Australian Contract Law For Fine Food Cafe – Legal Considerations And Remedies

Elements of a valid contract

Describe about the Australian Contract Law for Fine Food Cafe.

1. A food cafe is bought by Jill and Bill, the two siblings. The name of the cafe is ‘Fine Food Cafe’ in Sydney. The owner of the premises is Dodgy Pty Ltd and the owner mentioned that the weekly earnings are $10,000. The contract occurred between the siblings and the owner and the expenses of the business cost $3000. An exclusion clause is stated in the contract term that the business cannot be conducted by the seller in Sydney CBD for 5 years. The siblings used to earn hardly $ 2000. In the exchange of consideration in the agreement the offer was made it was accepted and a legal contract for between Dodgy Pty Ltd and Jill & Bill.

In this case contract has made between Dodgy Pty Ltd and Jill & Bill. In a contract the elements such as offer, acceptance, legal consideration, capacity, intention, formality and certainty should be present which makes the contract enforceable. The contract cannot be state valid because the element, capacity is missing in the contract. As per Australian common law of Contract, the contract is voidable if the capacity is missing. Bill and Jill both is partner who were making contract but as Bill was minor age of 15 and below 18, so he cannot make contract with anyone. Under section 49 of Corporation act 2001, obligations occur in this contract because of the capacity of bill that is minor. The contract is voidable but as they are misrepresented, so they should be penalised according to law.   

The issue aroused because misleading and deceptive conduct has occurred. In any misrepresentation or fraud case the harmed party can cancel the contract. Dodgy Pty. Ltd has provided false statement by saying that the weekly takings are $10,000 but after some months Bill and Jill came to know that the weekly taking was average and business estimate was $30.000 per week. An exclusion clause was mention that the seller is not allowed to run a CBD cafe in Sydney for 5 year from first July. It can be understood that misrepresentation has done in terms of the contract by the owner of the premises. The statement is found false in nature which is done by Dodgy Pty. Ltd. It can be simply said that while making the contract fraud has done by a party and according to Section 4 of Misrepresentation Act of Australia Jill and Bill can claim $20,000 penalty from Dodgy Pty Ltd. (Austlii.edu.au, 2016). There are three elements of misrepresentation: Fraudulent, Negligent and innocent misrepresentation. Bill and Jill can sue Doggy Pty. Ltd. For fraudulence he has intentionally misrepresented them for his own personal profit (Corones, 2011). In a contract, both the parties has top understand the profit and loss of each other to make a valid contract but selfish desire has raised in the part of Dodgy Pty Ltd, the owner of the premises (Vickery and Pendleton, 2006). This type of contracts is needed to be cancelled by the harmed party. Bill and Jill face financial loss by doing the contract because they were the victim of fraud done by the owner of the premises, with whom they made the contract. This contract cannot be legally considerate. As per section 29 of Australian Consumer law misrepresentation is prohibited. According to section 18 (1) of Australian Consumer Law (ACL), the court can imprison the person who has done misrepresentation or fraudulence with the innocent party, as it is done with Bill and Jill and the Dodgy PTY Ltd is liable for this fraudulence act (Austlii.edu.au, 2016). As per ACL, his premises licence can also be cancelled because of his fraud act. Even the defendant has done unsolicited goods practice by breaching the Trade practice act 1974. Misrepresentation is also a criminal conduct and violation of Fair trading Act 1987(Austlii.edu.au, 2016).

Capacity issues in the Fine Food Cafe contract

According to section 6 of Misrepresentation Act 1972, rescission or cancellation of the contract can be done by the plaintiff (Bill & Jill). According to section 7 of Misrepresentation Act, the harmed party or plaintiff can sue the defendant (Dodgy Pty Ltd.) and can claim monetary damages from the defendant (Austlii.edu.au, 2016).

For beaching section 18 (1) of Australian Consumer Law the plaintiff can sue the defendant.

Under section 52 of Trade Practice Act 1974 the rule of the corporation and trade act has been violated and for that reason civil penalty with monetary compensation can be claimed by the plaintiff from the defendant and the defendant is bound to give it as per court’s order (Austlii.edu.au, 2016).

As per section 56 of Fair Trading Act 1987 the plaintiff can ask damages and for not practicing fair way of trade or business, the court can ask high amount of civil penalty from the defendant and the business can be proved unenforceable under law (Austlii.edu.au, 2016). All these are the remedies which can be assisted by Jill and Bill as per Australian business law.

Therefore it can be said that fraudulence has occurred in this business and for that reason the contract can be cancelled and for violating the Australian business law penalty has to be given by the defendant under the sections of various penalty units mentioned here (Vickery and Pendleton, 2006).

2. For enhancing one’s knowledge about the legal issues of the present case, there should be a clear discussion on the facts of the case. In the present case, Hugh is having a pizza delivery business in Sydney. He used to use a pick and delivery service which used to help in betterment of his services. As a result it had a positive impact on his sales as it bettered day by day and the home delivery system was a boost to this. Following few months, he wanted to curb expenses and so he stalled the home delivery services as they were the reason of the increased expenses. He decided to employ his own vehicle and appointed his son to carry out the delivery work. Their business was advertised in spite the fact that there were no registered documents. He had has used expired date cheese in the pizza. Even after that he mentioned in an advertisement that they use fresh ingredients for making pizza which is false statement which they assured to the customers. In spite of all this, the customers who consumed the pizzas fell sick and had food poisoning. The worst part was that was death of a customer due to consumption of non fresh ingredients. Again this is a case of misrepresentation which is done by Hugh for saving money by using out of date ingredients which harmed the customers which is the breach of Australian Consumer law.

Hence from the above discussed scenario the following questions may arise-

If the pizza business of Hugh was a registered business?

Whether the advertisements displayed by Hugh were contradictory from the services given by him?

Whether there are any sanctions for supplying spurious food material to the public?

Is there any tortuous liability attached to Hugh for his acts?

Hugh had not registered any statutory documents for his business. It was not clear whether he paid any sales tax or had registered any sales tax agreement or even obtained any trade license. He had not even registered the business name of his company. According to Section 18 of the Business Names Registration Act, 2011, any business which is carried without a registered business name is considered a grave offense. In this case, Hugh has performed illegal action by using other registered company’s name (UberPizzadelivery) in their business. According to ASIC, every sole proprietorship business and proprietor limited business should have a registered company name, business number and a trade mark which is unique. In Hugh’s business, all this elements are not present which breach of Business Names Registration Act, 2011 of Australia is and for that reason Australian government authorities may levy big punitive fines for any such contraventions. Uber is another registered company and as Hugh has used it, then according to Part 2: section 18 of Business Name Registration Act 2011, Australian court can ask civil penalty from Hugh and if he is unable to give that, then under section 6.1 of Criminal Code he can be imprisoned under Australian law.

Misrepresentation and fraudulent conduct in the contract

Under the Australian Consumer Laws, businesses are disallowed to show unreal and confusing statements pertaining to goods and services. Hugh had showed that his ingredients were fresh and gave importance to the cheese he used for making the pizzas (Corones, 2011). Still the customers fell ill due to ingredients not being of good quality. In the matters of Practices Commission v Pacific Dunlop Limited (1994) FCA 1043, there was manufacturer who used to produce socks which was not actual cotton but the tag mentioned it as ‘pure cotton’. Misleading consumers pertaining to the purity of a product and later providing fake products is a serious crime and might attract penalties like compensations, injunctions, damages, orders related to harmful advertising and corrective advertising etc.

Hugh was serving food which lacked hygiene and spurious in nature which resulted in ill health and death of the customers. His action s might attract penalizing laws (Austlii.edu.au, 2016). Section 14 of the Food Act 2003 [Act 43 of 2003] mentions that selling food articles which do comply with hygiene standards will result in imprisonment of the minimum of 2 years (legislation.nsw.gov.au, 2011). Clause 8 of the Food Regulation Act, 2015 is another legislation which mentions the offences regarding handling food in a manner which does not conform to any food safety scheme or not having a license to run a food business (Polya, 2001).

Hugh had a duty to take care under the tort law towards his customers (Barker, 2012). He was negligent to keep a check on the quality of the food items. As a result of his careless act, customers fell sick and one customer even died due to the unsafe food materials. He had advertised his food materials to be safe but failed to validate the truth in his statements. He made illegitimate benefits at the cost of the health of the sufferers.

From the instant case it may be concluded that Hugh was culpable under various offenses. The victim of his negligence was the poor customers who believed in the quality of the products and consumed them. They can claim false representation charges in consumer courts. They can ask for massive punitive compensation for the health problems and mental agony they had faced. The government authorities can charge him for carrying a business without registering the business name of the company and not having registered legal documents for the business.

Reference:

Austlii.edu.au. (2016). AUSTRALIAN CONSUMER LAW AND FAIR TRADING ACT 2012 (NO. 21 OF 2012). [online] Available at: https://www.austlii.edu.au/au/legis/vic/num_act/aclafta201221o2012418/ [Accessed 16 Sep. 2016].

Austlii.edu.au. (2016). COMPETITION AND CONSUMER ACT 2010. [online] Available at: https://www.austlii.edu.au/au/legis/cth/consol_act/caca2010265/ [Accessed 16 Sep. 2016].

Austlii.edu.au. (2016). MISREPRESENTATION ACT 1972. [online] Available at: https://www.austlii.edu.au/au/legis/sa/consol_act/ma1972224/ [Accessed 16 Sep. 2016].

Austlii.edu.au. (2016). TRADE PRACTICES ACT 1974. [online] Available at: https://www.austlii.edu.au/au/legis/cth/num_act/tpa1974149/ [Accessed 16 Sep. 2016].

Corones, S. (2011). The Australian consumer law. Rozelle, N.S.W.: Thomson Reuters (Professional) Australia.

Vickery, R. and Pendleton, W. (2006). Australian business law. Frenchs Forest, N.S.W.: Prentice Hall/Pearson Education Australia.

Vickery, R., Pendleton, W. and Flood, M. (2008). Australian business law. Frenchs Forest, N.S.W.: Pearson Education.

Polya, R. (2001). Food regulation in Australia. [Canberra]: Dept. of the Parliamentary Library.

legislation.nsw.gov.au. (2011). Food Act 2003 No 43. [online] Available at: https://www.legislation.nsw.gov.au/inforce/21dd14e3-569d-eb35-e54b-cd410db63d52/2003-43.pdf [Accessed 16 Sep. 2016].

Corones, S. (2011). The Australian consumer law. Rozelle, N.S.W.: Thomson Reuters (Professional) Australia.

Barker, K. (2012). The law of torts in Australia. South Melbourne: Oxford University Press.

Austlii.edu.au. (2016). FOOD REGULATION 2015 – REG 8. [online] Available at: https://www.austlii.edu.au/au/legis/nsw/consol_reg/fr2015148/s8.html [Accessed 16 Sep. 2016].