Week 4 – Forming a Contract

Tutorial Questions

1. Minnie is shopping for a new iPhone. She goes to an Apple store and checks out their range
of iPhones. She discovers that the iPhone X is on sale. She finds a small stack of iPhone X
with sign: “Special offer! Only $999”. She takes one off the stack and brings it to the
counter and says to the cashier, “I would like to take this one”. She then remembers seeing
iPhones X on sale for $850 at another store. The cashier does not say anything and before
she can ring it up, Minnie tells the cashier that she has changed her mind. The cashier tells
Minnie it is now too late and that Minnie would have to buy the iPhone X, and that Minnie
is legally obligated. Is the cashier correct?

Required: Discuss whether there is an agreement between Minnie the Apple shop.

2. On January 1st, company A (seller) sent a letter to Company B (buyer) offering to sell goods
for $25,000. The letter stated that “this offer is binding and irrevocable until February 1st”.
On January 5th, before the buyer received the letter, the seller telephoned the buyer and left
a message on the answering machine at the buyer’s place of business, stating that the offer
was now withdrawn. On January 7th the original letter arrived and the buyer then listened to
the message on the answering machine. After reading the letter and listening to the message,
the buyer decided to send a fax to the seller stating, “I accept the offer that you sent on the
1st January.”

Is there a binding contract between company A and company B? Explain your reasons
why or why not.

3. Abby is in the water and a big wave crashes over him and sends him out further into the
ocean. He cannot swim and yells for help. Brett sees that and jumps in to save Abby. Abby
is so grateful and tells Brett he will give him $5000. The next day Brett comes to Abby’s
house for the money and Abby says he will not pay him.

Required: Does Abby and Brett have an enforceable contract?

4. On March 1st, Bob gets into a contract with Mike. The contract specifies that “Bob will do
everything to repair Mike’s iPhone’, and ‘the cost of the service is $100”. Bob takes the
phone home to repair it but as he opens the phone and begins to really look at it, he
discovers that the job is very difficult and will take him much longer than he expected.

On March 5th, Bob calls Mike and says, “Hey Mike, this job is going to take me much
longer than I thought. I will now have to charge you $150.” Mike responds, “But we have a
contract for $100. I really don’t think I should have to pay more than that.” Bob then

1|Page
 responds by saying he won’t fix the phone then.” Mike finally agrees to pay the $150 new
price that Bob quoted.

March 9th, Bob finishes fixing the phone and returns it to Mike. Mike pays Bob only $100.

Required: Discuss the relevant legal issues and advise Bob if he can sue for the
additional $50.

5. Steve and Mike are good friends. Mike is the sheriff of the town. One night, Steve notices
that there is a burglar in his house and goes to the toilet and calls Mike. Mike asks if the
burglar is armed and has a gun. Steve says yes, the burglar appears to have a shotgun and
seems to be very dangerous. Mike replies that he only has a small pistol and that it might not
scare away the burglar. Steve says he would give him $1000 if Mike comes over to scare the
burglar away. Mike agrees and comes over and scares the burglar away, even though he is
on his annual leave that night and is also not in charge of the district in which Steve is living.
Steve then refuses to pay Mike.

Required:

a) Do Steve and Mike have an enforceable contract?

b) Assuming that Mike is on duty that night and he is also in charge of the district in
which Steve is living, do Steve and Mike have an enforceable contract?

***

HOMEWORK

1. Quynh lived with her uncle Truong and his family in HCMC. She was an excellent student,
and she won a full scholarship with all expenses paid to study her MBA at Harvard University.

Truong didn't want to see her leave, so he told her "if you stay here in Vietnam and get your
MBA at RMIT (where she would have to pay tuition) instead, I will give you ownership of this
house upon completion of your degree, because you are my favorite niece".
Quynh stayed, but upon receiving her MBA, Truong refused to give her the house.

Is there an enforceable contract between Quynh and Truong?

2|Page