Describe about the Contract Law for Consumer Law and fair Trading.
1. According to Chapter 8 a contract is said to be valid only when there is an agreement between two or more parties which creates legally enforceable obligations and rights. Chapter 8 also says that for a contract to be valid it needs to satisfy six elements. The six elements are: (Lawhandbook, 2016)
There must be an intention to create legal relations.
There must be an agreement which means one person should make an offer and other person must accept that offer.
There must be a consideration which means that something in value must be exchanged.
Parties involved must understand the contractual rights and obligations.
All the parties must agree on the terms of the contract.
The contract must be legal.
As per Chapter 15 a term is an important statement to at least one of the parties of a contract and most of the terms are classified as warranties or conditions. Terms which are essential to the operation of a contract are known as condition and which are not essential are known as warranties. In the current case of Bill and Jill the condition of the contract was that the weekly takings of the café was $10,000 and the costs were $3,000. So as per the contract weekly profit should be $7,000. This term was very essential for the contract because on the basis of this tern the contract was signed as in the case of Luna Park Case. (The Sydney Morning Herald, 2016)
If this condition is breached then both Bill and Jill would be in very serious trouble since they would be incurring losses every week. This was same as in the case of Bettini v Gye.
As per Chapter 16 a contract can be discharged when any one of the party have breached a condition and then the injured party has the right to terminate the contract. In this case Dodgy Pty Ltd had breached his duty by giving false information in the contract. He should have informed that the weekly earnings from the café are only $3,000 instead of $10,000. So Bill and Jill have the right to terminate the contract and sue the company for damages. (KM Standards LLC, 2016)
As per Chapter 17 a remedy is a legal means of correcting damage or loss and the most common law remedy is damages which is an award of money. So to actually know whether damage exists or not one needs to perform a test for damage. In this case there was a breach of contract and the breach had even cause damage and loss to Bill and Jill. Loss was clearly identified, while signing the contract they expected a profit of $7,000 per week but actually they were incurring losses for $1,000. This means in total they were incurring losses for $8,000 which was same as Hadley v Baxendale and Victoria Laundry v Newman Industries. (Casebrief.me, 2016) Company knew about the situation that café would actually incur losses. Bill and Jill can easily prove the amount of loss which they had suffered. The total amount of loss which they had suffered was $8,000.Hence company is liable to pay damage charges as per the case of David Securities v Commonwealth Bank , Pavey & Mathews v Paul and Lumley v Wagner. (Deakin, 2016)
The key areas of business law which would apply in this case are discussed below in detail.
As per Chapter 3 a tort is a wrongful act which causes injury or loss to a person and the main purpose in this law is to award compensation and not punishment. The main part of tort law is negligence. When a plaintiff needs to prove that defendant was negligent then he needs to prove that defendant owned him a duty, defendant breached duty and plaintiff suffered harm due to such breach. As in the case of Donoghue v Stevenson it is very important that person must take reasonable care so that acts and omissions could be avoided which could harm other people. The main part is to know that whether the harm was reasonably foreseeable. Similar points were discussed in the cases of Sullivan v Moody, Modbury Triangle Shopping Centre v Anzil and Roads and Traffic Authority v Dederer. (FindLaw, 2016)
As per Civil Liability Acts 2003, to prove that a defendant have breached duty of care three tests needs to be proved which are risk was foreseeable, risk was not significant and if any other person was there then he would have taken reasonable precautions. Four factors should be taken into consideration for breach of duty of care which are Probability that harm would occur if care was not taken (Bolton v Stone), seriousness of the harm (Rogers v Whitaker), burden which is to be taken to avoid harm and social utility.(NSW, 2016)
Due to the breach of duty by the defendant, plaintiff was directly affected and harm was cause to him then such situations are called as Factual Causation. The same was described in the case of Alexander v Cambridge Credit Corporation Ltd.
As per Chapter 14 and Competition and Consumer Act 2010 states that a consumer is a person who satisfies at least one of the following
Involved in the purchase of any transportation.
Costs $40,000 or less.
Purchases goods for personal or household use. (Australian Government, 2016)
As per Section 18 of the Act if any person has made a comment in public which is false or misleading then he comes under this section. A person would be held under misleading conduct if he had made any misleading statements like in the case of Henjo v Collins. Even in the case of Accounting Systems 2000 v CCH some false guaranties and warranties were made but these were not intentional. This test would include that person who is selling their products to the public.
An Unconscionable conduct is a contract where parties are involved in trade or commerce who should not take unfair advantage of another party’s disability like poor skills. The same was discussed in the case of Commercial Bank v Amadio. (Australian Contract Law, 2016)
Consumers are also protected by the Consumer guarantees when they have purchased, leased or hired and goods or services costing $40,000 or less. As per Section 54 of the Act goods which are sold in the public must be regarded as safe, durable and free from defects. The said goods must be fit and acceptable from the look at which it is being sold. The goods must not be enforceable if the consumer were aware about the defects.
As per Section 60 of the Act guarantee must be provided in relation to goods and services. The services which are performed in public must be delivered with reasonable skill and care and should also be delivered within a reasonable period of time.
As per Part 3 and 5 manufacturers and importers would be considered liable for any loss, injury or damage if the product produced but them have a defect.
In the given case Hugh was wrong in most of the case. He was running a pizza business where the pizza was initially delivered by Ubereats and then by his so n through their case. But when his son was delivering pizza through his car then he had made a false advertisement that pizza was delivered by Uber Pizza Delivery. Apart from this he had also given one more false information which was about the cheese used in the pizza. Actually he was using old and some substitute cheese in his pizza but he had advertised that his pizza is filled with freshest ingredients with cheese’s which are straight from the farm,. Due to such false statements and advertisement of Hugh customers were falling sick and one of the customers have even died while eating his pizza. (legalaid.wa.gov.au, 2016)
Actions which needs to be taken against him was to be taken by the family of the died customer and even the general public. He had made a product which was unsafe for the public. If action is taken against them then as per Civil and Criminal breaches of ACL Hugh would be entitle to pay fine up to $1.1 Million for companies and $220,000 for individuals. Here Hugh is an individual so he would be entitled to pay penalty for an amount of $220,000. After the payment of this fine by Hugh then as per Section 223 of the ACL a public warning notice must be issued against the company. (NSW, 2016)Notice should clearly state that the Hugh’s pizza is very harmful for the public so it is better to please avoid the pizza. Consumers can easily take action against him in small claims Tribunals or special divisions of the lower courts. They main aim is to offer dispute resolution which is generally quick, inexpensive fair and less formal. The claim which is made by the consumers should also be under the monetary limit of the given law. (austlii.edu.au, 2016)
austlii.edu.au, 2016. AUSTRALIAN CONSUMER LAW AND FAIR TRADING ACT 2012 – SECT 3. [Online]
Available at: https://www.austlii.edu.au/au/legis/vic/consol_act/aclafta2012372/s3.html
[Accessed 12th September 2016].
Australian Contract Law, 2016. Commercial Bank of Australia Ltd v Amadio. [Online]
Available at: https://www.australiancontractlaw.com/cases/amadio.html
[Accessed 9th September 2016].
Australian Government, 2016. Competition and Consumer Act 2010. [Online]
Available at: https://www.legislation.gov.au/Details/C2011C00003
[Accessed 9th September 2016].
Casebrief.me, 2016. Victoria Laundry v Newman Industries. [Online]
Available at: https://casebrief.me/casebriefs/victoria-laundry-v-newman-industries/
[Accessed 9th September 2016].
Deakin, 2016. David Securities v Commonwealth Bank. [Online]
Available at: https://www.hcourt.gov.au/assets/justices/coper_hca3_dawson.pdf
[Accessed 9th September 2016].
FindLaw, 2016. Elements of a Negligence Case. [Online]
Available at: https://injury.findlaw.com/accident-injury-law/elements-of-a-negligence-case.html
[Accessed 9th September 2016].
KM Standards LLC, 2016. Termination Upon Breach. [Online]
Available at: https://www.contractstandards.com/clauses/termination-upon-breach
[Accessed 9th September 2016].
Lawhandbook, 2016. Elements of a contract. [Online]
Available at: https://www.lawhandbook.org.au/07_01_02_elements_of_a_contract/
[Accessed 9th September 2016].
legalaid.wa.gov.au, 2016. Negligence. [Online]
Available at: https://www.legalaid.wa.gov.au/INFORMATIONABOUTTHELAW/BIRTHLIFEANDDEATH/PERSONALINJURY/Pages/Negligence.aspx
[Accessed 12th September 2016].
NSW, 2016. AUSTRALIAN CONSUMER LAW AND FAIR TRADING ACT 2012. [Online]
Available at: https://www.austlii.edu.au/au/legis/vic/num_act/aclafta201221o2012418/
[Accessed 9th September 2016].
NSW, 2016. CIVIL LIABILITY ACT 2002. [Online]
Available at: https://www.austlii.edu.au/au/legis/nsw/consol_act/cla2002161/
[Accessed 9th September 2016].
The Sydney Morning Herald, 2016. Two guilty in Luna Park contempt case. [Online]
Available at: https://www.smh.com.au/national/two-guilty-in-luna-park-contempt-case-20070817-twq.html
[Accessed 9th September 2016].
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