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BUS2053 Principles of Law

Section A  Multiple Choice Questions (25 marks)

1. Based on the HK Basic Law, the HKSAR will maintain “one country two systems” for how many years?

A. 30 years.

B. 40 years.

C. 50 years.

D. 60 years.

2. Law is a set of rules which has binding force and the purpose is:

A. To balance the competing interests.

B. To govern the relationship between employer and employees.

C. To punish the criminals.

D. To order the debtors to repay the loans.

3. The Common Law legal system originally practised in which countries?

A. The Continental Europe.

B. The United Kingdom and the United States.

C. The USSR.

D. The Common Wealth countries.

4. Which one is the most important source of law in the Civil Law Legal System?

A. Hong Kong Basic Law

B. National Chinese laws

C. Legal cases (unwritten law)

D. Legislation (written law)

5. Before 1997, the final appeal was handled in London. After 1997, the final appeal is now handled in which place?

A. In Beijing, China.

B. In Hong Kong China.

C. In Guangzhou, China.

D. In London, the United Kingdom.

6. After 1997, which is the effect of a court decision made by an English judge in England on the Hong Kong judges?

A. Binding effect

B. Persuasive effect

C. Supervision effect

D. Supportive effect

7. Under the HK Basic Law, “high degree of autonomy” means that the HKSAR government has:

A. The executive power;

B. The legislative power;

C. The judicial power;

D. All the above powers.

8. What is the civil jurisdiction of the Court of First Instance?

A. A claim for an amount below $3,000,000.

B. A claim for an amount more than $3,000,000.

C. A claim for more than $75,000.

D. A claim for an amount more than $500,000.

9. When a student is reading a precedent, he should pay attention to which parts of the judgement?

A. The facts and the issue.

B. The law apply to the facts.

C. The material facts and the decision.

D. The interpretation of the legislation.

10. Which profession is enjoying “freedom of the press”?

A. Teaching staff

B. Employees

C. Publications

D. News reporters

11. Gary offers to sell his sports car to Gordon for $400,000. In reply, Gordon states that he would accept Gary’s offer if Gary provides 5 hours of driving lessons. What is the legal consequence of Gordon’s statement?

A. Invitation to treat

B. Offer

C. Acceptance

D. Counter-offer

12. Which one of the following is correct?

A. Postal rule applies to acceptance of offer generally.

B. Postal rule applies to acceptance of offer by telegram.

C. Postal rule applies to revocation of offer generally.

D. Postal rule applies to revocation of offer by non-instantaneous modes of communication.

13. Which one of the following is an offer?

A. Display of goods on the shelf with a price-tag in a self-service shop

B. Providing information in reply.

C. The showing of goods and prices in a catalogue

D. Submission of a tender in response to a prior invitation for tenders

14. Acceptance can be effected by the following forms except:

A. Verbally

B. Conduct

C. Writing

D. Silence

15. Gary offers to sell his sports car to Gordon for $400,000. In reply, Gordon states that he would accept Gary’s offer if Gary provides 5 hours of driving lessons. What is the legal consequence of Gordon’s statement?

A. Invitation to treat

B. Offer

C. Acceptance

D. Counter-offer

16. Which one of the following is correct?

A. Postal rule applies to acceptance of offer generally.

B. Postal rule applies to acceptance of offer by telegram.

C. Postal rule applies to revocation of offer generally.

D. Postal rule applies to revocation of offer by non-instantaneous modes of communication.

17. Which one of the following is an offer?

A. Display of goods on the shelf with a price-tag in a self-service shop

B. Providing information in reply.

C. The showing of goods and prices in a catalogue

D. Submission of a tender in response to a prior invitation for tenders

18. Rebecca's colleague says he will buy her a car if she loves him. Rebecca says she does, but the boy refuses to honor his promise. Rebecca’s claim:

A. Shall be failed, as she does not agree to be his girlfriend.

B. Shall be failed, as her love is not measured by monetary value.

C. Shall be succeed, as she has said as what he asks for

D. Shall be succeed, but just get a nominal value

19. Michaela’s classmate asked her to provide a revision before the midterm test of the law course. After the revision, the classmate was grateful to her and agreed to pay her $10. Later, the classmate refuses to pay her.

A. Michaela shall get the money only if she spends more than 1 hour on revision.

B. Michaela shall not get the money because they are classmates.

C. Michaela shall not get the money because the law exam is too easy.

D. Michaela’s revision was past consideration to the agreement to pay her.

20. Laura sells her car to a friend. Which of the following statements is true in order to make the transaction binding?

A. The price can be $1.

B. The price can be $0.

C. The price must be at least the market value of the car.

D. The contract must be in written form

21. Consideration may not be required in such a binding contract if the contract is:

A. A deed.

B. A simple contract.

C. A bilateral contract.

D. A unilateral contract.

22. What is the requirement of capacity to form a valid contract?

A. The contracting party must be of 18 years old or more.

B. The contracting party must have a clear mind.

C. The contracting party can be a legal person.

D. All the above.

23. For a sale contract with a 10 years old child, when the item is a necessary which has been sold and delivered, what is the effect of the contract?

A. The contract is invalid.

B. The parents are liable to the binding contract.

C. The child is required to pay the reasonable price for the item.

D. It is a crime to form such contract with the child.

24. If a person knowingly makes a contract with a drunken person, what is the effect of such contract?

A. The contract is void.

B. The contract is voidable at the option of the drunken person.

C. The contract is unenforceable.

D. The contract is valid.

25. What is the effect of a contract which has an honour clause?

A. There is no intention to create a binding contract.

B. It is valid.

C. It is voidable.

D. It does not have consideration.

Section B  Case Analysis Questions

Question 1 (25 marks)

To sell his Bulgari limited edition watch, Chris advertised it in a magazine at $400,000 on 2 September 2023, giving his phone number details. Mat saw the advertisement and called Chris and made an appointment to see the watch on 4 September. Mat liked the watch but could not agree on a price with Chris. Mat offered to buy at $380,000, while Chris insisted on $390,000.

On 4 September, Chris sent a telegram to Mat offering him the watch for $387,000, indicating that the offer would be kept open until 5 pm on 9 September. Mat received the telegram on 5 September.

In 6 September afternoon, Mat met Loretta in a public park. Loretta told Mat that Chris’ uncle had bought the watch earlier that day for $388,000, and the 4 September offer to Mat had been cancelled. Loretta was a friend of Chris and Mat.

In the evening of 6 September, Mat sent a telegram to Chris with a view to accepting Chris’ 4 September offer at $387,000. Chris received the telegram on 8 September and immediately replied by telegram that he had sold the watch to his uncle.

Part A

Discuss whether there was a binding contract between Chris and Mat. (15 marks)

Part B

Assuming that in Chris’ telegram to Mat dated 4 September offering the watch for $387,000, Chris requested Mat to reply by telex, and that Mat’s acceptance of the said offer by telex was received by Chris on 5 September.

Discuss whether there was a binding contract between Chris and Mat. (10 marks)

Support your answers to Part A and Part B above with relevant case law.

Part B (10 marks)

Issue: Was the telex acceptance by Mat effective?

Law and Application:

1. Where the (4 September telegram) offer specifies a particular mode of communication (telex), the postal rule may not apply. (Holwell Securities v Hughes)

2. When acceptance is made by instantaneous modes of communication such as telex, it is effective upon receipt by the offeror – the receipt rule.  (Entores v Miles Far East Corp.)

3. On the facts of Part B, according to the receipt rule in Entores v Miles Far East Corp, Mat’s acceptance by telex would have taken effect when his telex was received by Chris on 5 September.

4. Since Max had already effectively accepted on 5 September Chris’ telegram offer of 4 September, thus forming a binding contract between Max and Chris, the purported revocation by Chris of the offer through Loretta on 6 September in the public park was not effective.

Conclusion

As Chris’ 4 September offer was effectively accepted by telex on 5 September by Mat before Chris purported revocation through Loretta on 6 September, a binding contract was formed between Chris and Mat under the facts of Part B.

Question 2 Consideration (25 marks)

Part A

Angela is a professional kickboxing trainer in Hong Kong. She has operated a gym for two years to provide training of kickboxing.

Charlie is a loyal customer of Angela’s gym. In January 2024, he purchased a year plan allowing him to join unlimitedly for Angela’s training. However, in February, Angela decided to close the gym because of the economic downturn. She announced that no refund would be made to those who had purchased the yearly plan.

After the closure of the gym, Charlie was disappointed that he could not get any trainings from Angela anymore. He asked Angela to continue the trainings to him. He agreed to pay her an additional $100 per hour. Angela agreed and had provided ten hours’ trainings to Charlie. However, Charlie refused to pay any training fees to her.

Can Angela force Charlie to pay the additional $1,000 ($100 X 10 hours)? (10 marks)

Part B

Jessie is the landlord of the gym. Angela had a tenancy agreement until June 2024. She discussed with Jessie and she wanted to stop hiring the gym from September 2023. Jessie was concerned that it was not easy to find another tenant when the rental market was bad. She proposed to reduce 20% of the rent. Angela then agreed to continue the hiring of the gym. In order to continue the business rather than to stop the hiring, she had to spend more costs which she originally did not have to do so, such as the renewal of the business licenses.

In March 2024, when the economic conditions were better, a potential tenant approached Jessie and agreed to hire the gym from June 2024 after Angela’s tenancy agreement coming to an end. Jessie then changed her mind and asked Angela to pay the full rent immediately. She also asked her to pay back the reduced rent from September 2023 to March 2024.

Advise Angela whether she has to pay back the reduced rent as demanded by Jessie. (15 marks)

Your answer shall focus on consideration.

Question 3 Intention & Capacity (25 marks)

Part A

Dave recently won the “Master Chef” title in a cooking competition. With the prize money and the recently proclaimed fame, he decided to start and operate his own restaurant. Dave’s venture into the business began with a search for a suitable premises. After a few weeks of searching, he found a shop located at K11. Dave loved the location very much. He began negotiating with the owner of the premises, Tina, through emails. After the exchange of ten emails, both parties agreed to all the terms of the tenancy agreement. In the final email, Tina wrote to Dave that all the terms of the tenancy agreement were alright “subject to contract”. She agreed to commence the agreement one week later.

After one week, Tina emailed Dave telling him that she had decided to sign the tenancy agreement with another tenant who was willing to pay higher rent than Dave.

Whether there is a binding tenancy agreement between Dave and Tina? (15 marks)

Part B

Dave lived with his sister Rosy. After graduated from her college, Rosy was being unemployed and stayed at home all the time. Since Dave was going to operate his own restaurant, he orally agreed to pay $10,000 to employ Rosy to work for him for one year in the restaurant and the employment would begin one week later. Due to the fact that Tina had given the tenancy agreement to another person, not Dave. Dave has told Rosy that he will not employ her anymore.

Can Rosy sue Dave for breach of contract and ask for damages? (10 marks)