circumstances meet these legal requirements. Use ILAC format and cite relevant case law in your answer.