Contracts, LAWS3041/LAWS6141
Semester 2, 2019
Research Assessment
Important Guidelines/Rules/Notes/Reminders:
Please see the Course Outline for the assessment overview.
Remember:
o You do not need to submit a paper copy of your answer – submitting it
to Turnitin is all that is required.
Where the prompt asks for “law books/law review articles,” note that there is no
precise definition: I simply want to make sure that you rely on legal scholarship
(rather than accounts from journalists, the public, Wikipedia, etc.).
Consider that the law of NSW (and therefore also Australian Commonwealth
law) applies to each question. Of course, you may need or wish to refer to cases
from another jurisdiction, and that is ok – but be aware of what is binding here
and what isn’t. The time of the problem is the present time (ie, 2019).
In regard to the number of sources listed in each part of the prompt, note that the
text states in each instance “at least”. This is to highlight that the number of
sources listed in each prompt is the absolute minimum. Based on the needs of the
question, you may want to consider relying on additional sources, especially
whenever you are hoping for higher marks. (But by the same token, you should
only include cases that are necessary for resolving the question. You will not
receive extra marks for simply listing multiple cases that all say the same thing.)
Unless otherwise advised, you should use the Australian Guide to Legal Citation
(4th ed) in preparing your responses. The Guide may be viewed online at:
http://law.unimelb.edu.au/mulr/aglc/about.
[SEE OVER FOR QUESTIONS]
Page 2 of 4
Assessment Background and Questions:
Amari is a proud Awabakal woman who owns several successful businesses. She has come to you for
advice. In particular, she has three business deals that she’s finalising and she’s trying to work out
how best to manage the risks in each. She has three questions for you.
Question 1 (15 marks)
One of Amari’s companies is a small firm that serves as a building contractor on building projects
in Newcastle and the Hunter region. She has worked hard to establish her firm’s reputation in the
area, and just last week her firm was chosen as Head Contractor on an upcoming project for the
construction of a building near Newcastle Beach to contain four individual units (apartments).
In order to complete the job, Amari will need to hire several subcontractors to do things like the
electrical work, the plumbing, etc. In an ideal world, what happens in a construction project is that
a project is completed and then the owner/developer pays the head contractor for their work; the
head contractor can then pay all the subcontractors. Problems of course arise when the owner/
developer is late with payment because then the head contractor is not able to pay the subcontractors.
(Of course, often the arrangements become more complex, but that’s the basic form.)
In the past, Amari has worked with an owner/developer with whom she has good relations.
Payment has never been a problem. This time, however, Amari is working with a new
owner/developer and she has concerns. Although she doesn’t know anything certain, Amari
confides in you that she has heard through the construction-industry rumour-mill that this new
builder/developer who hired her is sometimes late with their payments to head contractors. Amari
of course does not want to be in the position where her subcontractors are demanding payment
from her directly (based on the contracts that they’ll have with Amari), but where Amari herself
doesn’t yet have any payment from the owner/developer.
In other words, the possibility that the owner/contractor won’t pay Amari on time is a risk – and
Amari wants to manage this risk. (Of course, she can insist on payment in her contract with the
owner/developer directly. But if they don’t pay, she’s still stuck without the money and all she has
is the right to sue the owner/developer.) So she is wondering about the possibilities for managing
the risk in her contracts with her subcontractors.
Amari has begun to consider inserting, in her contracts with her subcontractors, what’s called a
‘pay when paid’ clause (also called a ‘paid if paid’ clause, depending on the wording). As the
name suggests, such a clause states that the head contractor is not required to pay the
subcontractors until after the head contractor receives payment from the owner/developer.
Amari has a law degree. Although she doesn’t have a practicing certificate, she has a sophisticated
understanding of the law and says to you the following:
“In terms of managing the risks in my subcontracts, I think a ‘pay when paid’ clause would solve
the problem. I’m not up-to-date on the subject though, and I recall that there might be some legal
issues around using ‘pay when paid’ clauses these days. So, to be more specific, I’d like to know
whether you would advise me to include a ‘pay when paid’ clause in my contracts with my
subcontractors in this case. Please provide me a concise answer, written in IRAC form. To
support your answer, I would like to see at least 4 cases cited in your rule section and used in
your application section. So that we’re clear that we understand each other, I’ll go ahead and
set out what I consider the issue here to be: ‘Whether it is legal for Amari, as Head
Contractor in a building project, to include “pay when paid” clauses in her contracts with
her subcontractors.’ Please add a sentence at the end specifically addressing how the
proposed contract provision above does – and does not – protect me from risk in this
particular case. I’m very busy so do keep your answer to around 500 words (I’m not going to
count them, but I’ll likely be sad if the answer is significantly longer – or shorter – than
that.)”
Page 3 of 4
Question 2 (15 marks)
Amari is involved in the construction industry in other ways. Another of Amari’s companies sells
aluminium doors. Amari’s company is a wholesaler, so instead of selling directly to customers, she
sells to Bunnings and smaller builder-supply shops around NSW. When a shop purchases doors
from Amari they usually purchase a large amount at once (typically between 50-250 doors), so the
cost is quite high. The purchaser then has 90 days to pay. Recently, it has happened twice to Amari
that she had sent a large shipment of doors to a shop, but before they had paid, the shop became
bankrupt and entered into liquidation. (In short, this means that Amari couldn’t get the doors back
and could only receive a small percentage of the money she was owed.) This possibility of nonpayment
therefore poses a risk to Amari’s business. She would like to manage this risk in her
contracts with her purchasers.
Although she has only been in this particular business for a short time, Amari is aware that there
exists something called ‘retention of title’ clauses or ‘Romalpa clauses’ (after a famous English
case titled Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd). Retention of title clauses
can become quite complex, but in basic form the purchaser of a good agrees in their contract that
the seller will continue to own the good until the purchaser has paid for it. (In fancy legal terms,
we say that the seller will retain title (ie, ownership) in the good until they receive payment.) That
way, if the purchaser enters liquidation after they’ve received the goods but before they’ve on-sold
them, the seller is able to get the goods back (because the seller still owns them!).
Amari has begun to consider inserting retention of title clauses in her contracts with those shops
that purchase doors from her. She therefore says to you the following:
“In terms of managing the risks that I’ve described to you with my purchasers, I think a very, very
basic ‘retention of title’ clause could solve the problem. I know that such clauses definitely were
legal a few years ago. But starting in 2012, I also know that a big piece of legislation went into
effect called the Personal Property Securities Act 2009 (Cth). That legislation, ‘affectionately’
referred to as the PPSA, is huge and complicated. I’ve actually hired a specialist to advise me on
that aspect, so let me be clear in regard to what I’m asking you to do: I am not interested in
whether the PPSA applies to my contracts or sales or transactions. My question to you is much
simpler: I’d like to know whether – even after the introduction of the PPSA – it is still legal to
include a ‘retention of title’/‘Romalpa’ clause in my sales contracts. Please provide me a
concise answer, written in IRAC form. To support your answer, I would like to see at least 5
sources cited and used in your application section (these sources must include at least two
cases – the other three sources can be from law books/law review articles [not from blog
posts or the like – I will reject these]). So that we’re clear that we understand each other, I’ll
go ahead and set out what I consider the issue here to be: ‘Whether it is legal – especially in
light of the Personal Property Securities Act 2009 (Cth) – for Amari’s wholesale company to
include “retention of title”/“Romalpa” clauses in their sales contracts with purchasers.’
Please add a sentence at the end specifically addressing how the proposed contract provision
above does – and does not – protect me from risk in this particular case. I’m very busy, so do
keep your answer to around 500 words (I’m not going to count them, but I’ll likely be sad if
the answer is significantly longer – or shorter – than that.)”
[SEE OVER FOR QUESTION 3]
Page 4 of 4
Question 3 (15 marks)
Amari has a third small business as a property developer. In other words, she purchases properties
and often builds a house on them, after which she sells the property-with-house for a profit. It’s a
tough job but she has done well. Amari has heard, however, that the Newcastle City Council is
planning to enact much stricter zoning regulations regarding the building of houses. If Amari
purchases a property but then cannot build a house on it because she cannot get the necessary
zoning approval, she will of course lose money. This possibility represents a risk to Amari’s
business. Amari wishes to manage this risk through the use of contingent condition clauses. Amari
is delighted to hear that following your engagement in your Contracts course, you are a contingent
condition expert. In this case, Amari is considering using text something like the following in any
contract that she enters into for the purchase of land: “This contract is subject to Amari receiving –
within six months of the date of this contract – approval from Newcastle City Council appropriate
to building a house on the property.” Amari remembers from law school that such a clause is legal
but she can’t recall exactly how the clause works (ie, what rights does such a clause create – what
can each party do and what can’t they?). She therefore asks you: “Just to make sure that I have it
all straight in my head, please explain to me – succinctly – the basics of how the contingent
condition that I’ve proposed will work in regard to the following four questions:
what happens if the condition is fulfilled within the six months?
what happens if the condition isn’t fulfilled within the six months, what rights will I
have – and what rights will the vendor have?
under what circumstances can I terminate the contract?
under what circumstances can the seller terminate the contract?
Please support your answer with 5 cases, but please do not use any of the cases that were on
your required-cases list in your Contracts course (I read those cases in law school too – now
I’d like to see some other authority!). I do not need IRAC form here, just a general
explanation would be great. Please add a sentence at the end specifically addressing how the
proposed contract provision above does – and does not – protect me from risk in this
particular case. And because I need this information concisely, please keep your answer to
around 500 words (I’m not going to count them, but I’ll likely be sad if the answer is
significantly longer – or shorter – than that.)”
Semester 2, 2019
Research Assessment
Important Guidelines/Rules/Notes/Reminders:
Please see the Course Outline for the assessment overview.
Remember:
o You do not need to submit a paper copy of your answer – submitting it
to Turnitin is all that is required.
Where the prompt asks for “law books/law review articles,” note that there is no
precise definition: I simply want to make sure that you rely on legal scholarship
(rather than accounts from journalists, the public, Wikipedia, etc.).
Consider that the law of NSW (and therefore also Australian Commonwealth
law) applies to each question. Of course, you may need or wish to refer to cases
from another jurisdiction, and that is ok – but be aware of what is binding here
and what isn’t. The time of the problem is the present time (ie, 2019).
In regard to the number of sources listed in each part of the prompt, note that the
text states in each instance “at least”. This is to highlight that the number of
sources listed in each prompt is the absolute minimum. Based on the needs of the
question, you may want to consider relying on additional sources, especially
whenever you are hoping for higher marks. (But by the same token, you should
only include cases that are necessary for resolving the question. You will not
receive extra marks for simply listing multiple cases that all say the same thing.)
Unless otherwise advised, you should use the Australian Guide to Legal Citation
(4th ed) in preparing your responses. The Guide may be viewed online at:
http://law.unimelb.edu.au/mulr/aglc/about.
[SEE OVER FOR QUESTIONS]
Page 2 of 4
Assessment Background and Questions:
Amari is a proud Awabakal woman who owns several successful businesses. She has come to you for
advice. In particular, she has three business deals that she’s finalising and she’s trying to work out
how best to manage the risks in each. She has three questions for you.
Question 1 (15 marks)
One of Amari’s companies is a small firm that serves as a building contractor on building projects
in Newcastle and the Hunter region. She has worked hard to establish her firm’s reputation in the
area, and just last week her firm was chosen as Head Contractor on an upcoming project for the
construction of a building near Newcastle Beach to contain four individual units (apartments).
In order to complete the job, Amari will need to hire several subcontractors to do things like the
electrical work, the plumbing, etc. In an ideal world, what happens in a construction project is that
a project is completed and then the owner/developer pays the head contractor for their work; the
head contractor can then pay all the subcontractors. Problems of course arise when the owner/
developer is late with payment because then the head contractor is not able to pay the subcontractors.
(Of course, often the arrangements become more complex, but that’s the basic form.)
In the past, Amari has worked with an owner/developer with whom she has good relations.
Payment has never been a problem. This time, however, Amari is working with a new
owner/developer and she has concerns. Although she doesn’t know anything certain, Amari
confides in you that she has heard through the construction-industry rumour-mill that this new
builder/developer who hired her is sometimes late with their payments to head contractors. Amari
of course does not want to be in the position where her subcontractors are demanding payment
from her directly (based on the contracts that they’ll have with Amari), but where Amari herself
doesn’t yet have any payment from the owner/developer.
In other words, the possibility that the owner/contractor won’t pay Amari on time is a risk – and
Amari wants to manage this risk. (Of course, she can insist on payment in her contract with the
owner/developer directly. But if they don’t pay, she’s still stuck without the money and all she has
is the right to sue the owner/developer.) So she is wondering about the possibilities for managing
the risk in her contracts with her subcontractors.
Amari has begun to consider inserting, in her contracts with her subcontractors, what’s called a
‘pay when paid’ clause (also called a ‘paid if paid’ clause, depending on the wording). As the
name suggests, such a clause states that the head contractor is not required to pay the
subcontractors until after the head contractor receives payment from the owner/developer.
Amari has a law degree. Although she doesn’t have a practicing certificate, she has a sophisticated
understanding of the law and says to you the following:
“In terms of managing the risks in my subcontracts, I think a ‘pay when paid’ clause would solve
the problem. I’m not up-to-date on the subject though, and I recall that there might be some legal
issues around using ‘pay when paid’ clauses these days. So, to be more specific, I’d like to know
whether you would advise me to include a ‘pay when paid’ clause in my contracts with my
subcontractors in this case. Please provide me a concise answer, written in IRAC form. To
support your answer, I would like to see at least 4 cases cited in your rule section and used in
your application section. So that we’re clear that we understand each other, I’ll go ahead and
set out what I consider the issue here to be: ‘Whether it is legal for Amari, as Head
Contractor in a building project, to include “pay when paid” clauses in her contracts with
her subcontractors.’ Please add a sentence at the end specifically addressing how the
proposed contract provision above does – and does not – protect me from risk in this
particular case. I’m very busy so do keep your answer to around 500 words (I’m not going to
count them, but I’ll likely be sad if the answer is significantly longer – or shorter – than
that.)”
Page 3 of 4
Question 2 (15 marks)
Amari is involved in the construction industry in other ways. Another of Amari’s companies sells
aluminium doors. Amari’s company is a wholesaler, so instead of selling directly to customers, she
sells to Bunnings and smaller builder-supply shops around NSW. When a shop purchases doors
from Amari they usually purchase a large amount at once (typically between 50-250 doors), so the
cost is quite high. The purchaser then has 90 days to pay. Recently, it has happened twice to Amari
that she had sent a large shipment of doors to a shop, but before they had paid, the shop became
bankrupt and entered into liquidation. (In short, this means that Amari couldn’t get the doors back
and could only receive a small percentage of the money she was owed.) This possibility of nonpayment
therefore poses a risk to Amari’s business. She would like to manage this risk in her
contracts with her purchasers.
Although she has only been in this particular business for a short time, Amari is aware that there
exists something called ‘retention of title’ clauses or ‘Romalpa clauses’ (after a famous English
case titled Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd). Retention of title clauses
can become quite complex, but in basic form the purchaser of a good agrees in their contract that
the seller will continue to own the good until the purchaser has paid for it. (In fancy legal terms,
we say that the seller will retain title (ie, ownership) in the good until they receive payment.) That
way, if the purchaser enters liquidation after they’ve received the goods but before they’ve on-sold
them, the seller is able to get the goods back (because the seller still owns them!).
Amari has begun to consider inserting retention of title clauses in her contracts with those shops
that purchase doors from her. She therefore says to you the following:
“In terms of managing the risks that I’ve described to you with my purchasers, I think a very, very
basic ‘retention of title’ clause could solve the problem. I know that such clauses definitely were
legal a few years ago. But starting in 2012, I also know that a big piece of legislation went into
effect called the Personal Property Securities Act 2009 (Cth). That legislation, ‘affectionately’
referred to as the PPSA, is huge and complicated. I’ve actually hired a specialist to advise me on
that aspect, so let me be clear in regard to what I’m asking you to do: I am not interested in
whether the PPSA applies to my contracts or sales or transactions. My question to you is much
simpler: I’d like to know whether – even after the introduction of the PPSA – it is still legal to
include a ‘retention of title’/‘Romalpa’ clause in my sales contracts. Please provide me a
concise answer, written in IRAC form. To support your answer, I would like to see at least 5
sources cited and used in your application section (these sources must include at least two
cases – the other three sources can be from law books/law review articles [not from blog
posts or the like – I will reject these]). So that we’re clear that we understand each other, I’ll
go ahead and set out what I consider the issue here to be: ‘Whether it is legal – especially in
light of the Personal Property Securities Act 2009 (Cth) – for Amari’s wholesale company to
include “retention of title”/“Romalpa” clauses in their sales contracts with purchasers.’
Please add a sentence at the end specifically addressing how the proposed contract provision
above does – and does not – protect me from risk in this particular case. I’m very busy, so do
keep your answer to around 500 words (I’m not going to count them, but I’ll likely be sad if
the answer is significantly longer – or shorter – than that.)”
[SEE OVER FOR QUESTION 3]
Page 4 of 4
Question 3 (15 marks)
Amari has a third small business as a property developer. In other words, she purchases properties
and often builds a house on them, after which she sells the property-with-house for a profit. It’s a
tough job but she has done well. Amari has heard, however, that the Newcastle City Council is
planning to enact much stricter zoning regulations regarding the building of houses. If Amari
purchases a property but then cannot build a house on it because she cannot get the necessary
zoning approval, she will of course lose money. This possibility represents a risk to Amari’s
business. Amari wishes to manage this risk through the use of contingent condition clauses. Amari
is delighted to hear that following your engagement in your Contracts course, you are a contingent
condition expert. In this case, Amari is considering using text something like the following in any
contract that she enters into for the purchase of land: “This contract is subject to Amari receiving –
within six months of the date of this contract – approval from Newcastle City Council appropriate
to building a house on the property.” Amari remembers from law school that such a clause is legal
but she can’t recall exactly how the clause works (ie, what rights does such a clause create – what
can each party do and what can’t they?). She therefore asks you: “Just to make sure that I have it
all straight in my head, please explain to me – succinctly – the basics of how the contingent
condition that I’ve proposed will work in regard to the following four questions:
what happens if the condition is fulfilled within the six months?
what happens if the condition isn’t fulfilled within the six months, what rights will I
have – and what rights will the vendor have?
under what circumstances can I terminate the contract?
under what circumstances can the seller terminate the contract?
Please support your answer with 5 cases, but please do not use any of the cases that were on
your required-cases list in your Contracts course (I read those cases in law school too – now
I’d like to see some other authority!). I do not need IRAC form here, just a general
explanation would be great. Please add a sentence at the end specifically addressing how the
proposed contract provision above does – and does not – protect me from risk in this
particular case. And because I need this information concisely, please keep your answer to
around 500 words (I’m not going to count them, but I’ll likely be sad if the answer is
significantly longer – or shorter – than that.)”
- Assignment status: Get solution from our writing team
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