Please read the following instructions carefully:
§ This assignment is comprised of two questions. Together they are worth
30%
of the total marks
for this unit. Marks will be awarded based on the attached ‘Assessment Criteria’ (see page 4 below). Failure to submit your assignment will result in a mark of zero for this part of the assessment for the unit.
§ You are required to submit your assignment via LMS before
11.59 pm on Tuesday 27 April 2021. Do not forget to write your name and student number on the cover page (and preferably, on every other page as well) of your assignment.
§
If for some very good and exceptional reason you require an extension of the due date, or some other form of Special Consideration, please contact the Business School’s Student Life Team, not the unit coordinators.
§ Please type your assignment using 12-point font (preferably Times New Roman or Arial) and use single spacing.
§ The word limit for the assignment is
2500 words.
(Not including genuine footnotes.) Assignments exceeding the word limit will be subject to penalties. A penalty of 1% of the total mark will be deducted for each 1% in excess of the word limit.
§ Assignments that are submitted late (i.e., after the above deadline, without a valid extension) will be subject to penalties. A penalty of 10% of the total mark will be deducted for each day that your assignment is late. Each 24-hour block is recorded from the time the assignment is due. Assignments submitted more than 7 days late will receive a mark of zero.
§ You are required, where relevant, to support your answers by citing primary legal authorities (such as cases and statutory provisions) and secondary legal authorities (such as books and journal articles). Do not cite you lecture notes or slides.
§ Please use the AGLC (Australian Guide to Legal Citation
4th
edition) for your citations. A copy of the AGLC is posted on LMS. It is the first item listed under the ‘Learning Materials’ tab. No bibliography is needed for this assignment.
§
Do not reproduce the questions in your assignment answer.
TAKE HOME ASSIGNMENT QUESTIONS
Question 1 (20 marks)
Stephen Henchman is a licensed financial adviser who works for a large financial planning and investment advice company called WIN Ltd. Two years ago he advised Ray and Arlene Armstrong as to how they should invest their life savings. The Armstrongs explained to Mr Henchman that they had worked together for many years as cleaners in a large office building in the Perth CBD but that, as they were now both of retirement age, they were looking to put their feet up and ‘enjoy life’. They indicated that they had approximately $500,000 available to invest and that they were looking for a safe and secure investment that would produce a steady income stream. Mrs Armstrong also mentioned that her brother and sister in law, Peter and Anne Orme, were in a similar position to the Armstrongs and that they too were planning to retire in the near future. She specifically told Henchman that, because her brother was very lazy, and not very clever, it was likely that whatever Henchman advised the Armstrongs to do with their ‘retirement money’, her brother and his wife would likewise do with theirs.
Henchman recommended that the Armstrongs invest the full amount of their savings in a complex, structured, synthetic investment product known as
Williebrandt Notes. Henchman assured the Armstrongs that the
Williebrandt Notes
were an “extremely strong” product that could be relied on to deliver stable financial returns even in the most volatile market conditions. In saying this Henchman was relying, not on any independent research he himself had undertaken (for he had undertaken none), but rather on a “marketing script” written for him by his employer. The Armstrongs were very impressed with what Henchman told them. But still, they were in no rush to invest. They thought about it for a few days, talked it over with the Ormes and then, after nearly a week, they went back to see Henchman armed with two $500,000 cheques, one from themselves and one from the Ormes. They asked Henchman to use that money to purchase $1,000,000 worth of
Williebrandt Notes
in the name of the ‘Orme and Armstrong Family Trust’.
Mr Henchman was only too pleased to do as they asked because, under the terms of his employment contract, he was entitled to be paid an enormous commission for having clinched such a ‘high net value’ sale. So the sale and purchase of the
Williebrandt Notes
was quickly arranged and settled (even though the written contract of sale that the Ormes and the Armstrongs signedid not contain an express promise guaranteeing the ability of the Notes to deliver ‘stable financial returns’) and, for the first twelve months or so, all went well. The Notes performed well and delivered excellent returns. However, over the last six months, things have taken a dramatic turn for the worse. Changed credit conditions have caused the Notes to suffer a catastrophic fall in value. As a result, the Ormes and the Armstrongs have lost almost all of their life savings and all four of them have been forced to give up their retirement plans and return to work.
On the basis of the above facts advise both the Ormes and the Armstrongs as to their legal rights against Mr Henchman under the law relating to tortious liability for negligent misstatements.
Question 2 (10 marks)
Assume that, in relation to everything that Mr Henchman and his employer (WIN Ltd) did in Question 1, they were acting as agents for the European bank (ABN Bank) which created the
Williebrandt Notes
and assume further that, as a result, when the Ormes and the Armstrongs signed the contract under the terms of which they agreed to purchase $1,000,000 worth of
Williebrandt Notes
they were actually contracting, through the agency of Henchman and WIN Ltd, with ABN Bank.
On those assumptions, and regardless of how you answered Question 1, now answer each of the following questions:
· Was it an express or implied term of the contract that the
Williebrandt Notes
were ‘an extremely strong product that could be relied on to deliver stable financial returns even in the most volatile market conditions’?
(2 marks)
· If it was a term of the contract that the
Williebrandt Notes
were ‘an extremely strong product that could be relied on to deliver stable financial returns even in the most volatile market conditions’, would that term likely be a condition, a warranty or an innominate term?
(2 marks)
· As a matter of contract law, in cases in which the party that breaches the contract is found to have committed a major breach, one which goes to the very heart of the contract and which deprives the innocent party of substantially all that they were entitled to expect under the contract, what remedy or remedies are potentially open to that party?
(2marks)
· As a matter of contract law, if a party to a contract is induced to enter into that contract by either a fraudulent or negligent misrepresentation made by (or on behalf of) the other party to that contract, is that contract either void or voidable?
(2 marks)
· If a party to a contract is induced to enter into that contract by a fraudulent or negligent misrepresentation made by (or on behalf of) the other party to that contract, but in the circumstances of the case that misrepresentation never becomes a term of the contract, can the deceived party nonetheless sue the other party for damages?(2 marks)