Tui is a 16 year old fashion student. She is living at home with her parents but has a part-time job in a local café. Tui is starting a small business selling her handmade jewellery at local markets. She wants to buy a car so she can travel to markets to sell her jewellery.

Tui goes to Coronation Cheap Cars Limited and talks to the salesperson. She decides to purchase a 2012 Ford Focus for $11,000. Tui has $2,000 saved up which she received as a birthday present from her grandmother but will need to borrow the remaining $9,000. Tui signs a loan agreement with Coronation Cheap Cars Limited Finance at 26% interest and drives it home. She does not obtain car insurance as she cannot afford it.

Two weeks later Tui is driving back from the markets and she loses control of the car in wet conditions and hits a power pole. The car will cost $5,000 to repair and Tui has no money for repairs. She does not think it is fair that she has to continue paying for a car that she cannot use so Tui stops her payments. The car is repossessed and Tui receives an account for $10,000 which includes re-possession costs.

This is New Zealand Contract Law

Required:

a) Advise Tui whether a valid contract has been formed. Support your answer by stating the relevant legal principle(s) and applying them to the problem. Refer to case law to support your answer.

b) With reference to statute, identify and explain one precaution that an adult should take when they intend to do business with a minor?

c) Identify and explain the essential element for a valid contract that Tui would argue is missing from the arrangement between herself and Coronation Cheap Cars Limited?