BUSINESS LAW – TERM ASSIGNMENT QUESTIONS 150 150 Affordable Capstone Projects Written from Scratch

Answer the following questions with reference to the relevant common law and equity principles
operating in Australia concerning contracts plus related and other transactions. Do not consider the
effects of legislation potentially applicable other than that specifically identified. Students may make
whatever additional factual and/or legal assumptions are necessary or convenient. And students
should write about 3500-4000 words, or about 400 words per 10 mark allocation.
Please also note that:
 Additional readings relevant to this assignment may be made available to students via the
library’s Course Resources Online (CRO) system.
 The assignment counts for 40% of the total assessment for the course. But for convenience of
grading, the assignment questions are allocated a total of 100 marks. Your aggregate notional
score out of 100 marks will then be scaled back to a mark/score out of 40 for this assignment.
Assessment Task
Question 1 30 Marks
Read the recent Federal Court of Appeal case Steggles Limited v Yarrabee Chicken Company Pty Ltd
[2012] FCAFC 91 (see ) and answer the following questions.
(a) Provide a short account of the commercial background of the case, and key aspects/clauses of
the standardized contract in dispute between the parties. (5 marks)
(b) Regarding the pivotal clause 7.4, what case law principles governed its ‘proper construction’, in
the view of the judges (Jacobson, Lander & Foster JJ) on appeal? (10 marks)
(c) What was the nature of the term which the primary judge, Jagot J. had implied into the contract,
and on what grounds and case law did the judges on appeal decide that such implied term (of
fact) wasn’t required to give ‘business efficacy’ to the contract? Note, regarding this implied term
issue, students may care to read pages 2-4 of Jagot J’s earlier judgment Yarrabee Chicken
Company Pty Ltd v Steggles Limited (No 2) [2011] FCA 750 – see the same austlii database. (10
(d) Was the appeal decision ‘fair and equitable’ to the chicken growers in light of the dynamic
commercial relations existing between the parties? (5 marks)

Question 2 40 Marks
Mackay Biofuels Ltd (“Mackay”) supplies cheap biodiesel fuel to remote towns, settlements and
mining firms located in western Queensland for electricity generation, including the Clairview Shire
Council (“CSC”). Mackay’s standardised 2012 supply contract with CSC includes the following two
Clause 7: Mackay shall not be liable for any loss or damage sustained by CSC’s diesel
generator engines as a result of biodiesel use as supplied under this contract.

Clause 8: Biodiesel sold by Mackay to CSC under this contract shall not be on-sold or
supplied to any third or subsequent party without CSC’s express prior permission and any
such sale shall operate by way of contractual assignment subject to the exclusion clause
outlined in Clause seven above.
The biodiesel was actually delivered to the CSC by road train (a multi-trailer truck) under a separate
contract between CSC and a local transport firm, Camira Transport Pty Ltd (“Camira”). Due to an
overnight theft which occurred during the September 2012 delivery trip to the CSC, the Camira road
train ran out of standard diesel fuel in a remote area. The driver then phoned CSC, Mackay and
Camira’s head office, obtaining their collective permission to use five drums (1012 litres) of biodiesel
from the CSC consignment – subject to a suitably orally amended Clause 7 (‘… loss or damage
sustained by Camira’s road train engine …’). Unfortunately, due to a malfunction in Mackay’s
refinery, the biodiesel on-sold, hadn’t been correctly filtered. As a result, it did serious damage to the
road train’s diesel engine which broke down. It then took two weeks to recover the vehicle and repair
the damage. In total, it cost Camira $6,000 to recover the vehicle, $12,000 to repair the engine, and it
also lost an estimated net profit of $22,000 in freight income whilst the vehicle was out of action. But
fortuitously, the remainder of that poorly filtered bio-diesel batch didn’t do any damage to CSC’s
generators, due to their superior double filtration systems.
With reference to Australian common law and equity only (not the sale of goods or other
legislation), advise Camira, having regard to privity of contract and Clause 7 as amended, as
to what (if any) of its damages sustained totalling $40,000, it can sue Mackay to recover.

Question 3 30 Marks
In early 2008, Dr Zoka Zola, a very experienced consultant civil engineer was hired under a $100,000
contract to design the concrete foundations for a new $60 million multi-storey car park building in
Brisbane, Queensland on river-side land prone to flooding and with a proven history of underground
mining plus land subsidence. Dr Zola drafted up interim plans but strongly advised her client, Wollemi
Properties Ltd (“Wollemi”), to hire a specialist surveying firm to ascertain the site’s exact ground
characteristics so she could modify her interim ‘standard’ plans to strengthen the building’s
foundations if necessary. However, Wollemi chose to ignore Dr Zola’s advice, terminated her contract
on payment of the full $100,000 fee, and built the car park in early 2009 using her interim plans and
then re-sold the building on completion, in September 2010, to Rubicon Holdings Ltd (“Rubicon”) for a
discounted $50 million, after its own research had raised serious foundation- related issues. In mid-
December 2010, on-site subsidence caused $1 million in damage to the foundations, followed by
record floods in early January 2011 which caused a further $4 million in structural damage. Rubicon
now wants to sue Dr Zola in tort for $5 million claiming professional negligence in her (interim)
building design contract with Wollemi Properties Ltd.
Advise Dr Zola as to what (if any) liability for professional negligence she has to Rubicon
Holdings Ltd at common law as amended by the Civil Liability Act 2003 (Qld).
Assessment Criteria
You will have shown evidence of the following:
 the written expression is poor and difficult to understand
 the answer is poorly organised
 referencing is generally inadequate
 lack of familiarity with the legislation and its application
 failure to identify and address the issues in the question


 reasoning and application demonstrated is poor.

You will have:
 made a conscientious attempt to address the topic and/or answer the question
 shown evidence of having done the required reading and of having understood the reading
 presented a reasonable argument to back up your conclusions
 demonstrated a reasonable level of spelling and grammatical usage
 used referencing but this may need improvement
 issues that may need to be identified and addressed in more depth.
You will have:
 addressed the topic and/or answered the question directly
 presented soundly based arguments and backed these up with reasons
 gone beyond description to analysis of key issues
 used the English language well
 shown evidence of reading widely
 demonstrated understanding of the reading
 used referencing that is satisfactory.
You will have:
 met the above criteria for a credit
 demonstrated the attainment of a high degree of understanding of the concepts of the course
 demonstrated deep insight into the application of knowledge and skills acquired to complex
theoretical and practical situations
 used referencing correctly
 made reference to all appropriate legislation.
High Distinction
You will have:
 met the above criteria for a distinction
 demonstrated the attainment of an outstanding level of achievement regarding the objectives of
this course
 demonstrated an interesting and/or original approach/idea/argument
 demonstrated mastery of the relevant referencing system
 ensured conclusions are backed by well-reasoned arguments demonstrating a detailed insight
and analysis of issues


 ensured references are made to the appropriate legislation for particular issues.