Principles of Law (BUS2013)

Mid-term Test, Semester 2 of 2020-2021Academic Year

Part A Multiple Choice Questions (20 marks in total, each multiple choice question carries 1 mark) Answer ALL the questions in this Section A.

1. Contract law is all of the following, except:

A. Private law

B. Substantive law

C. Civil law

D. Administrative law

2. Which has the highest authority wherever there is a conflict among the following sources of law?

A. Rules of equity

B. Statutory law

C. Basic Law

D. Common law

3. Which of the following country does not have a common law legal system?

A. England

B. United States

C. Japan

D. New Zealand

4. The Doctrine of Precedent refers to:

A. the jurisdiction of a court to resolve disputes.

B. the hierarchical system of common law courts in which a decision of the higher court binds a lower court.

C. the principle of judicial independence.

D. None of the above

5. What is obiter dictum?

A. Said by the way

B. Reason for reaching the decision

C. Stand by previous decisions

D. The court’s finding

6. Which of the following is true?

A. The decision made by the magistrate has binding force

B. The decision made by the Small Claims Tribunal has binding force

C. Common law country’s court decision bound other common law country

D. The District Court decision binds the Small Claims Tribunal

7. Which of the following is NOT automatically binding in Hong Kong courts?

A. An English Case in 1899

B. An English Case in 1999

C. A Hong Kong Case in 1996

D. A Hong Kong Case in 2020

8. To win in a civil case:

A. the plaintiff’s claim must be more probable than the defendant’s claim

B. the plaintiff’s claim should be equally probable to the defendant’s claim

C. the plaintiff’s claim must be totally certain

D. the plaintiff’s claim must be reasonable

9. Which is NOT true about the dispute resolutions as an alternative to sue in court?

A. Decisions of the arbitrator are final and binding on the parties.

B. In both mediation and arbitration, neutral third parties assist in settling disputes.

C. There are no differences between arbitration and mediation.

D. The parties must submit their disputes to arbitration, if they have signed a contract with an arbitration clause.

10. Which statement is the correct description of the ejusdem generis rule?

A. Words must be given their literal and grammatical meaning.

B. A judge considers what mischief the legislation was intended to prevent.

C. General words mean the same kind of thing as the specific words.

D. To express one thing is by implication to exclude all others.

11. Norm offers to sell his horse to Gary for $1,000. Gary states that he accepts the offer provided Norm includes a month of riding lessons. What’s the legal status of Gray’s statement?

A. counter-offer

B. acceptance

C. offer

D. implied acceptance  

12. Dexter is considering purchasing from Lisa a vacant lot and opening a fast-food restaurant. However, he needs a month to obtain his financing. How may Dexter secure an enforceable offer to purchase the lot?

A. requirement contract

B. firm offer contract

C. option contract

D. security contract

13. Which of the followings is False? Revocation must be:

A. Communicated to the offeree.

B. The communication need not be made by the offeror personally.

C. The revocation must be given before acceptance.

D. If there is a deadline in the offer, the offeror could not revoke it before the deadline.

14. Tisha promises to pay the apartment rent due under her current lease if the landlord constructs covered parking for her. The landlord agrees, Tisha’s promise to pay rent____.

A. provides consideration for the landlord’s agreement.

B. is not consideration for the landlord’s agreement.

C. provides consideration only to the extent that the landlord has begun construction.

D. is not consideration but rather a firm offer.

15. Historically, a contract under seal ____.

A. requires no consideration.

B. requires monetary consideration only.

C. requires equal value consideration.

D. requires all parties to swear to perform. the contact.

16. Promissory estoppel involves ____.

A. principles of equity

B. an analysis of the terms of contract between the parties

C. an analysis application of what is customary

D. an analysis application of federal legislation

17. For a commercial agreement, there is a strong legal presumption about the intention of the contracting parties. Which of the following statement best describe the legal presumption?

A. Only the party initiating the offer of the contract has the intention to create a legally binding relationship.

B. The intentions of the contracting parties have to be proven by the evidence adduced by the individual parties.

C. All the contracting parties have the intention to create a legally binding relationship.

D. All the contracting parties have no authority to create a legally binding relationship.

18. The meaning of ‘necessaries’ in the Sale of Goods Ordinance ____.

A. is the same to all minors

B. varies according to local standards

C. varies according to the age of the minor

D. varies according to the minor’s living standard

19. Leo, age 16, has bought a pair of sports shoes from Jane, the boss of a sports shop, and taken them home. Jane sold the shoes to Leo for $2,900 while most shops are selling the same shoes for $900. After a complaint made by Leo’s father, Leo must pay ____.

A. $2,900

B. $1,050

C. $900

D. nothing if he does not affirm the contact

20. In relation to mental incapacity, which ONE of the following statements is TRUE?

A. A contract entered into by a mentally disturbed person is void if the other party knew of the incapacity.

B. A mentally disturbed person can enter into a binding contract for the purchase of necessaries.

C. A mentally disturbed person never has capacity to enter into a legally binding contract.

D. Mentally disturbed persons are always bound by the contracts they enter into.

Part 2 Case Questions

ANSWER TWO questions out of three, each question carries 40 marks, making a total of 80 marks. Do not answer with just a “yes” or “no”.  For each question, state the facts, and then apply the law to the facts in order to arrive at a conclusion to each question.

Question 1

Cathy wanted to sell her Cartier watch, which she bought two years ago, and, subsequently on 1 April 2021 advertised to sell in a local fashion magazine for $18,000. The advertisement also contained Cathy’s mobile phone number.  

In response to the advertisement, Mary called Cathy and made an appointment to see the watch on 3 April. Mary offered to buy the watch for $14,000. Cathy insisted on receiving $17,000 for the watch.

On 4 April, Cathy sent a letter to Mary offering the watch for $16,800, indicating that the offer would be kept open until 5:00 pm on 10 April. Mary received the letter on 5 April. In 6 April afternoon, Mary met Loretta in a shopping mall.  Loretta told Mary that, Betty, a distant relative of Cathy, had bought the watch earlier on the day from Cathy for $16,900, and that the offer previously made to Mary had been withdrawn. Loretta was a common friend of Cathy and Mary.

Mary then wrote a letter to Cathy accepting her offer of $16,800. Mary posted the said acceptance letter in the evening of 6 April. Cathy received the letter on 8 April, and replied immediately by mail, indicating that,

                  “I have already sold my Cartier watch to a distant relative of mine”.

Requirements:

a) Discuss whether or not Mary could successfully sue Cathy for breach of contract on the above facts. (32 marks)

b) Suppose that in Cathy’s letter to Mary dated 4 April offering the watch for $16,800, Cathy provided her email address and indicated that Mary could reply by email. After hearing from Loretta earlier on the day that the Cartier watch had already been sold to Betty, Mary accepted the said offer of $16,800 by sending an email on 6 April, which reached Cathy’s email address as specified, in the evening of 6 April. Would you change your answer to a) above? (8 marks)

Please explain your answers to Parts a) and b) above with reference to relevant case law and legislation.

Question 2

The London School of Easy (LSE) School of Law is a leading law school in London. In academic year 2020/2021, the LSE suffers a serious budget deficit because many international students admitted refused to attend because of the COVID-19.

Kristen is a student attending the course on campus in LSE. As LSE wanted to promote in China, Kristen acted as a school representative voluntarily to hold promotion activities in top schools of China in January 2021, includes the school she got her bachelor degree, Hui Tong University.

For Kristen’s effort, lots of outstanding students from Hui Tong University applied and accepted the offers from LSE for the coming academic year. On 1 April, 2021, Simon, an admission director of LSE, said, “Kristen, the school will give you GBP10,000 for appreciating your help!”

However, Simon broke his promise on 2 April, 2021, and said that it was just a joke for “April Fool”.

a) Simon claims that Kristen’s work done does not deserve GBP10,000, but GBP100, the market price based on the average salary of student helpers. Advise Kristen. Explain your answer by what contractual element Kristen shall prove in order to claim the money under contract law (10 marks).

b) Why Simon’s argument is not reasonable? (5 marks)

c) As Simon’s argument in section (a) is not sufficient, is there any better argument he may rely on? Explain your answer. (10 marks)

d) In 2020, Kristen received offers from LSE and “School of A child on the Street” (SOAS), another top law school in London. Kristen chose LSE instead of SOAS because the student handbook of the LSE stated, “Students of LSE may be paid student helpers”（不清楚，不能当作offer进行accept，也不能作为estoppel）. She wanted to earn some money during her study. Could Kristen rely of promissory estoppel based on the LSE student handbook? Explain promissory estoppel（防御保护用，但不能进行攻击） and provide 2 reasons to support your conclusion. (15 marks)

Question 3

Part A

Robert Chan was interested to buy an apartment from Big Name Limited (BNL). Two weeks ago, Robert emailed to William Sung, the sales manager of BNL, asking for the selling price of the apartment. William replied by email that, subject to contract（接受Acceptance，但没有binding effect，需要整理好合同进行签约才能算「扣分点」）, the price of the apartment was 3.5 million dollars. After receiving the email, Robert replied that the price was acceptable and decided to buy the apartment at 3.5 million dollars. However, two days later, William emailed Robert again and stated that the actual price of the apartment should be 4 million dollars.      

Could Robert have formed a contract to buy the apartment at 3.5 million dollars?  (20 marks)

Note: Students should not discuss the problem in terms of offer and acceptance. [legal intention]

Part B

The price of the apartment had been agreed at 4 million dollars. William then invited Robert to have a business dinner to discuss the details of the sale contract of the apartment.

During the dinner, William offered a bottle of brandy and a bottle of whisky to Robert. After drinking a lot of brandy and whisky, Robert was obviously a drunken man. At that time, William took out a prepared sale contract of the apartment and the sale price was 5 million dollars. William told Robert that the price of the apartment was cheap. Robert signed the contract without reading the details.

On the next day, Robert read the contract and found out that the price was not 4 million dollars. He has decided not to buy the apartment. （sell of goods不需要使用，goods不包括不动产）

Could Robert rescind the sale contract?  (20 marks)

Note: Students should not discuss the problem in terms of misrepresentation. [Intoxicated person]