BLW17: Business Law - Australian Consumer Law - IRAC Structure Assessment Answers

November 14, 2017
Author : Charles Hill

Solution Code: 1EIDI

Question: Business Law Assignment

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Business Law Assignment Writing

Task

  1. Identify the Issue - Start from the facts

Identify the relevant legal issues the facts raise. To do this, ask yourself who wants what from whom; based on what legal grounds and why? The analysis of these questions should lead you to the legal issue which determines in which way the case will be decided or defines what a party has to do to achieve a desired outcome.

The statement of the relevant issue(s) should not be longer than one sentence.

  1. The relevant rule/law

Note the major part of the applicable rule (law) for resolving the relevant legal issue. Give authority—either the relevant statute and/or cases for the propositions or statements you make about what is the relevant law that applies to the particular facts. In some situations eg consumer law, a section of a statute will often be the major source of authority. If you need more than 3 rules to resolve the relevant issue you have either stated the issue too broadly or some of the rules are not relevant to resolve the relevant issue.

  1. Application of the law to the facts

Develop the arguments in favour of particular outcomes or resolutions and the counter-arguments that may be raised. In identifying the relevant issues and analysis care must be taken to avoid focusing too narrowly and prematurely on particular issues and their resolution. In some factual situations there can be some temptation to support the "underdog" or apparently weaker party. Try to be more detached and explore various approaches. In the adversarial nature of the common law legal system there are usually at least two sides to every dispute. You need to suggest why the facts are more like some of the major cases and where they differ from other cases. That is, you need to indicate whether cases you have studied should be applied or followed given the facts of the question, or whether they should be distinguished from the facts in the particular question you have been given.

  1. Conclusion

In the end give a short and concise conclusion (1-2 sentences) summing up your key findings and stating the most likely outcome of the problem.

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Solution:

I.

Issue

Whether Bing and Alan can deny the validity of the exclusion clause made part of the contract with Locky and sue Locky for the loss they suffered?

Rule

When any contract is made then the parties must comply with the terms of the contract. Non compliance of the contract terms will result in raising consequences against the defaulting party. (E McKendrick & Q Liu, 2015)

However, at times clauses are made part of the contract which tries to exclude or limit the liabilities of the defaulting party with the consent of the other party and such clauses are called exclusion clauses and is analyzed in Darlington Futures Ltd v Delco Australia Pty Ltd (1986). In order to consider the exclusion clause effective it is necessary that the same is made part of the contract mutually by the parties. (P Latimer, 2012)

Now, when the parties enter into the contract and the contract is in writing then the general rule is that any exclusion clause that is made part of a written contract then such exclusion clause is binding upon the parties irrespective of the reality whether the same is read by the parties to the contract or not and is held in L'Estrange v Graucob [1934]. It makes no difference whether they are aware of the contract or not. if the contract is signed and the exclusion clause is part of the contract then it is binding. However, it is held in Curtis v Chemical Cleaning Co [1951] it is held that if the contract is signed by the parties under any misrepresentation made in regard to the exclusion clause then such clause is not binding upon the parties and has no relevance. (The law Teacher, 2017)

Now, if any contract is made by the parties which is not signed then the exclusion clause is considered to be valid provided the same is made part of the contract prior the establishment of the contract and the relying party has made all the reasonable efforts to bring the exclusion clause in the notice of the affected party and is held in Olley v Marlborough Court [1949] and Thompson v LMS Railway [1930].

Further, in order to exclude the liability of the party it is necessary that such liability must be covered by the exclusion clause.  In Houghton v Trafalgar Insurance Co (1954) it was held that when the clause is not clear the n it is not consider to be effective, if any negligence liability is to be excluded then the wordings must be very precise and clear and is held in White v John Warwick [1953]. (Dangeloloegal, 2017)

However, as per section 64A of the Australian Consumer Law, no implied condition or warranties of the consumer can be excluded. If the clause tries to exclude any consumer services then it is in violation of section 60 of the Australian Consumer Law. ( The law hand book, 2017)

The law is now applied to the facts of the case.

Application

Alan and Bing are running a restaurant named Peking Duck. They entered into a contract with Locky as part of the security of the premises. The main tasks of Locky were to make regular checks on the premises and to ensure that the doors, windows and other openings were securely fastened and locked. Locky on one night entered the premises to make coffee and left the back door unlocked. A thief gained access and stole some valuable equipment.

Now, Locky was relying on the clause that was made part of the contract which submits that ‘It is expressly agreed that neither Locky nor any of his employees shall be under any liability whatsoever to any of its customers for any loss of, or damage to, the contents of any premises to which the contract relates whether such loss or damage is the result of any breach of this contract or otherwise’.

Now, Locky was in breach of the contract when he did not take care of the locks and because of which loss is incurred by Alan and Bing. Thus, Locky can rely on the clause as the same was made part of the written contract and the clause covers the liability that is impose upon Locky.

It makes no difference that when the contract was made and signed Bing nor Alan had read the details. Since the contract is in writing and is signed by the parties thus the clause is operative and is binding upon both the parties.

The clause can only become inoperative only when there is some kind of misrepresentation that is incurred by Locky upon Alan and Bing.

Conclusion

It is now submitted that the exclusion clause is valid and is operative upon Alan and Bing and thus they cannot sue Locky for the loss incurred as the same is made part of the exclusion clause by the parties by making it part of a written contract and is signed by all the parties.

II

Issues

Whether Alan can get compensation from the manufacturer for the supply of faulty electrical appliances?

Rule

When the goods and services provided to the consumer are not satisfactory then there are remedies that can be availed by the aggrieved consumer under section 259-277 of the ACL. However, the remedy that can be availed depends upon the defect that is found in the faulty goods

As per section 260 of ACL, a  fault in the goods is considered to be major when: (Hobartlegal, 2017)

  1. When the consumer is not aware with the nature and extend of the failure present in the goods;
  2. When the goods does not match the description or sample or model;
  3. The goods are not fit for the purpose supplied when compared with other goods and cannot be made fit within reasonable time;
  4. The goods were not fit for the purpose which was already disclosed by the consumer and the faulty goods cannot be made fit within reasonable time;
  5. The goods so supplied are not of acceptable quality.

It is submitted that when the goods are found to be of major failure then the consumer: (Hobartlegal, 2017)

  1. May ask the retailer to remove the defect within reasonable time as per section 259(2) of ACL;
  2. May ask for repairs; For refund of the price; For the replacement of the goods under section 261 of the ACL.
  3. May reject the goods.
  4. May also claim damages.
  5. May also seek consequential damages that might have incurred because of the defective goods under section 259 (4) of ACL.

The law is now applied to the facts of the case.

Application

It is submitted that Alan suffered injuries on his right arm and was not able to use the same for one week. The injury is sustained by Alan when he was working in the restaurant using one of the electrical appliances and he received an electric shock from it. He later discovered that the electrical appliance was faulty.

It is submitted that as per ACL, any goods supplied by the manufacturer to the consumer must be of acceptable quality, if the goods are not of acceptable fault then it is considered to be a major failure as per section 260 of ACL.

So, the fault in the goods was a major fault and thus Alan can either return the goods or seek repairs within reasonable time.

Conclusion

It is thus concluded that Alan can return the goods or can seek repairs; he can also seek cone uncial losses that is suffered by him because of the faulty goods.

III

Issue

Whether Alan and Bing are in violation of the ACL when they imported goods from Spain and Queensland?

Rule

Every manufacturer as per the ACL must comply with certain conditions and warranties and any non compliance will make them answerable for the losses that are sustained by the aggrieved consumer. Two of the most important provisions of ACL that must be complying with every manufacturer, retailer or supplier are:

  1. Section 18 of the ACL- As per section 18 of the ACL, every manufacturer/seller/retailer must not indulge in any action that is deceptive or misleading in nature. when the seller makes any action or statement which is misleading or deceptive in nattier, knowingly, and because of such false and deceptive statement/action any consumer suffer losses then the seller is held to liable for the violation of section 18 of the ACL and is held in Houghton v Arms [2006]. It is necessary that when the seller is making false and deceptive representation then at time he must be aware that the consumer is relying on his representations to make him liable for the violation of the statutory provisions of ACL and is held in Butcher v Lachlan Elder Realty Pty Ltd [2004].

The defaulter can be imposed with a fine of $220,000 (individual) and upto $1.1 million if corporations. Damages can also be claimed.

  1. As per section 29 when any manufacturer is promoting his goods and at that time of any false or misleading representations are made by such manufacture then it is an act that is prohibited under ACL and is analyzed in Australian Competition and Consumer Commission v Bunavit Pty Ltd [2016]. An act is misleading and false when the manufacturer submits representations regarding: (Hannebery and Sapountsis, 2016)

  1. The quality or value or composition or style or grade or model of the goods;
  2. That the goods as beneficial value;
  3. That the goods are novel;
  4. Making representation regarding the origin of the product;

The law is now applied to the facts of the case.

Application

Both Alan Bing has developed a main course dish ‘Superiffic’. There were few representations that were made by them, that is;

  1. That they used ingredients of Australia;
  2. If the ingredients are sourced then they are sourced locally within 50 kilometers of the restaurant.

However, it was found that both the representations were false as the ingredients were imported from Spain and they often had to order the fresh vegetable ingredients from Queensland.

It is submitted that there is violation of section 18 of ACL as they specifically make representations in order to induce the consumers knowing the fact that the consumers will rely on their representation prior making the decision.

also, there is violation of section 29 of ACL as there were false and deceptive statements that are made regarding the origin, quality  and origin of the ingredients.

Thus, there is clear violation of section 18 and 29 of ACL.

Conclusion

Both Alan and Bind are in violation of section 18 and 29 of ACL and thus they can be imposed with a fine of $220,000 and damages can also be claimed from them.

IV

Issue

Whether Bert has contravened any sections of the Australian Consumer Law and whether he can defend himself if Alan and Bing allege that he has.

Rule

Every manufacturer has a right to promote his goods and services with the help of advertisements. However, every advertiser must advertise his goods and services in such manner so that there should not be any kind of hardship that is caused to the consumer. Some of the key essential and provisions that must be kept in mind are: (Horvath, 2009)

  1. No bait advertisement – As per section 35 of the ACL, no product must be advertisement at a price which is not intended to be sold by the advertiser in reasonable quantities and price. (ACCC, 2017)
  2. No advertiser is allowed to make any kind of misrepresentation that is false and misleading as the same is prohibited under section 29 of ACL;
  3. Any misleading or deceptive statements when made part of the advertisement in order to induce the consumer then it is an action of violation of section 18 of ACL. The aggrieved party has the right to seek damages, ancillary orders, money refunded and injunction orders from the courts.

However, there are few defenses that can be availed by the seller or manufactures in order to protect him from the consequences. The same are:

  1. That the consumer is already aware of the deception or the misleading information made by the manufacturer and is held in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982).
  2. When the breach that is incurred is not because of the fault of the manufacture and is an act of force majeure;
  3. There is no application of section 18 of ACL when the deception is not intentional and is held in Yorke v Lucas (1985).

Application

As per the facts, Alan and Bind decide to take a holiday and thus contacted Bert (travel agent). Bert advertised a tour to China and make several promises. However, it is submitted that the promises that are made are in violation of provisions of ACL. The same are:

  1. There were two promises that are made nu Bert knowing the fact that the same cannot be completed. That is, Alan and bind will be provided with one shopping day and that they will be travelled through Qantas Airlines. However, in reality they had one less shopping day than promised because of a public holiday in Beijing which was well known to all agencies and c) they flew with Thai airlines.

Thus, a false and misleading representation is made by Bert and thus he is in violation of section 29 of ACL.

Also, Bert has with misleading intent and in order to deceive Alan and Bind had promises statements which he is aware cannot be fulfilled. Thus, there is clear violation of section 18 of ACL.

  1. It is promised by Bert that the price quote is all inclusive of the price but it was later found that an extra cost of $900 each is incurred to all travelers. Thus, the price that is offered by Bert is not the right price and is an act of bait advertisement and is in violation of section 35 of ACL.

Bert also promised a tour of the Great Wall but it was cancelled on the day due to the incompetence of the local bus driver. It is submitted that there was no misleading, false or deceptive act on the part of Bert and thus the cancellation was a force majeure.

However, Bert can protect himself by proving that there is no intentional deception that is incurred by him and that the truth of the promises that are made by him already within the knowledge of Alan and Bind

Conclusion

It is submitted that Bert is in violation of section 18, 2 and 35 of the ACL and thus must face consequences of the same. However he can avail the defuse and can protect him from the liabilities is imposed.

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