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Examinations
Semester 2 - 2002
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Emalus Campus
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COURSE NAME: Commercial Law
COURSE NO: LA 313
TIME ALLOWED: 3 Hours
READING TIME: 10 minutes
NUMBER OF PAGES: 5
NUMBER OF QUESTIONS ON PAPER: 7
NUMBER OF QUESTIONS TO BE ANSWERED: 4
MARK ALLOCATED FOR EACH QUESTION: 15
TOTAL MARKS: 60
MATERIALS PERMITTED IN EXAMINATION ROOM:
Reader LA 313 and /or relevant legislation
permitted by the Examiner.
SPECIAL INSTRUCTIONS
1. All answers are
to be buttressed with regional case laws and/ or statutes where relevant.
2. All answers are
to focus on a chosen jurisdiction/s in the South Pacific.
1. Brittle Concrete is
a major cement producer in X country in the South Pacific. In March 2001, it
agrees to purchase 20 tonnes of sand from Underground Products Limited. The
price per tonne was to be fixed by an independent party in November 2001 when
the 20 tonnes of sand are to be processed and delivered by Underground Products
Limited to Brittle Concrete. Due to a
cyclone that persisted for more than 2 weeks accompanied by heavy rainfall in
November 2001, Underground Products Limited was only able to process and
deliver 10 tonnes of sand to Brittle Concrete. Because of this short fall in
supply, Brittle Concrete was therefore unable to meet the order of 200 tonnes
of cement placed by Marble Finish Enterprises.
Advise Underground Products Limited. (15 marks)
2. Mr. Polarity is a general merchant dealing in sunglasses.
Vision Enterprises is a leading manufacturer of sunglasses and optical testing
equipment. They operate their businesses in X and Y countries in the South
Pacific, respectively. Through a telephone conversation in March 2002, Mr.
Polarity was appointed by Vision Enterprises to market its products in X
country. No remuneration was agreed upon at the time but this was left to
further discussions later. However, Mr. Polarity did make it clear during the
conversation that he would, in consideration of an extra payment on top of
whatever remuneration is to be agreed, guarantee the sale of all products
delivered to him by Vision Enterprises. In April 2002, 200 boxes of assorted
sunglasses were sent by Vision Enterprises to Mr. Polarity by air freight. Mr.
Polarity never received the goods. Vision Enterprises is now claiming the price
of the sunglasses from Mr. Polarity.
Advise Mr. Polarity. (15 marks)
3. E-Banking Concept Limited has just opened it doors for
banking business to the public. The banking hall is fully automated. Customers
process their banking requirements through a number of automatic teller
machines (ATMS), voice-activated computer screens and terminals installed in
the banking hall. There is no bank staff to be seen any where in the banking
hall. It is a new concept in banking. It is called self-service e-banking. Using these facilities, Craft, a sole trader,
instructs E-banking Concept Limited to stop the payment of a cheque of VT8000
drawn by him in favour of Breed Farms Limited. Due to a faulty network
connection, the computer was unable to process this instruction and the cheque
of VT8000 was subsequently paid out to Breed Farms Limited. Before leaving the
banking hall on the same day, Craft decided to make a withdrawal of VT3000 by
using his debit card. Having followed all the correct instructions for using
the debit card, the ATM displayed the message- “Computer is Busy. Please try
again next week”.
Advise Craft on his right/s against E-Banking Concept Limited.
(15 marks)
4. Risk-Wrap is an insurance company registered in Y country
in the South Pacific. Free Ocean Liner is a cargo ship sailing international
waters. In 1970, it struck an under-water rock and lost some of its cargo during
rough seas off the coast of
(a) Advise Risk-Wrap Insurance Company on its right of
subrogation as against claims by Research Fellow Reach, Z Country and the
University (10 marks) AND
(b) Unrelated to (a) above, compare and contrast the principle
of “insurable interest” with “utmost good faith”, as fundamental requirements
of a valid insurance policy. (5 marks)
5. Fabrics Industrial, is a producer of heavy clothing in Y
country in the South Pacific. It owns a factory premises worth $250000, machinery
worth $200000 and raw materials worth $150000. The business wants to raise an
additional $300000 from Cash Bank in order to expand its operations. Fabrics
Industrial is prepared to charge all these assets as security for the loan.
Advise Fabrics Industrial on the best legal security
transaction it should opt for. Give reasons in support the method chosen. In answering this question, explain the
practical legal implications of the arrangement; the statutory requirements;
and the consequences for breaching the arrangement by both parties. (15 marks)
6. Alternate-Current
is a supplier of washing machines. Fountain-Wash operates a commercial laundry
business in the city centre. In April 2002, Fountain-Wash ordered 10 new “PowerX1”
washing machines from Alternate-Current at the cost of $10000. In June 2002,
Alternate-Current delivered and installed 7 new “PowerZ3” and 3 new “PowerX1”
washing machines in the premises of Fountain-Wash. All the 10 machines stopped
functioning in July 2002 due to a mechanical defect in their spinning wheels. This
resulted in water from the washing machines flooding the entire premises and
damaging customers’ garments. Three operators of the washing machines (staff of
Fountain-Wash) were injured when they tried to disconnect the washing machines
from power and water supplies.
(a) Advise Fountain-Wash (10 marks) AND
(b) How would you answer differ from (a) above, assuming that
the 10 washing machines were sold as second-hand by Alternate-Current to
Fountain-Wash. (5 marks)
7. Miss Probe is a marine engineering undergraduate. As part
of her final year dissertation, she was assigned by her Department to work on a
2 month project in a coastal village in Z country in the South Pacific. She is
to undertake a study on rare species of oysters found in the warmer waters of
the village. In the process of carrying out the project, she was also able to
experiment with a mechanical process of cross-breeding oysters. This resulted
in high-yield that may have commercial implications in the way that rare types
of oysters are farmed in the future. She wishes to register this invention and
its processes for patent protection, but the Department has threatened to withhold
her degree certificate if she claims a patent on the invention or its processes.
Advise Miss Probe. (15 marks)
END OF PAPER