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LST2BSL Introduction To Business Law And Ethics

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Mikaela owns and runs a cake shop, and often sources ingredients from a business called Tower Flours. One day, she calls Tower Flours to ask about their almond flour. She speaks with Ricky: ‘
Lots of my clients request gluten-free cakes’, says Mikaela. ‘Is your almond flour gluten-free?’
‘Yes, of course,’ Ricky replies.

Mikaela agrees to order 40 kilograms of almond flour, and shortly after the conversation, Ricky emails her an online order form with the type and amount of flour already entered. Mikaela fills out the rest of the online order form and submits it. The order form does not mention anything about the almond flour being gluten-free.

Mikaela uses the almond flour to bake a cake for the wedding of Dan and Jacob. Dan, who has coeliac disease, has a severe reaction to the cake. It turns out that the almond flour used in the cake was not gluten-free, as it had been processed and packaged with machinery also used for wheat flour.

Dan and Jacob had not specifically requested a gluten-free cake when dealing with Mikaela, but they had asked for almond flour. They now want to sue her for breach of contract.

1. Was it a term of the contract between Mikaela and Tower Flours that the almond flour would be gluten free? 
2. Was there an implied term in Dan and Jacob’s contract with Mikaela, that their wedding cake would be gluten-free? 

After the complaint about Dan and Jacob’s cake, Mikaela makes a sign to put up in her cake shop. She positions the sign on the wall next to the counter where customers are served.

Kimiko comes to Mikaela’s shop to place an order for a cake. They discuss all of the details: Kimiko orders a round, chocolate cake covered with blue and purple coloured icing. While finalising the order Kimiko sees the sign, which says: We accept no responsibility for breach of any warranty.
Kimiko comes back a week later to collect and pay for the cake. After leaving with the cake Kimiko discovers that it has blue and green icing. This makes it inappropriate for the function she was planning to use it for – a sports team celebration. Kimiko wants to complain to Mikaela but isn’t sure whether or not the sign prevents her from doing so.

3. Was the icing colour a condition or a warranty of the contract?
4. Is Mikaela still responsible for the icing being the wrong colour on Kimiko’s cake? 
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