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Sam calls her friend Nina and asks, ‘Would you like to buy my car? I will give it to you for $100,000.’ Nina replies, ‘I love your car. Can I get back to you next week?’ Sam is happy to give Nina time and says, ‘That’s fine. I will give you time till 5.00 pm next Monday, but you must bake me a cake for waiting.’ Nina replies, ‘ Sure thing. I will bake your favourite chocolate chip cake.’ For that Sam, states, ‘Make sure to give me a call before 5.00 pm next Monday.’ Nina sends a text to Sam by 12.00 pm on Monday, confirming the purchase of the car and states, ‘Hi, how about I pay you $95,000 in cash. I will be at your place around 2.00 pm tomorrow to pick up the car.’ Sam replies to the text, ‘Hi Nina, Fine. I am doing this because you are my friend. See you at 2 pm.’ As she is driving the car out onto the street, Nina leans out the window and asks Sam if the vehicle is suitable for off-road driving. Sam assures that the car runs smoothly in city traffic and off-road trails. Nina decides to take one of her favourite off-road trails and notes that the engine makes noises and overheats. Nina takes the car to a mechanic, who tells her that the vehicle is designed only for city traffic and not off-road driving.
1. Discuss the legal effect of each communication and determine if an agreement is formed and whether there is an intention to be legally bound by the contract.
2. Assuming there was an agreement and intention to a contract between Sam and Nina, discuss whether there is valid consideration for Sam’s assurance of the car’s suitability for off-road driving?
Question 2:
For the weekend, Caren and Sindy are staying at Prime View, a fancy boutique hotel in the Blue Mountains. Prime View is their favourite place to spend the weekend, and this is their fifth visit. Caren and Sindy check-in at the reception desk by signing the form, paying the nightly fee in cash, and receiving their room key. The receptionist calls after them when they are heading to their room, ‘Hi, do not forget to check the notice at the bottom of the stairs.’ On their way to the room, Caren and Sindy see a small notice which states, ‘The owners of the Prime View Hotel are not liable or responsible for the loss or damage to any personal belongings or property, howsoever such loss or damage may arise or be caused.’ The notice is in small print and pretty difficult to read from a distance. Unfortunately, while they are out of the room, a hotel staff member provides the key to the room to a rogue, who then breaks in and steals all of Caren’s expensive gold jewellery. Prime View tells Caren and Sindy that the hotel is not liable for the stolen jewellery because of the notice at the bottom of the stairs, which excludes their liability.
Caren and Sindy wish to know whether Prime View is liable for the loss of the jewellery. Explain your answer with reference to relevant cases. Do not discuss under the Australian Consumer Law.
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