LST2001 Introduction to Business and Company Law Assignment

FACTS

Eddie is keen to get ft, so he goes shopping for an exercise bike. Eddie told the manager at Fitness Cycles that he doesn’t have tme to go the gym because his business that he is running from home has been getng busier and busier, so he needs an exercise bike that is reliable, and he can use to get ft while he is working from home. He fnds a bike he likes at Fitness Cycles – a bike shop run by Health Life Cycles Pty Ltd – and buys it for $500.

He sets it up in his study. The frst tme he uses it, the wheel comes loose at high speed and fies of – smashing his laptop, which was on the other side of the room. As a result of the damage to his laptop, Eddie is unable to run his business as a web developer for a week untl he can buy a new laptop and get it set up. Eddie takes the bike back to Fitness Cycles and ask to speak to the manager. The manager, Reeta, points to a sign displayed in the shop that which says “Please choose carefully. No refunds, No exchanges.” She says, “You’ll have to follow this up with the manufacturer. It’s not our problem”. However, this hasn’t been brought to Eddie’s atenton when he buys the exercise bike.

Do not use legislaton to answer questons 1 and 2. Use only common law principles of contract.

1. Assuming the sign statng ‘No refunds, No exchanges’ is a term of Eddie’s contract with Fitness Cycles for the purchase of the bike, is the exclusion clause valid?(4 marks)
2. Assuming Eddie can prove breach of contract, and Fitness Cycle’s liability is not excluded by the sign, can Eddie claim damages regarding the damage to his laptop and his loss of income during the week when he is replacing it and setng the new laptop up? (6 marks)

   Use legislaton (and any relevant case law) to answer questons 3 to 7.

3. Would the contract of sale between Fitness Cycles and Eddie be considered a ‘consumer’ contract under the Australian Consumer Law? (4 marks)
4. Assume that it is a consumer contract under the Australian Consumer Law. Has there been a breach of any relevant statutory guarantees? (6 marks)
5. Would the sign statng ‘No refunds, No exchanges’ exclude Fitness Cycles from liability for breach of statutory guarantees under the Australian Consumer Law in the contract with Eddie? Why or why not? (3 marks)

   Following on from the facts above, another Fitness Cycles customer, Joanna, has purchased 50 of the same exercise bikes (at a wholesale price of $350 each) which she is intending to install in her gym, Endurance Fitness for her customers to use. Unfortunately, all these exercise bikes sufer the same problem – the wheels fy of when the bike is pedalled fast. When Joanna purchased the bikes, Reeta gave her a purchase order contract to sign. Joanna had a quick glance at it but didn’t read it before she signed it. The purchase order contract included this term:‘Clause 16: All statutory guarantees and warrantes are hereby excluded. Customers must satsfy themselves that the product is ft for their purposes and is of the standard they desire. Fitness Cycles bears no responsibility for products once they are in the customer’s possession.’

6. Would the sale contract between Fitness Cycles and Joanna be considered a ‘consumer’ contract under the Australian Consumer Law? (4 marks)
7. Would the exclusion clause (Clause 16) exclude Fitness Cycles from liability for breach statutory implied conditions under the Goods Act 1958 (Vic) in the contract with Joanna? Why or why not? (3 marks)

Guide to citation for the common law assignment

Legal citation is different to other styles of citation, such as Harvard or other in-text citation. Legal citation involves providing the most relevant legal authority for any statement of legal rules or principles. Citations are provided in footnotes. (If you are working in MS Word, simply go to the ‘References’ tab and click on ‘Insert Footnote’.) For the purposes of LST2001: Introduction to Business and Company Law, we do not expect you to learn the Australian Legal Guide to Citation, which is the usual approach to legal citation in Australia.

That Guide is incredibly complex. Instead, you can simply follow these instructions for citations in your common law assignment. As stated above in the Assignment Instructions, where you state a legal principle, which comes from a case, you must provide a citation to the relevant case. You are not expected to read the cases themselves: as long as a case is summarised in the textbook, you can cite the case itself. An example of this would be if you said this in your assignment:

If a letter of comfort includes statements which are not promissory, then it probably was not intended to be legally binding.1 Alternatively, you could mention the case name in the sentence of your assignment itself, and just put the case citation in a footnote, like this:

As in the case of Commonwealth Bank of Australia v TLI Management Pty Ltd2 a letter of comfort with only non-promissory statements was probably not intended as legally binding. Either way, we expect you to provide a citation to the relevant case for the legal principle you are stating. If you are stating a legal principle that is covered in the textbook or lecture and which does not have a relevant case provided in the textbook, you should cite the textbook. An example of this would be:

If an agreement is executed as a deed, then there is no requirement for both parties to provide consideration.Please also note that you are not expected to use any materials beyond the lectures and the set textbook. But if you do, you must provide appropriate citations. No bibliography is required. Finally, remember that footnote citations do not count towards your word count, so don’t hesitate to provide citations for any statement of legal principle. If in doubt, provide a citation.