Business Law Exam:
Business Law Exam:
12th of August 9.00am-12.30pm
The exam will be in 3 parts:
one part containing theory questions requiring brief mini-essay answers like Q2 in your recently completed assignment,
one part containing short answer responses such as question 3 of your assignment and
one past containing legal problems such as question 4 & 5 in your assignment
TERM 1
Take-home Exam
UNIT: LEGL1003 Introduction to Business Law
TIME ALLOWED:3 hours+ 30 Minutes
SPECIAL
INSTRUCTIONS:
This examination is worth 50 marks out of a total of 100 marks for this unit.
All questions are worth 10 marks.
You must answer the PART A question.
You must answer two (2) questions only from PART B. Do not answer more than two questions..
You must answer two (2) problem questions only from PART C. Do not answer more than two questions..
Youmustrefer to relevant rules and cases or legislation as appropriate for each question.
You must complete your exam on this document. You can expand the space under each question as needed.
If you experience Internet problems and are unable to download the exam file please send an email to your Unit Assessor atwarwick.fisher@scu.edu.auand attach a photo of the error message as evidence.
If you experience delays in uploading your completed exam document, you are required to email a copy to your Unit Assessor. However, you will need to complete a successful upload before your exam can be accepted for marking.
THE SUBMISSION PORTAL WILL CLOSE AT 12.30. AFTER THAT TIME YOU WILL NEED TO EMAIL YOUR PAPER TO WARWICK
Module 4 areas to revise:
Not much to cover here but it will all feature in the exam.
Express terms - everything covered in the tutorial including exclusion/exemption clauses
Implied terms - the three ways courts may imply a term ie course of past dealings, trade usage or custom, to make the contract effective
Generally, what express terms and implied terms are about
Module 5 areas to revise:
Top of Form
You'd be crazy not to focus on:
Frustration
Conditions and warranties
Common law remedies
equitable remedies
ACL - S3 and consumer guarantees re goods
ACL remedies
Bottom of Form
Bottom of Form
Business Law Exam:
12th of August 9.00am-12.30pm
The exam will be in 3 parts:
one part containing theory questions requiring brief mini-essay answers like Q2 in your recently completed assignment,
one part containing short answer responses such as question 3 of your assignment and
one past containing legal problems such as question 4 & 5 in your assignment
TERM 1
Take-home Exam
UNIT: LEGL1003 Introduction to Business Law
TIME ALLOWED:3 hours+ 30 Minutes
SPECIAL
INSTRUCTIONS:
This examination is worth 50 marks out of a total of 100 marks for this unit.
All questions are worth 10 marks.
You must answer the PART A question.
You must answer two (2) questions only from PART B. Do not answer more than two questions..
You must answer two (2) problem questions only from PART C. Do not answer more than two questions..
Youmustrefer to relevant rules and cases or legislation as appropriate for each question.
You must complete your exam on this document. You can expand the space under each question as needed.
If you experience Internet problems and are unable to download the exam file please send an email to your Unit Assessor atwarwick.fisher@scu.edu.auand attach a photo of the error message as evidence.
If you experience delays in uploading your completed exam document, you are required to email a copy to your Unit Assessor. However, you will need to complete a successful upload before your exam can be accepted for marking.
THE SUBMISSION PORTAL WILL CLOSE AT 12.30. AFTER THAT TIME YOU WILL NEED TO EMAIL YOUR PAPER TO WARWICK
Module 4 areas to revise:
Not much to cover here but it will all feature in the exam.
Express terms - everything covered in the tutorial including exclusion/exemption clauses
Implied terms - the three ways courts may imply a term ie course of past dealings, trade usage or custom, to make the contract effective
Generally, what express terms and implied terms are about
Module 5 areas to revise:
Top of Form
You'd be crazy not to focus on:
Frustration
Conditions and warranties
Common law remedies
equitable remedies
ACL - S3 and consumer guarantees re goods
ACL remedies
Bottom of Form
Bottom of Form
Contract law - contents and genuine consentModule overview 4
We have now completed our study of the Big Four the essential elements of every contract (with those few exceptions related to consideration). Lets now turn our attention to the contents of the contract. A typically simple contract might be one for the purchase of a carton of milk; the terms of the contract are clear and not much can go wrong. Alas, many contracts are more complicated and, by the time a dispute arises, the parties often have different views as to what was agreed.
If everything relating to the contract were expressed in writing there would be less likelihood of disagreement later. But most contracts are not committed entirely to writing and so we have to consider what may have been spoken and also, what might have been implied. And, even where everything may have been committed to writing, these express terms may not be recognised by the courts.
In this topic we examine the issues involved with the contents (terms) of the contract. We shall examine the way the courts deal with signed and unsigned documents, how they sort out the statements made in negotiations into those that are terms of the contract and those that are non-contractual as well as how they interpret exclusion clauses. We then consider implied terms, terms that have not been expressed but are of equal importance. Finally we will examine the five ways that genuine consent may be affected and how the courts, in those situations, will allow the innocent party to avoid the contract.
Module purpose
By the end of this module you will be able to:
understand when signed documents become terms of the contract
understand when unsigned documents become terms of the contract
explain how oral representations become terms
explain how the courts interpret the meaning of contractual terms, including exemption clauses
understand when and how the courts fill gaps in contracts
describe and apply the rules used by the courts to imply terms into a contract
understand how parliament has intervened in contracts for sale of goods
understand how a contract may be rescinded due to an absence of genuine consent
Introduction
Life would be so much easier and people would spend less time in courts if every contract was clearly written and signed by both parties. Well, let me tell you, that isn't going to happen. Imagine you are trying to order a glass of wine in a very crowded pub, everyone pushing and shoving and trying to gain the attention of the bar attendant. Now imagine the response from both the attendant and all the people around you if you insisted that the contract for that drink be committed to writing. It would be horrible to watch what would happen.
We look closely at everything that may or may not be part of a contract from the courts' perspective; there is often so much left up in the air and, lacking certainty, disputes will arise as to:
what was actually agreed upon
the importance of the various statements made
the actual meaning of those various statements
whether there were somethings that weren't discussed during negotiations that may still turn out to be a term of the contract.
In the final part of this module we will examine what happens if one of the parties entering the contract wasnt genuine? An example might be where you agree to buy my car for $5000 because I'm your unit assessor and you are afraid I will fail you if you don't. Or, how about if I threatened to bash you up if you didnt buy it? Would your acceptance be truly voluntary under that threat? These are just a few examples of agreement that isnt genuine. This topic examines five different ways where the question of genuine agreement arises:
misrepresentation
unconscionable conduct
duress
undue influence
mistake
Topic 1 - The terms of the contract
The terms of a contract will ultimately determine its validity and the rights and liabilities created. Some of these terms will beexpressedwhile some will beimplied. They are equally important. First, we consider express terms, those that are written, spoken, or part-written and part-spoken. Then we will look at implied terms; these may not have been considered by the parties but they exist anyway. Before anything else, closely examine the diagram at6.1as it will help you see where we will now be heading.
Express terms
Activity 4.1
Read Textbook 6.1 6.5, 6.13 - 6.16, 6.32 6.38, 6.42 and figure 6.8.
Express terms might be terms to which both parties expressly agree or they might be terms specifically designed by one party to restrict its liability. We often refer to these latter terms as exemption or exclusion clauses. Note the following:
Terms cannot be introduced after contract formation(Thornton v Shoe Lane Parking[1971] 1 All ER 686 andOlley v Marlborough Court[1949] 1 All ER 127).
As a rule if you sign it, youre stuck with it(LEstrange v Graucob[1934] 2 KB 394).
Where a signature is not required, whether or not those terms will be contractual usually depends onreasonable notice. (Oceanic Sun Line v Fay(1988) 165 CLR 197) andInterfoto Picture Library v Stiletto Visual Programmes([1988] 1 All ER 348).
With a few notable exceptions (e.g. consumer contracts - Module 5) the parties are free to assume whatever obligations they decide.Exemption clauses, as unpalatable as we may view them, are often included in contracts by a party seeking to limit its liability. Check out the examples of exemption clauses inFigure 6.6. As you study this topic you will learn that the courts dont like them anymore than we punters and have developed a number of rules they apply in determining the clauses validity or otherwise. These are:
the general rule
the ambiguity rule (Photo Production v Securicor Transport[1980] 1 All ER 556)
the negligence rule (White v John Warwick & Co[1953] 2 All ER 1021)
the presumption against fundamental breach (Photo Production Ltd v Securicor Transport Ltd[1980] 1 All ER 556)
the four corners rule (Sydney Corporation v West(1965) 114 CLR 481)
The deviation rule (Thomas National Transport (Melbourne) Pty Ltd v May & Baker (Aust) Pty Ltd(1966) 115 CLR353).
Activity 4.2
Read the case note onOlley v Marlborough Courtat 6.4 and make notes on the following:
Briefly summarise the facts.
State the issue before the courts.
Briefly summarise the courts decision.
Read the case note onLEstrange v Graucobat 6.5 and make notes on the following:
Briefly summarise the facts.
State the issue before the courts
Briefly summarise the courts decision
Watch the short video onexclusion clauses:
Then answer the following question: Giving reasons, will Dave (from Delivery Logistics) be able to rely on his exclusion clause in the following situations:
where the court applies the negligence rule
where the court applies the four Corners rule
We will discuss your answers in our Week 4 Tutorial.
Implied terms
Activity 4.3
Read Textbook 7.1 7.33
Lets examine these implied terms, those that have not been agreed to but are equally significant when applicable. The courts mightimplya term into the contract and there may also be terms implied by legislation.
A good starting point is the diagramFigure 7.1as it shows the three categories of implied terms. Lets now consider each of these three categories.
Special terms implied by courtsare:
the implied term ofcooperation
the implied term ofgood faith(Burger King Corp v Hungry Jacks Pty Ltd[2001] NSWCA187)
terms implied intospecific types of contracts, typical of which are that services will be provided withreasonable care and skill and be fit for purpose. Included in this category are those involving:
professional persons and their clients
work and materials (Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd(1968) 120 CLR 516 andHelicopter Sales (Aust) Pty Ltd v Rotor-WorkPty Ltd(1974) 132 CLR 1)
other service contracts (Costa Vraca v Berrigan Weed & Pest Control[1998] FCA 693)
hire contracts (White v John Warwick(discussed earlier)
employment contracts
landlord and tenant contracts
Terms implied by the courts based on the particular facts of each casecould include:
terms impliedon the basis of a course of past dealings(Henry Kendall & Sons v William Lillico & SonsLtd [1968] 2 All ER 444)
terms impliedas a result of custom or trade(British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd[1974] 2 WLR 856)
terms implied in orderto make the contract effective(The Moorcock(1889) 14 PD 64 andCodelfa Construction Pty Ltd v State Rail Authority of New South Wales(1982) 149 CLR 337)
The final category is those terms implied by sale of goods legislation. We will save our study of statutory implied terms until the next module when we will focus on the statutory guarantees under the Australian Consumer Law.
Activity 4.4
Read the case note onCosta Vraca v Berrigan Weedat 7.6 and make notes on the following:
Briefly summarise the facts.
State the issue before the courts.
Briefly summarise the courts decision.
Read the case note onThe Moorcockat 7.13 and make notes on the following:
Briefly summarise the facts.
State the issue before the courts.
Briefly summarise the courts decision.
We will discuss your answers in our Week 4 Tutorial.
TOPIC 2 Genuine consent
As I have already mentioned in the Introduction, all the required elements may be present but there are a range of circumstances which may render the contract ineffective. In this topic we will consider how the doctrines ofmisrepresentationandmistakecan render a contract void or voidable at the election of the innocent party where there has been misinformation about an aspect of the contract.Duress, undue influence,andunconscionable conductmay also result in a void contract where there has been a misuse of power by one of the parties. We shall now consider all these circumstances, though in a slightly different order.
Activity 4.5
Read Textbook 8.43 8.59
Misrepresentation
The textbook deals with this area in detail in Chapter 3 though you are not required to understand it in that much detail. You do, however, need to understand the following rules.
A misrepresentation occurs when, during negotiations for a contract, one of the parties:
Makes a misrepresentation of fact and
The misrepresentation helped to convince or induced the other party to enter into the contract
Having established that the necessary elements exist for a misrepresentation, you now need to understand what is required to determine each of the following three types:
Fraudulent misrepresentation.Here, the additional ingredient required is proof that the representor made the false statement knowing it was false or recklessly not caring as to its truth or otherwise.
Negligent misrepresentation. In Module 2 you learned about that landmark negligence case,Donoghue v Stevensonwherein the tort of negligence was established. UntilHedley Byrne & Co v Heller and Partners Ltdin 1964, actions for negligence required an act, the doing of something negligent. Hedley Byrne established the law of negligent misstatement, more commonly called negligent misrepresentation. Negligent misrepresentation simply involves the same necessary elements as negiligence generally, but in this situation, the duty of care is owed by professional advisers such as a lawyer, doctor or investment advisor.
Innocent misrepresentation. Put simply, an innocent misrepresentation is identical to a fraudulent misrepresentation except that the representor genuinely believes the statement to be true. Which means it is not like a fraudulent misrepresentation at all, but you know what I mean.
All three types of misrepresentation allow the innocent party (the representee) to rescind the contract. The effect of recission is to bring the contract to an end and returns the parties to the position they occupied prior to the contract. This is well explained at8.56.It is important to note that contracts entered as a result of a misrepresentation arevoidable. They are not void.
A voidable contract is one where the innocent party has the option of rescission. If they so choose, then the parties are restored to their original position because the contract is void; it no longer exists. But, the innocent party also has the option to affirm the contract, meaning that they are bound by it and the right to rescind is lost. And, even without affirming the contract, the right to rescind may be lost in several circumstances. These are where:
precise restitution (restitution in integrum) is not possible
there is an innocent third party
there has been an act of affirmation a reasonable time has passed
the contract has been completely formed
The effect of S18 of the Australian Consumer Law
Section 18 prohibits misleading or deceptive conduct (except in the provision of financial services which is covered by other, specific legislation). Section 18 is mighty powerful and is not restricted merely to conduct construed as misrepresentation at common law. It will apply to everyone provided the conduct in question must have taken place in trade or commerce.
Note the following important rules:
Remedies for s 18 breaches include injunctions (s 232), damages (s 236) and a range of ancillary remedies (s 243) such as declaring all or part of a contract void, varying the contract and directing refunds
The conduct must be misleading or deceptive its about leading someone into error
The intended audience will be an important factor age, knowledge, background and degree of sophistication of intended audience will be taken into account
Evidence that someone has been misled is not necessary the courts will look at each situation objectively
The conduct must have actually caused the error
Unconscionable conduct
Where one party takes advantage of the other partys vulnerability (special disability) so that the contract is unfair or unconscionable, the courts can set the contract aside (rescind). (Blomley v Ryan(1956) 99 CLR 362)
Duress
Where a contract is entered into because of some coercion or force (duress), it may be rescinded. The duress may be either:
To the person or their goods
Economic duress
Para8.46explains the circumstances in which duress can occur. Whilst duress to a person or their goods is straight forward, economic duress can be harder to identify because there is a thin line between duress and the normal argy-bargy involved in commercial negotiations. The courts, however, found a clear case of economic duress inNorth Ocean Shipping Co Ltd v Hyundai Construction[1979] QB 705
Undue influence
Undue influence involves the improper use of ascendancy by the dominant party for their or a third partys benefit in a way that the acts of the weaker party are not his or her free and voluntary acts. Where undue influence is proved the weaker party can choose to rescind or continue with the contract, as was the case with duress above. There are two types of undue influenced: presumed and actual.
Presumed undue influence
Where a recognised special relationship exists the courts presume undue influence and the onus rests with the dominant party to rebut the presumption. Relationships where the presumption exists include:
parent and child
solicitor and client
doctor and patient
trustee and beneficiary
guardian and ward
religious adviser and disciple/devotee
Any other situation where a fiduciary duty (a relationship based on trust) is owed. (OSullivan v Management Agency & Music Ltd[1985] QB 428 andLloyds Bank v Bundy[1974] 3 WLR 501)
Actual undue influence
In rare cases, the courts will rescind a contract for actual undue influence but here, it is the person seeking rescission who bears the onus of proof.
Mistake
As you consider this area, keep in mind that the courts are reluctant to grant relief and more often than not the mistaken party is left to suffer the consequences. This is because the courts fear fraudulent claims as a way of avoiding contracts and also because a finding of mistake may have an unjust impact on innocent third party as you will soon discover.
There are three types of mistake:
Common where each party makes exactly same mistake
Mutual where the parties are at cross-purposes
Unilateral where one party is mistaken and the other party takes advantage of that misapprehension (Taylor v Johnson(1983) 151 CLR 422 andCundy v Lindsay(1878) 3 App Cas 459)
Summary
That was a lot of information to absorb. Naturally, I do not expect you to do any more than understand the very broad fundamentals, the main things to consider when considering the content of the contract and genuine consent. In Module 5 we will look at the innocent partys rights when a contract is breached as well as our consumers rights under the Australian Consumer Law.
Contract law - remedies and statutory regulation
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Module overview
In Module 5, we look at the important area of consumers rights under both common law and statute. First, we consider the remedies offered by the courts when there has been a breach of a contract. Then, we focus again on theAustralian Consumer Law(ACL), legislation that protects consumers when they purchase goods and services. We will examine the provisions that require sellers and manufacturers of goods to provide certain guarantees plus those that require service providers to provide certain guarantees. None of these guarantees can be excluded or limited.
Prior to 1974 and the introduction of theTrade Practices Act(TPA), consumers who purchased faulty goods or services needed to sue in contract law, a costly process with no guarantee of success. The oft-quoted phrasecaveat emptor(let the buyer beware) was one Latin phrase everyone knew. Nowadays the most likely action is for breach of a statutory guarantee under the TPAs successor, the ACL, which places the consumer in a much stronger position to the extent that it is more accurate to saycaveat venditoror, let the seller beware!
Module purpose
By the end of this module you will be able to:
understand the remedies available where there has been a breach of a contract
explain the emergence of consumer protection legislation
understand the significant impact of this legislation on both consumers rights and business obligations
by requiring sellers to provide certain guarantees which cannot be excluded
by requiring manufacturers to provide certain guarantees which cannot be excluded
Introduction
True story. A few years ago, when I was about to commence teaching this topic to my Lismore class in Introduction to Business Law, a student approached me and sought my advice. She and her husband of 6 months had purchased a bed for their home but they were very unhappy because the bed sloped into the middle and its metal springs pushed into them. Needless to say, they were not getting a good nights sleep. But when they approached the owner of the shop from where they had purchased the bed, he had little sympathy and refused to give them a refund. Law lecturers are strictly forbidden to give legal advice but I was able to assure this young student that, if she stayed wide awake and paid close attention, in less than two hours she would know precisely what to do to get her money back. Im pleased to report that she indeed stayed awake and paid attention and, within a few days had received a full refund from the seller. Prior to consumer protection legislation this story may not have had such a happy ending for that student. Without those consumer guarantees under the Australian Consumer Law she may have weighed up the cost of going to court and, like so many people, decided it was probably easier and less traumatic to purchase a new bed and get rid of the old one.
Topic 1 - The end of the contract
In this topic, we build on your understanding of the fundamentals of contract law learned in Module 4 and examine the conclusion of the contract. All contracts come to an end and, in most cases, are completed to the satisfaction of both parties. There are, however, numerous unsatisfying ways that a contract may come to an end and it is these that we consider in this topic. Where the contract ends and one party has breached a term the court will provide a remedy. An examination of the main types of remedies will bring your study of contract law to its logical conclusion.
Terminating the contract
Activity 5.1 read Textbook 8.1 8.15
Read Textbook 8.1-8.15
There are numerous ways in which the contract can be terminated and the parties discharged from future obligations. These are laid out inFigure 8.1. You only need focus on the following:
discharge by performance(Hoenig v Isaacs[1952] 2 All ER)
termination by frustration(Taylor v Caldwell(1863) 3 B & S 826,Codelfa ConstructionsandDavis Contractors Ltd v Fareham Urban District Council[1956] AC 696)
termination for breach of a condition(Associated Newspapers Ltd v Bancks(1951) 83 CLR 322 andBettini v Gye[1874] All ER Rep 242)
Activity 5.2
Read the case notes onTaylor v CaldwellandDavis Contractors Ltd v Fareham Urban District Councilat 8.6 and make notes on the following:
Briefly summarise the facts.
State the issue before the courts.
Explain why the court held that the contract was frustrated in the former case but not in the latter.
We will discuss your answers in our Week 5 Tutorial.
Remedies for a breach
A remedy is the thing that solves a legal problem in much the same way that painkillers are a remedy for a headache. In this topic, we will explore the various remedies available to the innocent party when a contract has been breached, both at common law and in equity.
Activity 5.3
Read Textbook 8.25 - 8.36
We start by looking at common law damages. Before digging deeply into this area, note that the aim of damages is to compensate the innocent party and not to punish the defaulting party (Addis v Gramophone Co[1909] AC 488). In determining damages the courts consider the following:
damages will only be awarded for losses caused by the breach (Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd(1968) 120 CLR 516)
the plaintiff mustmitigate(do whatever is possible to reduce) their losses
damages must not be too remote (Kofos v C CzarnikowLtd[1969] 1 AC 350,Hadley v Baxendale(1854) 9 Exch 341 andVictoria Laundry Ltd v Newman IndustriesPty Ltd[1949] 1 All ER 997
the amount of damages may include the following losses:
expectation losses including reliance losses (Commonwealth v Amann AviationPty Ltd(1991) 174 CLR 64)
personal injuries provided they were caused by the breach and were not too remote
disappointment, distress, and discomfort - these have limited application but, where appropriate, will be awarded (Jarvis v Swans Tours Ltd[1973] 1 QB 233 andBaltic Shipping Co (The Mikhail Lermontov) v Dillon(1993) 111 ALR 289)
Activity 5.4
Read Textbook 8.38 8.42
Sometimes damages will not produce a fair result for the innocent party. Equity has developed several remedies that take into account the uniqueness of the particular situation.
Specific performance(Lumley v Wagner[184360] All ER Rep 368)
Injunction(alsoLumley v Wagner)
Restitution(Pavey & Mathews Pty Ltd v Paul(1987)
Quantum meruit(Sumpter v Hedges[1898] 1 QB 673)
Activity 5.5
Read the case note onVictoria Laundry v Newman Industriesat 8.32 and make notes on the following:
Briefly summarise the facts.
State the issues before the courts.
Briefly summarise the courts two decisions.
What remedy would the court apply where the contract was for the sale of a second-hand 2016 Mazda for $10,000 and the seller changes his mind and refuses to sell? Explain your reasons.
What remedy would the court apply where the contract was for the sale of a 1926 Rolls Royce Silver Shadow, the only one of its kind in Australia, and the seller changes his mind and refuses to proceed with the contract? Explain your reasons.
Topic 2 - Consumers rights against the suppliers of goods
What is a consumer and what are the consumers rights?
Activity 5.6
Read Textbook 9.2 9.13
Before embarking upon an exploration of the guarantees under the ACL you first need to understand the meaning of several key terms found within the statute. You should understand the following:
Who is a consumer?
What are the statutory guarantees relating to the supply of goods?
When is a supply in trade or commerce?
You must pay particular attention to the definition of a consumer at9.3as the meaning is most precise.NB in a most unfortunate piece of timing, this edition of the textbook was published just as significant changes to the price threshold were announced. On 1 July 2021 the price threshold was increased from $40,000 to $100,000 which will result in a wider range of goods and services falling within the definition of consumer.
Once you are clear about those terms you can study the four significant consumer guarantees. These are:
theguarantee of acceptable quality(s 54) (Paisley v Aitchison t/a Dean Cars)[2012] VCAT 1483 andGrant v Australian Knitting Mills[1935] AC 85)
theguarantee of fitness for any disclosed purpose(s 55) (Dawson v Pacific Chase Investments[2012 NSWCTTT 432 andCarpet Call Pty Ltd v Chan(1987) ATPR 46025)
theguarantee that goods correspond with description(s 56) (Beale v Taylor[1967] WLR 1193)
theguarantee that goods correspond with sample(s 57)
With the few exceptions provided bys 64Athese guaranteescannot be excluded, restricted or modified. Liability may be limited where the goods are not normally bought for personal, household, or domestic use.
Activity 5.7
Answer the following questions:
Answer Question 1 (parts a, b & c) at the end of Chapter 9 in your Textbook
Explain the difference between acceptable quality and fitness for any disclosed purpose?
Read the case note onDawson v Pacific Chase. Explain why the horse was neither of acceptable quality nor fit for the disclosed purpose.
Read the case note onBeale v Taylorat9.9and make notes on the following:
Briefly summarise the facts.
State the issue before the courts.
Briefly summarise the courts decision.
We will discuss your answers in our Week 5 Tutorial.
Remedies for a breach of these statutory guarantees
Activity 5.8
Read Textbook 9.14 9.19
You will find an explanation of the remedies for breaches of the statutory guarantees at9.14, paying particular attention tofigure 9.1. The remedies fall into two categories:
major failure(s 260) (Morphy v Beaufort Townsville Pty Ltd[2018] VCAT 1520)
not a major failure(s 261) (Paisley v Aitchisonat9.7).
Activity 5.9
Watch the video entitled Returning Goods:
Then, answer the following questions:
Why did the court find a major failure inMorphy v Beaufort Townsville Pty Ltdbut not inPaisley v Aitchison?
What is meant by the following sentence,[W]herea supplier of goods, not of a kind ordinarily acquired for personal, domestic or household use, incurs damages/costs as a result of a failure to comply with the above statutory guarantees and that failure is due to the manufacturer, the supplier is entitled to be indemnified for those damages/costs (s 274)?
What should you consider before buying anextended warrantyfor a new computer that cost you $10,000 and comes with a one-year retailers warranty?
We will discuss your answers in our Week 5 Tutorial.
Consumers rights against the manufacturer of the goods
Activity 5.10
Read Textbook 9.21 9.24
The obligations on manufacturers are much the same as those upon suppliers of goods. Make sure you understand the definition of a manufacturer (s 7) at9.21. Note, also, the circumstances when aconsumer can sue the manufacturer.
This occurs when:
the goods are not of acceptable quality (s 271(1)) (Graham Barclay Oysters PtyLtd v Ryan[2000] FCA 1099 andMedtel Pty Ltd v Courtney[2003 FCAFC 151)
the goods do not correspond with the description (s 271(3))
the manufacturer fails to provide repair facilities (s 58) and spare parts (s 271(5))
the manufacturer fails to comply with an express warranty (e.g. money back if goods returned within 30 days)
The manufacturers available defences are:
the problem was caused by someone else
the reason for the unacceptability of the goods is the price and the supplier has sold them above the recommended retail price
notice was given before purchase that there would be no provision for repair or spare parts
The manufacturer may provide a warranty to repair or replace goods which are of unacceptable quality or do not match the description. Thus, damages will be unavailable to the consumer. In other situations, where damages do apply, there are limitations if the consumer paid an unusually high price.
Activity 5.11
Read the case note onGraham Barclay Oysters PtyLtd v Ryanat9.21and make notes on the following:
Briefly summarise the facts.
State the issue before the courts.
Briefly summarise the courts decision.
We will discuss your answers in our Week 5 Tutorial.
Consumers rights against the suppliers of services
Activity 5.12
Read Textbook 9.25 9.37
Section 3(3) of the ACL defines a consumer of services.Remember as you learned earlier, the threshold amount is now $100,00! Make sure you understand the meaning of services (9.27) and those services not covered by the ACL (9.28).
The two significant guarantees relating to the supply of services are:
a guarantee of due care and skill(s 60). (Read v Nerey NomineesPty Ltd[1979] VR 47)
a guarantee as to fitness for a particular purpose (s 61)
Note that these guarantees cannot be excluded although the service provider can limit liability where the service is not of a type normally acquired for personal, household, or domestic use.
As with those available to the consumer in relation to the sale of goods, the remedies depend on whether the breach is a major failure or not (s 268). Make sure you understand what constitutes a major failure and understand the remedies listed in the table at9.36.
Activity 5.13
Read the case note onMoore v Scenic Tours Pty Ltd (No.2)at9.32and make notes on the following:
Briefly summarise the facts.
State the issue before the courts.
Briefly summarise the courts decision.
We will discuss your notes in our Week 5 Tutorial.
Summary
This is an area of law that affects us all and, as such, is of great importance. In Module 5, you have learned about the innocent parties' remedies when a contract is breached and consumers rights under the ACL in relation to the supplier of goods, the manufacturer of goods, and the supplier of services. The ACL provides great support to consumers like us. In our final module, we will look at something completely different, the law regarding various types of business organisations.
