Elements Of Contract Formation And Australian Consumer Law Are Crucial In Essay.

Legal intention

This group assignment consists of 2 parts. Part A is a case study on Contract law, and Part B is a question involving Civil Liability (the Law of Torts and Negligence). Both questions must be answered. strictly enforced. A deduction of 2 marks will be imposed for every 50 words over the word count for either part of the report. Anything over the word count will not be read by your lecturer.

The total word count for the report as well as each part must be clearly written on the cover sheet of the assignment. A paper will not be marked if the word counts are not written on the cover sheet.

Part A:

1. Refer to the prescribed textbook: Gibson, A, Business Law, 10th edition (Pearson, Sydney: 2017).
2. From Part 3 –Law of Contracts, Chapters 7 to 15 on Contract Law, refer to the “Tutorial Questions” at the end of the chapters and choose one (1) problem case question. Note: it must be a case problem-type question and not a short answer question.
3. You must send your lecturer the number of your question and the page on which is appears for approval. Do not start work on a question without obtaining your lecturer’s prior approval.
4. Your answer must be supported by relevant law and cases decided by Australian courts (preferably the High Court) and/or scholarly articles. A minimum of 3references are required for this part of the report.
5. Your references must be listed in a Reference list at the end of the Part A
Part B:
1. Again, refer to Business Law 10th edition by Gibson.
2. This time, refer to either of the following parts:
a. Part 2 – Civil Liability, Chapter 4 (Civil Liability: The Law of Torts and Negligence) and Chapter 5 (Applications of Negligence to Business). 
b. Part 4 – Consumer Law, Chapter 16 (Statutory Consumer Guarantees and the Australian Consumer Law) and Chapter 17 (General and Specific Consumer Protection under the ACL).
3. Refer to the “Tutorial Questions” at the end of the above-mentioned chapters and choose one (1) problem case question. Note: it must be a case problem-type question and not a short answer question.
4. You must send your lecturer the number of your question and the page on which it appears for approval. Do not start work on a question without obtaining your lecturer’s prior approval.
5. Your answer must be supported by relevant law and cases decided by Australian courts (preferably the High Court) and/or scholarly articles. A minimum of 3 references are required for this part of the report

Legal intention

Issue

After analyzing the facts, there are two major issues that are raised:

1. Does Richard has established a valid contract with his father?
2. If a contract is formed then can Richard sue his father for a weekly allowance of $200?

A legal document, which is established by two private parties to comply with their terms, can be established in the form of an agreement which must have a value in law. An agreement is the combination of an offer and acceptance. An agreement when has legal value is considered to be a contract. So, there are few elements which together constitute a valid contract. The same includes: (The Law Handbook 2016)

Legal intention- The parties when making an offer and acceptance must make sure that the promises are made by them with a legal intention, that is, the parties are willing to comply with the terms of the offer & acceptance legally and in the court of law in case of dispute (Erogenous v Greek Orthodox Community of SA Inc.  (2002). Normally in family contracts this legal intention is not present and is held inBalfour v Balfour [1919] and in commercial contracts this legal intention is present and is held in Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1989). But this basic preposition is rebuttable on the presence of evidence, that is, a contract made by family members can be considered as an enforceable contract if the parties intend so Evans v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2012) &Australian Woollen Mills Pty. Ltd. v. Commonwealth (1954).

An offer –It is the foremost element in contract formation is made by an offeror. It is a proposal made by an offeror with an expectation of conformation by the offeree and is held in the leading case of Carlill v Carbolic Smoke Ball Co (1893). When an offer is made then it must be made to the intending party and should be communicated to make it valid in law and is held in Payne v Cave (1789). An offer can be made in any form, either oral, written or by conduct but it is important that the terms of the offer must be very clear.

An acceptance –It is the second most element which results in the formation of an agreement in the leading case of Latec Finance Ltd v Knight (1969). It was held that when the offeree gave his assent to the offer made to him by the offeror then it is an acceptance. When the offeree makes the acceptance it must reach to the knowledge of the offeror to make it valid and binding in nature. But, as per Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) an acceptance by post is deem to be completed when the acceptance is posted and not when it reaches the offeror. The acceptance should correspond to the terms of the offer to make it binding. (Gillies, 2004)

An offer

Also, when the offeror does not wish to make offers but likes to seek offer for people, then, he can by advisements, tenders, auctions, etc., invites offers. This is an act of invitation to treat and an invitation when received by the inviter can be accepted resulting in formation of contract and is held in Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401.(McKendrick&Liu 2015).

Consideration–Consideration is also one of the most promising element in the formation of contract. The concept of consideration implies that the promises that are made by the offeror and the offeree must be combined with some value in the eyes of law and is called consideration. It is the presence of consideration that makes a contract enforceable and is held in Coulls v Bagots Executor & Trustee Co Ltd. (1967).

Parties’ capacity - The parties to the contract must be capable to make a valid contract in law. A party is said to be capable when it is of sound mind and has attained the age of majority. Also, any law must not bar the party to the contract. In the leading case of Re Walker (1950) it was held that if a contract is made by a party which is incapable to form a contract then such contract has no sanctity in law and is void. But, it was held in the leading cases of Peters v Fleming (1840) &Nash v. Inman (1908) that when a minor makes a contract on his own behalf for necessity then such contracts are considered to be valid in law and can be enforced by the minor. (Moles & Sangha 1998)

The facts of the case submit that a promise is made amid Richard and his father. Richard was a student and his father agreed that if Richard keeps the yards of the property mowed then against this service of Richard he will gave him $ 200.

So, the facts reveal that the father of Richard has given him an offer that he must keep the yard mowed. This offer is made to Richard. Richard without bringing any change to the terms of the offer gave his acceptance. Thus, at this stage the offer and acceptances are approved between them, so there is a valid agreement among them.This exchange of promises is supported with a valuable consideration of $200 which father promised to gave to Richard on completion of the work.

At this stage it is submitted that Richard took the work on the hope that after completion of the work he will get his dues and the legal intention of the father can also be gathered from the fact that initially he used to give the money for the same work to the grader @c 350. Now, he is getting the same work done at a reduced prize of $ 200. Thus, booth the party’s intended to abide by the promises even though there is a family relationship.

An acceptance

Also, Richard considering is minor still can enforce the contract as he made it for his benefit.

Conclusion

In conclusion, there is a valid contract between Richard and his father resulting the possibility of Richard suing his father.

Whether Hui has any rights against Ashmore Office equipment under the Australian Consumer Law?

The Australian Consumer law is Schedule 2 of the Competition and Consumer Act 2010 and is formulated to make sure that no goods and services should be supplied to a consumer, which hampers his interest. As per section 3, the provisions of the Australian Consumer law is applicable over those goods and services, which are bought by a consumer for domestic or household or personal use and the value of the goods, and services of not more than $40,000. (Morandin & Smith 2011)

In order to safeguard the interest of a consumer there are few implied guarantees that are framed. The same are:

1. Section 18, submits that no seller must engage in any kind of misleading or defective activity while dealing in his trade and commerce. The basic essential to prove section 18 includes:
2. That the sellers activity must be of commercial nature;
3. A representation must be made by the seller which must be untrue and is held in Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd, 1993);
4. The buyer must have relied on the false representation prior establishing the contract;
5. The buyer has no knowledge of the misrepresentation and is held in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd(, 1982);

When all the elements are established then the seller is considered to be indulged in an act of misrepresentation. The aggrieved party has the right to sue the seller for under section 236 of ACL and seek ancillary orders, refund of money, injunction orders and declaring the contract as void (Italform Pty Ltd v Sangain Pty Ltd (2009).

1. As per section 29, if the seller is indulged in any kind of misleading or false representation regrading novelty of the goods, or its quality or style or model or composition or value or benefits or origin, then, such representations if found to be untrue, then, it is an act of violation of section 29 and is held in Kailash center for personal development Inc, v Yoga Malik Pty limited(2003).

• Section 54, submits that the goods that are supplied by the supplier must be such that are fit for the purpose for which it is acquired and is held in Grant v Australian Knitting Mills [1936]. If the buyer is not able to use the goods for the purpose it is purchased then there is breach and is held in ACCC v Valve Corporation(No 3) [2016];

1. As per section 55 of ACL, the goods that are sold by the seller must be durable, safe, and free from any defect and is held in McWilliams Wines Ltd v Liaweena (NSW) Pty Ltd [1988]. If the goods are not safe then there is breach.
2. As per section 56 of ACL if the goods supplied is by way of description then the goods actually sold must correspond with such description and is held in Metal Roofing & Cladding Pty Ltd v Amcor Trading Pty Ltd (1999) and Ferraro v DBN Holdings Aust Pty Ltd T/As Sports Auto Group [2015]). (Hanneberyand Sapountsis 2016)

As per the facts of the case,Hui bought a second hand computer from Ashmore Office equipment for $500. Also $95 is also spent over overhauling. He used the computer for three months. After three months police arrived at his premises and inspected the computer. They found that the computer is stolen and thus seized the same. The computer is then returned to its true owner.

The law is now applied to the facts of the case,Hui has a right to rely on the implied guarantees made part of ACL as the computer purchased by him was for his own use and is less than $40,000.

It is submitted that if it is assumed that before selling the computer Ashmore Office equipment has made a representation that there is no defect as to the title of goods knowing that is false, and Hui has relied on the said representation before buying the computer, then, it is an act of misrepresentation undertaken by Ashmore Office equipment within his trade. Thus, there is clear breach of section 18. Hui can sue under section 236 and declare the contract to be void and claim refund of money.

Consideration

Also, section 29 of the ACL is violated by Ashmore Office equipment as a false and misleading representation is made regarding the facts that the computer that is parched by Hui is not stolen and does not contains any kind of defect. But, in reality the representation is false as the computer is not of genuine origin. So, section 29 is violated by Ashmore Office equipment.

Also, section 55 of ACL is violated, as Hui was not able to use the computer for which he acquired. He was only able to use the computer for 3 months and after that the police seized it.Section 55 is violated as the computer, which is purchased by Hui, is not free from defect as the same is stolen. Thus, there is an inherent defect and thus is not safe to use.  So, this is clear breach of the section.

Conclusion

It is thus concluded that the computer that is purchased by Hui from Ashmore Office equipment is not a computer that’s defect free, rather, there is an inherent defect that the computer is stolen. Also, a misrepresentation, misleading and false statement are made by Ashmore Office equipment to Hui in order to sell the computer. Therefore, there are clear breaches of various implied guarantees under ACL, Hui can hence terminate the contract and ask for legal remedy i.e. refund of money & compensation.

Reference List

Morandin, N., & Smith, J. 2011, Australian Competition and Consumer Legislation 2011. Australia: CCH Australia Limited.

ACCC v Valve Corporation (No 3) [2016].

Ferraro v DBN Holdings Aust Pty Ltd T/As Sports Auto Group  [2015]).

Grant v Australian Knitting Mills [1936].

Italform Pty Ltd v Sangain Pty Ltd (2009).

Kailash center for personal development Inc, v Yoga Malik Pty limited (2003).

McWilliams Wines Ltd v Liaweena (NSW) Pty Ltd [1988].

Metal Roofing & Cladding Pty Ltd v Amcor Trading Pty Ltd (1999);

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd ( (1982).

Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd (1993).

Gillies, P (2004), Business law. Federation Press.

Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1989).

Australian Woollen Mills Pty. Ltd. v. Commonwealth (1954).

Balfour v Balfour [1919] 2 KB 571

Carlill v Carbolic Smoke Ball Co (1893).

Coulls v Bagots Executor & Trustee Co Ltd. (1967).

Empirnall Holdings Pty Ltd v Machon Paull PartnersPty Ltd (1988).

Ermogenous v Greek Orthodox Community of SA Inc  (2002).

Evans v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2012)

Latec Finance Ltd v Knight (1969).

Nash v. Inman (1908) 

Payne v Cave (1789).

Peters v Fleming (1840)

Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401.

Re Walker (1950)