The University of the South Pacific

Serving the Cook Islands. Fiji. Kiribati. Marshall Islands. Nauru. Niue. Samoa. Solomon Islands. Tokelau. Tonga. Tuvalu, and Vanuatu.

SCHOOL OF ACCOUNTING & FINANCE

AF108: INTRODUCTION TO LAW FOR COMMERCE

FINAL EXAMINATION - SEMESTER I, 2017

FACE TO FACE MODE

Time allowed: THREE (3) hours

10 minutes Reading Time

INSTRUCTIONS:

• This paper is in three sections. There are twenty (20) multiple choice questions in
section A. The questions in Section B and Section Care ALL compulsory.

• ALL Questions in Section A, Band C are compulsory

• Section A is worth 20 marks.

• Section B is worth 10 marks.

• Each question in Section C is worth Five (5) marks.

• The exam is worth fifty (50) marks.

• You must score at least twenty (20) marks in this examination and fifty (50) marks
overall to be considered for a pass in the course.

• Ensure that you have secured the MULTIPLE CHOICE ANSWER GRID with your
answer booklet by tying it to the answer booklet with a piece of string.

• In your answers, refer to relevant cases and statutes where applicable.

• CLOSED BOOK EXAM

 SECTION A:
ALL QUESTIONS ARE COMPULSORY IN THIS SECTION. (20 marks)
Circle the alphabet that is the most accurate answer. The answer grid is provided with
your exam paper. Place only one circle for each question. An example is provided below:

AFI08 Multiple Choice Questions

(You should spend about 40 minutes on this section)

I. In a transfer of goods transaction what does 'risk' pass with?

(a) delivery
(b) property
(c) money
(d) insurance

2. An "invitation to treat" in contract law is

(a) a binding offer to make a contract

(b) a condition subsequent to a contract
(c) an invitation by the seller to persons interested in buying a good to make
an offer to purchase from the seller
(d) a contract made in relation to a party

3. The implied terms in the Sales of Goods Act generally apply to:

(a) sales where the goods are bought by a consumer for private use
(b) sales where the buyer holds himself out as having knowledge about the
goods
(c) sales where the goods are sold by a manufacturer to a retailer
(d) sales by a consumer to a retailer

4. If Charlotte telephones a paint shop and orders 20 litres of paint suitable for
external walls, which implied condition would NOT apply?

(a) fitness for purpose

(b) merchantable quality
(c) correspondence with sample
(d) correspondence with description

2
5. Which of the following is essential for a simple contract to be valid?

(a) Price
(b) Consideration
(c) A executed document
(d) A written document

6. At the end of a case when the court reaches a decision, a judgment is given
outlining that decision and the reasons behind the decision. The binding part of
the judgment is known as:

(a) /lemo dat quod non habet

(b) noscitur a sociis
(c) obiter dicta
(d) ratio decidendi

7. When a court is deciding if a partnership exists the courts will look at:

(a) the intention of the parties.

(b) whether a state of agency exists between the parties.
(c) whether profits and losses are shared between the parties.
(d) all of the above.

8. Intention to ·create legal relationships will be presumed to apply in commercial

arrangements. This principle was applied in:

(a) Crown v Clarke

(b) Ba!four v Ba!four
(c) Carlill v Carbolic Smoke Ball Co
(d) Rose v Frank

9. A patent is a:

(a) mark indicating the origin of a good.

(b) method of protecting an invention.
(c) method of protecting a literary work.
(d) contract between a manufacturer and an inventor.

10. In considering the "reasonableness" of a restraint of trade clause courts do NOT

consider?

(a) the area of the restraint.

(b) the time of the restraint.
(c) the public interest.
(d) the damages payable.

3
I J. In a trust the settlor is the party who is:

(a) the person who manages the trust propelty for themselves.
(b) the person who transfers propelty to the trustee to manage
(c) the person who manages the trust property for the beneficiaries.
(d) entitled to receive the benefits of the trust propelty.

12. A contract may be discharged by

(a) perfOlmance
(b) agreement
(c) frustration
(d) all of the above

13. A major advantage of a company over a partnership is that:

(a) a company can be created simply by oral agreement whereas a partnership

has to be created by a document in writing
(b) a company does not have perpetual succession whereas a partnership does
(c) companies are much cheaper to set up and do not have the ongoing
auditing requirements which partnerships do
(d) the company has perpetual succession whereas a partnership does not

14. Section 66 of the Consumer Credit Act of Fiji does not allow:

(a) the debtor to get the interest rate reduced

(b) the debtor to get the number of installments prolonged over a longer
period and to lower the amount due under each installment.
(c) Payments due to be postponed for a certain period of time.
(d) Payments to be postponed and prolonged over a longer period.

15. In a sale of goods transaction where the contract is silent on when property in the
goods passes, when would property pass?

(a) when goods are made for the buyer

(b) when goods are delivered by the seller to the buyer
(c) when goods are sold by the seller to a third party
(d) when the buyer insures the goods that are not yet produced by the seller

16. Vicarious liability occurs where:

(a) an employer is liable for a tort which an employee conunits in the course
of employment duties
(b) an occupier is liable to take care to avoid a reasonably foreseeable risk to
anyone who enters their premises
(c) a person suffers a reasonably foreseeable loss from a defective product
(d) a person enters land without the consent of the owner

4
17. A payment on basis of "quantu111I11erllit" mean?

(a) being paid on the basis of work done

(b) being paid on the basis of work yet to be done
(c) getting married to a foreigner and being paid for it
(d) cancelling a contract

18. To prevent abuse of powers there is a legal rule that says only Parliament can
make laws, only the Executive can administer laws and only the COUItS can
interpret and enforce the laws. This rule is known as:

(a) Delegation of authority

(b) Division of Executive authority
(c) Separation of Powers
(d) Applicable authority

19. In Fiji the people believe that customs and practices are similar to law. In the
hierarchy of laws what is the status of customalY law in Fiji?

(a) above the constitution

(b) below the constitution but above legislation
(c) below both the constitution and legislation
(d) all of the above

20. Which of the following is a rule for interpreting Acts?

(a) mischiefrllie
(b) silver rule
(c) bronze rule
(d) nemo dat quod non habet

5
Section B This Question is COMPULOSRY
(You should spend about 40 minutes on this section)
(10 marks)
John works as a driver for SFL, a household goods supplier based in Suva, SFL employs
about SO employees. Certain provisions in John's employment contract state;
" ... your hours of employment are from 8am to 5pm, and at such other times as the
Company needs your sen,ices. You will be paid at $5.00 per hour for driving the
Company vehicle.

At no time shall you drive whilst under the influence of alcohol, and any such behavior
shall be treated as gross misconduct, and shall entitle the Co to terminate you without
notice,"

On the morning of Friday the 1st of May 2017 the Company informs John that he has to
work that evening to make an extremely urgent delivery to the Nadi Branch of the
Company. He has to depart from work at Spm and an'ive in Nadi at about Spm.Then he
has to return from Nadi the following morning departing Nadi at Sam and arriving in
Suva by lunchtime. The Company also pays him his meal allowance of $22.S0 for dinner,
and $24.00 for breakfast and lunch for the following day. He is also provided with paid
accommodation in Mediocre Hotel in Nadi, and given special instructions that he should
not deviate (i'01ll his assigned dutv.

John depalts Suva with the delivery for Nadi at Spm as scheduled. On the way he takes a
detour and decides to go to his girlfriend's house situated in one of the gravel roads at
Navua for dinner. He reaches there at 6:15 pm, and has dinner, and upon his girlfriend's
insistence, a few glasses of wine as well. On returning from the gravel road onto the
highway he has an accident with a logging truck in Navua. Several people are injured and
John agrees that it was his fault. If John had not gone to his girlfriend's home, maybe the
accident would not have happened as John was supposed to take the direct route from
Suva to N adi, through Lami and N avua. Also, he would not have been speeding to catch
up on time. As a result of the accident John's truck also breaks down and John fails to
arrive in Nadi on time with the delivery. Instead, he spends the night in the cell. Due to
the delay SFL lose a major contract worth $1,000,000.

On the Sth of May, 2017 the injured victims, and the logging truck driver sue SFL.

Advise SFL on the following:

a) whether John is personally liable to the victims?

b) whether SFL has any liability on behalf of John?

c) whether they can terminate John for being involved in an accident, and for
deviating from his duties, as well as not following instructions?

d) whether SFL can terminate John for causing substantial loss by losing a major
contract worth $1,000,000.
(10 marks)

6
 Section C
This section is worth 20 marks.
All Four Questions in this section are compulsory. Each Question is worth five (5) marks.
(You should spend about 25 minutes on each of the four questions in this section. but not
more than one and half hours (90 minutes) in this section)

Question 1 (You should spend about 25 minutes on this question)

Answer .!ill.parts of this question:

a) What for practical purposes is the difference between agreements concemmg

"social/domestic matters" and agreements concerning "commercial matters".
Use relevant case examples to illustrate your answer.

b) Explain how a trust is different from a company. What are the advantages and
disadvantages of each in comparison to the other for purposes of operating a
business which wants to maximize profits, and reduce tax liabilities?
Discuss with relevani examples.

(2.5 marks each)

Question 2 (You should spend about 25 minutes on this question)

James purchases a Smal1 TV from the local department store. After a month he has a
serious car accident and doctors have declared him unfit to ever work again. He
purchased the items on credit under the Fiji Consumer Credit Act and now being without
an income, is unable to repay the installments of $ 100 dollars a month. He has FNPF and
the balance is about $240,000 however, they are saying that his claim is being processed
and they can only pay after about 6 months once their independent report of James's
condition is completed. In addition, James is 54 so FNPF would payout within the year
anyways. He plans to lock two doors of the house and rent out half of the premises, but
that may take some time, as he would have to construct a sink bench in one of the rooms
to convert it to a kitchen. Once that is done, maybe the flat will earn $1,000 per month.

Discuss what rights under the Consumer Credit Act, if any, James may have to have the
debt to the Department store cancelled, reduced or varied due to his difficulties.

Refer to appropriate examples. cases or statutOlY provisions to illustrate your discussion.

(5 marks)

7
, ,

Question 3 (You should spend about 25 minutes 011 this question)

On 1 May Petroleums Ltd in Suva wrote to Fuels Ltd in Samoa offering to sell 100,000
tonnes of fuel at FJD$1.50 per litre. They requested for Fuels Ltd to deposit $15 million
dollars as 10% deposit into their account within a fortnight if the offer was acceptable.
Fuels Ltd received this offer on 11th May, and accepted it by sending their reply by post
on the same day. On 14th May, Fuels Ltd made the deposit of $ 15 million as per request.
On 8th May, Petroleums Ltd posted a revocation of their offer as fuel prices had increased
in the world market, and their Suva depot had just enough fuel to supply the Fijian
market. This was mainly due to a shortage in supply, and uncertainty in the world fuel
markets after Trump administration sent warships towards Russia and North Korean
waters. Fuels Ltd received the revocation on 20 th May. In the meantime the Accountant
of Petroleums Ltd, sole signatory of accounts, created a fictitious account and transferred
the $ 15 million into the fictitious account and has disappeared with the money.

Advise Petroleums Ltd and Fuels Ltd on their rights and liabilities in the above situation.

Refer to relevallt cases where appropriate to support your argumellts. (5 mark)

Question 4 (You should spend about 25 minutes on this question)

Mandy owns a coffee shop. She buys cakes for the shop from Tasty Cakes.

Janet is a regular customer at Mandy's coffee shop. One afternoon, Janet ordered a
cappuccino and a slice of chocolate cake. After eating half of the piece of cake, Janet
discovered the partial remains of a cockroach in her cake. Janet suffered nervous shock
and gastroenteritis and was unable to work for 4 weeks.

Advise Janet whether she would be successful in bringing an action in tort law against

(a) Mandy; and

(b) Tasty Cakes

Refer to relevant cases where appropriate to support your arguments. (5 marks)

Good Luck--The End

8
 IN=, ....................................
AFI08 FINAL EXAM SEMESTER 1 2017 IDNo ...................................... .

Section A: MULTIPLE CHOICE ANSWER GRID

Circle © the letter of the answer that most accurately reflects the answer. Do not circle
more than one alphabet for any question. After completion tie this to the answer booklet.

01 A B C D
02 A B C D
03 A B C D
04 A B C D
05 A B C D
06 A B C D
07 A B C D
08 A B C D
09 A B C D
10 A B C D
11 A B C D
12 A B C D
13 A B C D
14 A B C D
15 A B C D
16 A B C D
17 A B C D
18 A B C D
19 A B C D
20 A B C D