Legal Questions on Sale of Goods, Consumer Guarantees, Fair Trading Act and Employment Law

Question 1 - Sale of Goods

Question 1 - Sale of Goods 24 Marks

1. What is the purpose of the Sale of Goods Act 1908? 2 Mark
   
   
2. Lisa has a nice garden shed on her land which she no longer uses.  She advertises in the "Trade and Exchange" magazine, "Garden shed for sale, $300 or nearest offer".

On Thursday 11 November Paul comes to look at the shed and eventually says to Lisa, "It's going to be difficult to remove because it's concreted in, and also the window is broken.  Tell you what, if you drop the price to $225 and get the window fixed I'll come and pick it up by next Thursday."

Lisa agrees and they sign a written contract on these terms.

1.  Explain by reference to the appropriate sections in the Sale of Goods Act 1908 why this is a contract of sale of goods. 2 Marks (3 marks)
   
   
2.  Explain by reference to the appropriate sections in the Act who owns the shed when Lisa gets the window fixed the following Monday.  Paul does not yet know this has been done. 3 Marks (2 marks)
   
   
3.  Lisa rang Paul on the day before he was due to pick up the shed.  She told him the window had been fixed.  Paul replied, "OK, I'll come and pick it up tomorrow, Thursday, about noon".  Before he arrived a strong wind blew down a neighbour's tree on the shed, smashing it into broken pieces of timber.  Who would bear the loss – Lisa or Paul? 3 marks

3. Background facts       

Samantha runs an interior design store. To shift some old stock she sends a set of Side tables packaged together in a box to auction. Before the auction Angus makes an offer to buy the set of side tables and Samantha accepts. As part of the contract it is agreed that Angus will make payment and collect the tables the next day.

During the night the side tables are destroyed in a fire at the auctioneers.  

Required

Applying the law to ascertain who bears the loss of the burnt tables. 5 Marks 

4. Jo is the chef de cuisinein a busy restaurant. Jo sees an advertisement in a national newspaper for bulk Amphitrite Soybean Oil at 75c/litre, and e-mails an order to the supplier for 100 litres of Amphitrite Soybean Oil. When it is delivered, Jo discovers that it is a lubricating oil totally unsuitable for culinary purposes. Would Jo be justified in rejecting the oil?  3 marks

5. Explain with reasons who will have to bear the loss in the following circumstances:

1. i) On Tuesday Charles purchases 12 m of carpet from Carpetland Ltd. The carpet is a bulk roll and the 12 m is to be cut from the bulk and the delivered to Charles’s office on Thursday. On Wednesday morning before the 12 m has been cut, there is a fire at Carpetland and the entire roll of carpet is destroyed. 2 marks
2. ii) On Tuesday Charles purchases 12 m of carpet from Carpetland Ltd. The carpet is a bulk roll and the 12 m is to be cut from the bulk and the delivered to Charles’s office on Thursday. On Tuesday afternoon an employee of Carpetland cuts 12 m from the bulk and, having rolled it, labels it ‘For Charles Thursday’. On Wednesday morning, there is fire at Carpetland and the 12 m roll of carpet is destroyed. 2 marks
3. iii) Pat goes to Rick Jones Electrical Ltd (RJEL) in order to look at home entertainment systems. As part of a promotion, RJEL allows potential purchasers to take a system home for 48 hours to try before deciding whether or not to make the purchase. On Friday, Pat takes home a SUPASYSTEM Mark X which is on sale for $5 000. On Saturday night Pat throws a party to really try out the system. One of Pat’s guests accidently pours a gin and tonic over the central part of the system which explodes with a loud bang and bursts into flames. 2 marks

1. When does the Consumer Guarantees Act Apply? 2 Marks

1. Background facts

Alex is a keen sailor, and decides to set up a small business teaching people to sail the type of yachts that families and hobby sailors would normally use.

Alex buys the following items for her business:

• A ‘family’ yacht from Nelson Marine Limited (“NML”)
• Five ‘second hand’ life-jackets from his Neighbour, Warren (who has in the past sailed in his spare time);

A week after these purchases Alex notices some cracks in the yacht’s hull. She calls in Clive, a marine engineer to carry out a survey of the yacht, and equipment.  

Clive reports that;

1. the yacht is in fact parts of two separate yachts nailed together and is not seaworthy and is a ‘death-trap,’ the flotation material in the life jackets has broken down over time and wouldn’t support the weight of a person.  

Required

Explain Alex’s statutory rights against NML and Warren. You must consider whether the supply of the yacht and/or the life jackets is covered by the Consumer Guarantees Act and what guarantees apply (if any). 8 Marks

1. Sarah goes into a hardware store to buy paint that will stick on a certain type of wood – rimu – that her house is made of. The person behind the counter, Bob recommends a certain brand as “excellent for painting on that type of wood”. Sarah pays for it, takes it home and starts painting.However three days later she notices that the paint is starting to peel. A friend of hers who is a painter comes around and informs Sarah that she has used the wrong type of paint. Sarah then discovers the instructions on the paint say that it will not stick properly on certain woods – rimu is listed as one of these woods. Another person at the hardware store (not Bob who has left) informs Sarah that they are not required to do anything to help her because she didn’t read the instructions on the side of the paint can where it clearly lists rimu as a wood the paint shouldn’t be used on. Sarah argues with them and finally they agree they will order her the proper paint (they have none in stock at the present time) from their store in Wellington.  She is keen to get started again with the painting and after two weeks have gone by she approaches them and asks them about the order. They inform her that they have forgotten to order the extra paint and will do so immediately. She goes back in another two weeks (now four weeks have gone by) but the paint still has not arrived. The store insists it is on the way.
2. Does the store have to remedy the problem seeing as the instructions specifically said the paint should not be used on rimu? Explain.  (2 marks)
3. What are the rights and remedies Sarah has available to her?   (2 marks)
4. What can Sarah do about the fact the store insists they will receive the paint but Sarah is still waiting? (2 marks)
5. Would the situation be different if there was no paint that worked on rimu wood and the store could do nothing to help Sarah?  (2 marks)

4. Facts

Lucky, an engineer, has a practice with offices in his home in Mount Albert.

He has recently purchased a small “Freezit” fridge from Auckland Fridge Suppliers (AFS) for the reception area which has drinks and snacks for his clients while they wait.

Question 2 - Consumer Guarantees

After only a month the fridge suddenly stops working and leaked water in the expensively carpeted reception area.

Mani, an electrician and a client of Lucky’s, who was in the reception at the time tells Lucky that he has tried to repair similar “Freezit” model fridges and that  they are known to be unreliable and difficult to repair. He looks at Lucky’s fridge and says that it will be difficult to repair and it would be better for Lucky to get a new one.  

Lucky takes the fridge back to AFS and says he wants his money back and compensation for drying and cleaning the reception area carpet. The owner of AFS says he will not refund the money.

Explain what rights, if any, Lucky has against AFS under the Consumer Guarantees Act 1993. [ 4 marks]

Q1) Tessa Black is a professional multi-sport athlete. For the past three (3) years she has purchased her ‘thermal’ clothing from a New Zealand Company, Ice Country Limited. Tessa chose to purchase Clothing from Ice Country Limited, because of the Companies advertising statements that the clothing was made in New Zealand from 100% New Zealand Merino Wool. These statements were on;

• their website when she accessed it immediately before making her first purchase; and
• Swing tags attached to the garments that she looked at in the shop when selecting the clothing she wanted to buy.

Tessa has just found out from an article in North and South that when the company first started making the clothing, it was designed and made here, but for the past five (5) years (and currently), the clothing was designed in New Zealand and made in China, from 85% Australian Merino, and 15% Polyester.

Required

Determine whether there has been a breach of the Fair Trading Act 1986 by Ice Country Limited (4 marks) 

Q2) facts:

1. Bhavin finds an advertisement in his letterbox from an Auckland company called Specialist Laboratory Services Ltd. The advertisement states that the company is selling “a slim fast tablet.”

The instructions state that if taken as prescribed the tablet will cause significant weight loss within three months. Bhavin, who is overweight responds to the advertisement and buys a substantial quantity of the tablets, He has been using them as prescribed for the past six months without losing any weight. The advertisement also stated that the tablets were manufactured in the USA.  Bhavin discovered that the tablets were manufactured in a backyard laboratory in South Auckland.  

Required:

Outline the issue. [1 mark]

Explain the relevant law in relation to the above scenario. 3 marks]

1. b)

Keen is a newly qualified personal trainer. In order to attract customers, Keen proposes to insert the following advertisement in the local paper.

Lose weight in weeks!!

With my personalised fitness programme, you will lose at least a kilo in the first week. You will also be fitter, healthier and happier. I have trained several famous athletes and now you may have the benefit of my skills and knowledge.

Question 3 - Fair Trading Act

Ring D Keen 122 3456

Keen has not trained any athletes, famous or otherwise.

Required: 

Briefly outline the potential problems this advertisement could cause Keen in the light of the provisions of the Fair Trading Act 1986 (3 marks)                                                                                                         

Q3) Food Storage Ltd puts up large notices at the entrances to its supermarkets which states:

None Of The Products Sold In This Store Contain Genetically Modified Food Products

In fact, several of the foods they sell, including some packets of dried fruits and soya-bean-based meals, do in fact contain genetically modified content.

Comment whether there has been a breach of FTA 1986 (3 marks) 

Read the cases below and the questions.

Case 1

Dr Hans Wagner was a lecturer in Marketing at Noname University. He was 29 years old, and had one year’s experience as a lecturer. Hans had only been in New Zealand for one year, having emigrated from Germany where he had been a student at the University of Berlin.

Professor Alan Wilson was Hans’ head of department. As head of department, Alan was in charge of all human resource decisions affecting his staff. Part of his job included monitoring the staff’s research and teaching performance. Unfortunately for Hans, his teaching performance had been relatively poor, with student ratings of generally between 2.5 to 3.0 (on a scale of 1 to 5, with 5 being the lowest score). This was worse than three quarters of the staff in the School of Business. However, in a recent 4^th year course which he had not taught before, his ratings were even worse that usual. Most students rated him as either 3 or 4 on the criteria in the student evaluations.

Alan was very concerned about this development. He had already told Hans that he ‘needed to improve’ during a discussion about his teaching performance in the previous semester. He called Hans to his office, explained to him that this performance was ‘not acceptable’ and said that he would have to ‘let Hans go’. Hans felt humiliated. When Alan asked him to explain his poor performance, Hans, not wanting to drag out the interview longer than absolutely necessary, said that he could not. Two months later, Hans lodged a personal grievance and returned to Germany.

• Did Alan the employer have substantive grounds to dismiss Hans? Explain (3 marks)

2) Did Alan follow the procedural requirements in dismissing Hans, if not, what procedures should have been followed in this case? (5 marks)      

Case 2

Sextus is employed as a systems designer by Tarquin Industries Ltd. Sextus is a cheerful, outgoing person. Lucretia is also employed as a systems designer by TIL.

Question 4 - Employment Law - Dismissal

Lars, the systems manager, puts Sextus and Lucretia on a project team to redesign the payroll system for TIL. The task is complex and there is a deadline which means that Sextus and Lucretia are required to spend a good deal of time in each other’s company. Because they often work late they frequently have a meal together as a break. While at local restaurant on one of these ‘breaks’ Sextus puts his hand on Lucretia’s knee and asks her to come back to his place after work. Lucretia is shocked and upset and goes home. The next day Lucretia complains to Lars about Sextus’s behaviour.

Required: Draft an opinion for Lars setting out the obligations of TIL in this matter and how the affair should be handled to avoid a personal grievance being taken by either Lucretia or Sextus ( 5 marks)

Case 3

Rob is a delivery driver. He has a good work record and has been with the company for five years. A motorist has complained that two weeks ago Rob broke the law by double parking and blocking the road when unloading parcels and that he was arrogant and rude in his response to the motorist.

The report from Rob states that, as is normal practice, he had the vehicle’s hazard lights flashing at the time. He said that he was extremely busy with deadlines he was required to meet by the company. He said he did not apologise to the motorist but just looked at him and kept unloading the parcels as quickly as possible.

His manager calls Rob into his office and advises him that he is dismissed because of his actions. Discuss. (4 marks)

Case 4

Mary started working in a local supermarket. At the time she began, she was told what the hours of work would be, and that an agreement would be signed later. One month later she is called in to see the manager. He says she has been on trial for the first 90 days and that he has decided that she is not suitable because she does not smile at the customers enough and sometimes forgets to say, ‘Have a nice day’. He tells Mary she should leave immediately. Advise Mary ( 3 marks)

Case 5

Mary has been employed by Mouse Ltd for three years. She is required to carry out reception and secretarial duties. At first, her work was of a very high standard. In the past few months, however, she has become surly and withdrawn and several times was late for work. Five months ago she was given a warning about her work performance. After that, nothing further was said about her performance.

On Friday she was late back from lunch, drove too fast into the firm’s yard and hit the CEO’s new BMW, which was parked around a blind corner of the building. The CEO is furious and dismisses Mary. He says she knew she was under a final warning.

Case 6

Mary says that the only reason her work had deteriorated was that a customer who came into the firm regularly was making advances to her and when she refused him he told other people lies about her sexual conduct. The men in the office sniggered at her and gossiped about her.

She says she told her supervisor about the circumstances but he said: ‘Don’t be so neurotic – men are like that. Ignore it.’

Advise Mary of her rights and of the steps she should take. Comment on any time limits (5 marks)                               

Issues at Thomas Aluminium, New Zealand (15 marks) 

Thomas Aluminium was established in Tauranga New Zealand in the 1990s as a family-run business. The business produces aluminium sheeting and custom produced aluminium components, mostly for joinery, for the building sector. The company had been under strong financial pressure since the economic crash of 2008, and following the arrival of serious competition from a larger company, which undercut Thompson Aluminium’s price.

A new culture, focused on cost reduction and production increases, was introduced in 2010, and several downsizings had reduced the labour force from the level of around 200 employees to the current level of 130 employees. Workers at Thompson Aluminium show little pride in their work and express poor morale. Management is seen as authoritarian and bullying. The high rates of absenteeism, ill health and injuries are blamed on poor employees work attitudes and unsafe behaviours.

The production process at Thompson Aluminium is characterized by high job specialization, with high levels of repetition and little variety in most jobs. There is minimal communication or transfer between the various departments. Workers have little or no control over how work is planned or carried out, and some employees are expected to work double shifts where there is pressure to complete an order in time.

As the supervisor in production department, Gloria has been feeling very stressed over the past few weeks and is close to quitting her job. She is concerned that her manager, Dave is putting her under unreasonable pressure to improve performance and quality in her section. Dave has refused to discuss how Gloria feels about the situation and has threatened to reconsider her position as supervisor if she cannot improve things in the section. Gloria feels this is unfair as she has an excellent record as supervisor during her employment with this company. She has a good relationship with the women she supervises, but their work morale is very low and there is little motivation for there to increase performance. A number of other department supervisors and staff have also been experiencing stress, and some have regularly taken time away from work as a result.

Gloria is aware that two of her fairly new workers in the anodizing section, Sally and Megan, have been experiencing significant discomfort in their shoulders and they have begun to complain about sleep disturbance as a result of this pain. The women experiencing the shoulder problems have a very short-cycle, high-repetition job, with no rotation to other tasks in their section. The task involves manually lifting and attaching aluminium components of different weights and sizes onto racks suspended around shoulder height above their working platform prior to the anodizing process and later unhooking the treated components and placing them on a pile to the side of their working platform. While the task is highly repetitive and is causing discomfort, Sally and Megan enjoy this work because they can talk to each other as they work. For this reason, the women do not wish their discomfort to be reported to management, as they are afraid they will be moved to a job where they cannot communicate so easily.

Grant and Peter worked in the dispatch and warehousing section of Thompson Aluminium. Their jobs involved unloading aluminium sheets and other materials from trucks and placing them onto cantilever storage racks, as well as putting processed components onto distribution trucks to be delivered to various industry customers and retail outlets. The job involved use of a forklift truck and much heavy lifting or manual materials handling.

For the most part, Grant and Peter worked safely and following the rules in terms of safe forklift use and safe handling techniques. One morning, however, under pressure to get a truck unloaded quickly, Grant and Peter took a gamble. Grant stood on the forks of the forklift and Peter lifted him to the empty top levels of cantilever rack to store away the truck’s contents more quickly.  While this activity saved some time, it led to an injury a few years ago when Peter had fallen off the narrow forks and landed on the concrete floor some three meters below, breaking a finger on impact. Despite this, management ignored occasional unsafe behaviour of this type during high work pressure, just so long as no one from management actually witnessed it. Unfortunately, Grant slipped his left foot and fell to the ground, five meters below while reaching over to place one of the boxes on the top rack. Peter called for ambulance immediately, but Grant has been left with some brain damage and no feeling in his lower body. He will not be able to work again. The manager who parked in the truck waiting space received a verbal warning for his role in the events leading to incidents. The company owners were prosecuted and fined for the incident, and instructed to put in place a comprehensive Occupational Health and Safety management system.

Question 1

Explain:

1. a) The reasons why the owners of Thomas Aluminium were prosecuted and fined for the incident (2 marks)
2. b) What are the employers’ responsibilities for keeping health and safety working environment required by law.  (5 marks) 

Question 2 (8 marks)

Examine the health and safety approaches taken by Thomas Aluminium by:

1. identifying the existing hazards in the organization (4 marks)
2. design a hazard notification checklist for Thomas Aluminium (4 marks)