LAWS108: Commercial Law - Domboyz Office- Assessment Answer

Commercial Law Assignment

Assignment Task

You have been requested to provide a draft memo of advice to the head of the Domboyz Officeof General Counsel which intends its terms of service to cover all the rights and remediesavailable to consumers.

You are required to advise on the possible legal implications forDomboyz of the following marketing claims in their proposed advertising materials (do not discuss misleading and deceptive conduct here):

Delivery will be made by drone to any address within three kilometres of a franchisewithin nine minutes of receipt of an online order;

Exclusive technology and packaging will guarantee that pizzas are ‘extra hot’, namely up to 50 degrees C, when received by customers;

There will be no charge for pizzas delivered outside the advertised time and heat ranges but because of the other benefits for consumers they have no entitlements if not satisfied with their food.

Now assume that the company has started trading and pizzas are being sold on the basis that they are suitable for all consumers with diabetes. A consumer complains that because of their particular health circumstances their steady consumption of Domboyz pizzas has resulted in the onset of diabetes. Discuss the company’s potential liability and how its promotion in respect of this issue can avoid any problems in the future.

Relevant Background

It is the responsibility of every manufacturer or supplier in Australia to ensure that the products and/or services they are providing to their consumers are effective and efficient. According to ACCC and Australian Consumer Law (ACL), suppliers and manufacturers need to provide enough guarantees to the goods and services to their consumers in accordance with the law. The suppliers and manufactures need to be keen on the guarantee they provide on things such as the quality of the goods or service, the time frame for delivery, the rules and instructions to follow during or before consumption and after consumption, the intended purpose of those goods and the lifespan of those goods. From Washington v. Glucksberg’s, ruling it was made it clear that Poor provision of these guarantees or failure to meet this guarantees will result in a remedy to the consumer and the supplier or manufacturer will face the law. Consumers also need to be keen with the way they use the goods and the statements they make to suppliers and manufacturers as complaints and comments.

Executive Summary

Domboyz new Pizza brand needs to review its guarantee to its customers in terms of delivery time, quality of the Pizza brand, effectiveness and efficiency of the technology used in storing the Pizza and the main purpose of the Pizza to its target customers. This is to avoid further complaints from its customers so as to remain competitive in the market. ACCC standards, principles and rules explain clearly that the manufacturers need to have reasonable express guarantees to potential customers which it can meet effectively. The manufacturers need to be cautious and careful in guaranteeing customers as they stand to provide a remedy in case they fail to meet these guarantees and might even go to an extend of paying huge fines in court if the offended customers enforced the case to the court of law. This paper is going to

provide detailed advice on Domboyz Pizza brand on how to provide effective consumer guarantee that might not cost them heavily in future.

Opinions

Opinion of Delivery Time

In Australia, when a consumer buys goods or pays for a service, it is required by the ACL that it comes automatically with some guarantee from the manufacturer of that product or service. Among the guarantees that the ACCC allows the manufacturers to provide to their consumers is that of delivery time so as to make it efficient and reliable. A manufacturer will be held accountable to recover damages he caused to the consumer relating to a failure in meeting express warrantees he gave to the consumer including deliver time. After San Antonio Independent School Dist. v. Rodriguez’scase, the law was adjusted in a manner that the manufacturer should supply the goods and/or services within a specified reasonable time frame. However, the reasonability of that time frame always depends on the nature of those services or goods and the distance required supplying to.

In our opinion, Domboyz Pizza brand needs to determine some important factors involved under delivery time. Such factors involve the distance they will deliver the Pizza with a drone in relation to the time frame provided. Secondly, they have to determine obstructing factors such as traffic jam and breakdowns that come about in their transportation means. Domboyz promises those potential customers within 3 kilometres to get delivery of the Pizza within 9 minutes. This means that for every 1 kilometre covered, the drone takes exactly 3 minutes to deliver to those at 3 kilometres further. In light of our long experience with cases dealing with short delivery time, this guarantee is quietly effective in competition but is dangerous to Domboyz. They are likely to default delivering the parcel within 9 minutes as the packaging delay might cost it. Since it is a guarantee, the customer might seek for a remedy which might drive Domboyz to incurring a loss at this point.

The packaging of goods and services and exclusive technology applied lie within the exclusive warrantees. These are the guarantees that the manufacturers formulate for themselves and not formulated by the law. As the law applies, the manufacturer will be held liable for any general express warranty made to the consumers which he will fail to meet. Some technologies might be used for the first time and it the real situation application, they might fail in one way or the other. It might turn out that the system is not functioning, and since the guarantee was made, the manufacturer will be required to compensate for that failure.

According to ACCC, we think the better view on Domboyz Pizza is that they have to re-advertise the guarantee on exclusive technology and packaging. They have to understand clearly the reputations that come to them as a result of failing to meet the guarantee of delivering hot Pizzas of around 50 degrees Celsius. The ACL grants the consumers right to claim remedy to the manufacturers in case they fail to meet their prescriptions. The packaging might have a default as any other electronic machine and fail to keep the Pizza warm at 50 degrees Celsius by the time it reaches the customer. And this shows that Domboyz will have to take responsibility to guarantee the customer another best alternative in case the guarantee fail to apply at the time of delivery.

Unsatisfactory Warnings

From Griswold v. Connecticut’s ruling of a refund to Griswold, the law favours the consumer more than it favours the manufacturers. The consumer will always be required to be compensated or refunded by the manufacturer if he did not meet his specifications as stated in the warranty or guarantee. When a manufacturer states with some warnings that he will not be responsible for some refund for some circumstances, he must make sure that the warnings are within the law by the time the consumer claims for a refund. When a manufacturer provides some warnings starting that ‘he will not be liable for…’ he has to be careful with the statement he makes since he might be confusing the customer.

In our view, Domboyz was not supposed to issue a marketing warranty starting that the customers should not pay anything in case the Pizza is delivered outside the required time and heat condition. It goes ahead to say that customers have no any entitlements unless in case they are not satisfied with the food. This shows that Domboyz is not following the Australian law on guaranteeing of consumer goods. As the law applies, the manufacturer will be breaking the law by providing statements stating that ‘we are not liable for…’ meaning that they are confusing the consumer. The manufacturer needs to use other words and statements in advertisements that do not confuse the client as it is difficult to determine whether the customer was satisfied or not.

Opinion on Products Purpose

According to ACCC, the law requires every manufacturer or supplier to be clear and reasonable on the opinions/facts he passes across concerning aim, purpose or function of the product he/she is supplying to the customers. The manufacturer need to be 100% certain about the statements and assurances he makes about the purpose of the product. Domboyz main target audiences are people with diabetes, and it will help them reduce the effect of this condition. However, one consumer complains of onset of diabetes after regular consumption of this Pizza. These might show that Domboyz gave false information. Therefore, Domboyz Pizza brand needs to provide verifiable and reliable information to its consumers to avoid their loosing trust to the company. Domboyz also need to have 100% assurance from its technical experts to ensure that they do not fail their customers on the conditions they provide before implementing them.

Practical Implications

Domboyz main aim of providing these crucial statements to their consumers through advertisements is because they want to improve their competency and increase their sales volume and customer base. However, the fact here is that some of the statements such as that of the delivery time within 9 minutes for clients within 3 kilometres are somehow difficult to attain. In as much as Domboyz wants to increase its market share, it has to provide reasonable time frame for the time of delivery of the Pizza. It is likely to default at 9 night minutes. Claiming that the client should not pay anything in case the Pizza arrives past the stipulated time of heat condition poses the firm to a greater risk of loss as it is hard to maintain these guarantees for long term purpose.

Conclusion

In summary, manufacturers or suppliers advertisements need to be reasonable, considerate and clear to the customers. This is to avoid misleading the consumers and providing unreasonable advertisements that could cost the supplier or the manufacturer in any way or the other. The manufacturer need to be clear on the delivery time frame he provides, the express prescriptions he guarantees to his consumers and the purpose of the products he/she is supplying out. This is to ensure that effective service is provided to consumers, and their rights are well observed and protected. The manufacturer needs to understand the re-educations they might base for unfair advertisements.