Contract and Exclusion Clause Problem Question – Applying IRAC

LAW00720 Legal Studies – Assignment 1
Contract and Consumer Law Problem Questions

Unit and Assessment Overview

Unit code: LAW00720 – Legal Studies
Assessment: Assignment 1 – Contract and Consumer Law Problem-Solving
Weighting: 25% of overall unit mark
Length: 2,500 words, plus or minus 10 percent. Marks may be deducted where the excess is caused by irrelevant material.
Type: Individual written assignment using problem-solving and legal reasoning methods

Assessment Task

You must answer both of the following problem questions. The questions address important areas of contract law including contract formation, offer and acceptance, revocation, the postal rule, and the legal effectiveness of exclusion clauses in consumer transactions. Each answer must be supported by reference to relevant legal authority such as cases and legislation where appropriate. You are required to use a structured legal problem-solving approach such as IRAC, which involves identifying the Issue, stating the Rule, applying the law to the facts, and reaching a Conclusion.

Question 1 – Contract Formation and Postal Rule

Value: 13 marks

Connor urgently needed cash. He decided to sell his car by parking it outside his house with a notice on the windscreen stating:

“For sale. Excellent condition, one owner. $26,000 or nearest offer. Please call here at my home number 48 or phone 100 333 only.”

The following events occurred on Monday:

• At 9 am, Dolly saw the car but did not stop. Later she phoned from work and told Connor that she would give him $23,000 for his car. Connor said he would consider it.

• At 11 am, Eileen saw the car and called at number 48. Connor was not home and only his daughter Hetti was there. Eileen wrote a note stating: “Monday 11.05 am. Please keep the car for me. Here is my cheque for $26,000 – Eileen.” Hetti left the note on Connor’s desk.

• On Monday afternoon Connor decided to sell the car to Dolly for $23,000. At 2.30 pm he posted a letter to Dolly’s business address stating: “I agree to sell you my car on your terms.” Dolly received this letter on Wednesday at 10 am.

• At 4.30 pm on Monday Connor read Eileen’s note. He immediately phoned Dolly’s business address and left a message on her answering service stating: “Ignore my letter that you will receive, the deal for my car is off.” Dolly was away on business and did not listen to the message until Wednesday at 8 pm.

• At 2.15 pm on Monday Fiona saw the notice on the car and hurriedly posted a letter stating she would buy the car for $26,000. She enclosed a cheque and posted the letter in time for the 3.30 pm collection. However, Fiona failed to address the letter correctly and it did not reach Connor until Friday.

Required

Advise each of the following parties of their legal rights and obligations:

1. Connor

2. Dolly

3. Eileen

4. Fiona

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In your answer you must address legal issues such as offer, counter-offer, acceptance, revocation, communication of acceptance, and the operation and limits of the postal rule. Your discussion should refer to relevant case law including Adams v Lindsell, Henthorn v Fraser, Entores v Miles Far East, and Holwell Securities Ltd v Hughes.

Question 2 – Exclusion Clauses and Remedies

Value: 12 marks

Dan took his dinner suit and his wife’s silk dress to Toff Dry Cleaners, a firm his family regularly used. He was handed a docket and, as usual, placed it in his wallet without reading it.

When Dan returned to collect the clothing he was told that his dinner suit was missing and his wife’s silk dress was badly stained. No explanation was given for the damage. One assistant recalled handing the dinner suit to another customer who had apparently lost his docket but was allowed to search through the cleaned clothing and take items he identified as his own.

Dan demanded compensation. The owner of Toff Dry Cleaners pointed to a clause printed on the docket which stated:

“We will not be liable for any loss or damage to clothing left for cleaning.”

The owner also referred Dan to a sign displayed at the back of the shop which read:

“We take all care in the dry cleaning of our customers’ clothing but we regret we cannot take any responsibility for loss or damage however caused.”

Dan protested that he had never read either the docket or the sign.

Required

1. Advise Dan whether he is entitled to compensation from Toff Dry Cleaners for the lost dinner suit and the stained dress.

2. Would your answer change if Dan had noticed the clause on the docket and an assistant had said: “That excludes liability for damage to buttons and zippers”? Explain.

3. Assume Dan is entitled to compensation for the lost suit and the stained dress. He now informs you that:

   • His wife has suffered emotional distress because the dress was a family heirloom, and

   • They incurred substantial expense hiring replacement clothing for a formal occasion.

   Advise whether these additional losses are recoverable.

Your answer must be supported by relevant authority on the incorporation and construction of exclusion clauses and on the types of damages recoverable in contract. Relevant cases include Parker v South Eastern Railway, Thornton v Shoe Lane Parking, Olley v Marlborough Court Hotel, and Curtis v Chemical Cleaning and Dyeing Co.

Presentation and Referencing Requirements

• Answer both questions in a single Word document.

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• Use clear headings for each question and for each sub-part.

• The total word limit is 2,500 words. A useful guide is approximately 1,300 words for Question 1 and 1,200 words for Question 2.

• Use 1.5 line spacing, 11 or 12-point font and standard margins.

• Apply an accepted legal citation style as specified in your unit outline. Where no style is specified, OSCOLA or AGLC style case citations with a short reference list are acceptable.

• Support your analysis with primary legal sources such as cases and legislation, and with secondary sources where appropriate.

Academic Integrity

• This is an individual assessment and must be written entirely in your own words.

• Do not copy or closely paraphrase material from commercial assignment help websites or shared student answers. Similar or identical submissions may be treated as academic misconduct.

• All sources used must be properly acknowledged through accurate citation. Failure to reference correctly may constitute plagiarism.

Effective legal problem solving requires not only knowledge of legal rules but also the ability to apply those rules logically to complex factual situations. Students who approach each issue methodically by clearly identifying the legal questions, explaining the relevant principles, and then carefully linking those principles to the facts of the scenario are more likely to produce coherent and persuasive answers. The IRAC method encourages structured reasoning and helps avoid the common error of merely describing the law without applying it to the problem. Legal education research emphasises that this analytical approach develops deeper understanding and improves the quality of written legal argument (Jones 2018).

A high-quality answer to Question 1 begins by identifying the car notice as an invitation to treat rather than a legal offer, and then analyses each communication to determine when, if at all, a binding contract arises. Dolly’s telephone conversation must be examined to determine whether it amounts to an offer or merely an inquiry. Connor’s posted letter of acceptance raises issues concerning the postal rule from Adams v Lindsell and whether revocation by voicemail can be effective before acceptance is communicated. Eileen’s note and cheque require consideration of face-to-face dealings and whether any contract was formed. Fiona’s incorrectly addressed letter tests the limits of the postal rule where the offeree’s own error prevents proper delivery.

A strong answer to Question 2 focuses on whether the exclusion clauses were properly incorporated into the contract and whether reasonable steps were taken to bring them to Dan’s attention. Cases such as Thornton and Curtis demonstrate that misleading explanations or insufficient notice may prevent reliance on such clauses. The damages discussion must distinguish between recoverable financial losses, such as the cost of hiring replacement clothing under Hadley v Baxendale, and generally non-recoverable claims for emotional distress, subject to recognised exceptions.

Recent References

• Chen-Wishart, M 2022, Contract law, 7th edn, Oxford University Press, Oxford.

• Poole, J 2019, Textbook on contract law, 14th edn, Oxford University Press, Oxford.

• Stone, R & Devenney, J 2021, The modern law of contract, 14th edn, Routledge, London.

• Routledge, E 2020, ‘Offer, acceptance and the postal rule revisited’, Journal of Business Law, vol. 2020, no. 3, pp. 215–237.

• Andrews, N 2020, Contract law, 3rd edn, Cambridge University Press, Cambridge.

• Jones, T 2018, ‘Teaching legal problem solving through IRAC methodology’, Legal Education Review, vol. 28, no. 2, pp. 45–62.