COML Tuto 4-6 - Answers for Tutorials 4-6 PDF

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Tutorial 4 (Consumer Law) The traditional justification for having consumer law is based on the idea of ‘unequal bargaining power’. (a) Explain what unequal bargaining power is. ⁃ Consumer has a low bargaining power ⁃ The consumer might don’t know what their rights on the product is. ⁃ Consumer are ...

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Tutorial 4 (Consumer Law) 1. The traditional justification for having consumer law is based on the idea of ‘unequal bargaining power’. (a) Explain what unequal bargaining power is. ⁃ Consumer has a low bargaining power ⁃ The consumer might don’t know what their rights on the product is. ⁃ Consumer are inferior; less experience, knowledge, market power, ability to make informed decisions, access to experts and deep pockets (money). (b) Some believe that consumers do have significant bargaining power. How come? ⁃ Consumers can vote with their money ⁃ Consumers can research online ⁃ Consumers have the power to affect firm’s reputation. ⁃ Caveat emptor (Buyer beware) ⁃ The principle that the buyer lone is responsible for checking the quality and suitability of goods before a purchase is made 2. The Fair Trading Act adopts an ex ante perspective [slide 5]. Explain the term ‘ex ante’. - Pre-sale protection of promotional product - Ex ante - prior/before (the contract is entered into) - Advertising, pre-contracted protection 3. Which Act adopts an ex post perspective? Explain how this Act protects consumers. Consumer Guarantees Act 1993 Ex-post = after the act After the contract e.g. if a product/service is not of the quality the consumer expects, or not fit for purpose 4. The CGA provides consumers with automatic set of protections. However, a consumer signed a contract, in which she waives these rights. Is she nevertheless protected? Yes, she is protected. General rule is that sellers cannot contract put of consumer protection laws when a consumer enters a regular transaction. For example, exceptions: S43, S41 Business is “consumer” they can contract out. 5. Are consumers entitled to return a product and get a refund if they change their mind about the purchase? Generally, NZ does not allow consumers to return a product and get a refund due to changing their mind. In line with other countries. S 36M FTA 1986 - Door-to-door sales “Uninvited direct sale agreement” 5 days cooling-off period, can get a refund if you change your mind within 5 days. 6. Who is supposed to benefit from consumer law rules? - Consumer, get protection - Producers/suppliers, reduce unfair competition - The economy/market, consumer law promotes certainty, stability, competition and efficiency 7. The ‘bait-and-switch’ rule involves a legal norm that is a ‘standard’. - Bait advertising = duty or supplier to advertise goods and services and supply them at reasonable quantity and for a reasonable time - (a) What is a ‘standard’? - A legal norm that is not well-defined. - (b) Which standard is relevant to the ‘bait-and-switch’ rule? - Reasonableness - (c) What is the main disadvantage of using a standard? - Uncertainty, it is dependent on the type of product, supplier, price and all other circumstances. 8. Below is Viagogo’s modification clause. Explain in what aspects this term is problematic. Suggest concrete ways to improve the term. Modification. If We change this Agreement, We shall post a revised version of this Agreement, which shall automatically replace the terms of this Agreement. The revised version of this Agreement is automatically effective after it is initially posted on the Site. Your continued use of the Site and the Services following viagogo's posting of a revised Agreement will constitute Your acceptance of the revised Agreement. If You do not agree with the terms of this Agreement or any revised version of this Agreement, do not continue to use the Services or this Site. ⁃ FTA-unfair contract terms SS 46H-46M. ⁃ Automatic replacement

Notify the consumer of changes and allow time to reconsider. Continue use/ should tick ‘I agree’ Many people believe that firms engage in ‘planned obsolescence’. o Explain what planned obsolescence is. -Firm’s strategic policy of designing a product so that if no longer function after a period of time o Should consumer law worry about planned obsolescence? -Consumer cannot make informed decision of they don’t know it will stop working after a period of time o HowdoesNZlawinteractwith/mitigatethepracticeofplannedobsolescence? -Reasonable in CGA: no time limit 10. The CGA and the FTA are NZ Acts. Yet, these Acts may impact international players and international trade/activity. Explain. ⁃ NZ can make more money overseas by revising product (chapter, less quality) ⁃ International players in NZ have to confirm to FTA and CGA ⁃ New products/features

⁃ ⁃ 9.

Tutorial 5 Question 1 (a) Situation Raul lives above a chinese takeaway shop. He is sick of the smell of fried food lofting into his (i) apartment. (ii) Zoe is a toy-doll manufacturer. She names her dolls “Babie” and sells them in pink boxes. Steve is sick of the neighbour’s kids constantly kicking footballs onto his land and leaving them (iii) there. Thomas is a lawyer. He knowingly gives bad advice, knowing that the client will rely on the advice, (iv) which causes his client to lose money. Joe is an artist, whose recent exhibition included provocative images of children without clothing. (v) One day, he finds a pamphlet on the street with his face on it and the words “child pornographer”. (vi) In a carpark building, Astrid is approached by a man in a hood with a raised cricket bat. During a game of netball, Leonie is slapped across the face after the referee’s call goes against her (vii) opponent. (viii Jeannine is not paying attention while driving and crashes into a child. The child’s father, Martin, see what happens and goes into nervous shock. ) Danny’s neighbour keeps large cats on his property (that is, lions and tigers, etc). One day, a tiger (ix) escapes and eats all of Danny’s pet rabbits. Camille and Sybille work in different areas of the same company. They talk and decide together to (x) each steal valuable trade secrets and sell them to a competitor.

Tort Nuisance Passing Off Trespass to land Deceit Defamation Assault Battery Negligence Rylands v Fletcher Conspiracy

Question 1 (b) Which of the situations could not result in a tort action in New Zealand? Explain why. ⁃ physical injury resulting from battery is statutorily barred by ACC ⁃ Note: damages resulting from assault not barred by ACC, as there is not ‘personal injury” Question 2 Casey has a successful business manufacturing ginger beer in glass bottles in Wellington. Due to the method Casey uses to make the ginger beer, it is very important that the ginger beer is refrigerated. If this is not done the glass bottles are likely to explode due to the yeast in the ginger beer continuing to ferment. For this reason, Casey and her staff use a refrigerated truck to deliver ginger beer. The ginger beer bottle labels also state that the bottles must be refrigerated. Casey has recently sold some cases of ginger beer to Richie who owns a cafM three-hour’s drive away. Unfortunately, on the day that the ginger beer is to be delivered, William (her long-time employee and delivery man) finds that the refrigerated truck is broken. Casey does not know this. William decides to deliver the bottles to Richie in an ordinary van. Richie does not refrigerate the bottles when they are delivered and overnight some of the bottles explode. The shop window is broken by an exploding bottle. Apply the law of negligence to the facts you have been given and advise Casey of her legal situation with regard to Richie. a) What are the elements of the claim that a plaintiff must prove in order to succeed in an action for negligence? b) Apply the law of negligence to determine whether Richie has a case against William.

c) Apply the law of negligence to determine whether Richie has a case against Casey. d) What are the possible remedies that Richie could get? e) If Casey has been diligent, why is it unlikely that a court case needs to be brought, or that William or Casey will have to personally pay much to Richie? Issue: Law: Negligence 1) There must be a duty of care 2) Breach of duty of care 3) The breach must cause harm that is foreseeable and not too remote Application: 1) Duty of care: did William owe Richie a DOC?  Donoghue v Stevenson – DOC owed to neighbours (people affected by defendant’s acts or omissions) i. William is in a direct proximate relationship with Richie-he owes duty of care ii. Foreseeability iii. Temporal/ geographical proximity-William should’ve known that delivering the goods unrefrigerated for 3 hours will affect the bottles. William is next to Richie when goods are delivered iv. Policy Factors  William DOC to Richie? i. Quite foreseeable – predictable that the bottles would explode if unrefrigerated more than 3 hours ii. Proximity – delivering product iii. Policy – societal message – if you are delivering the product, take DOC – be responsible 2) Breach?  Objective test – what would ordinary, reasonable person do?  Farden v Harcourt – take into account if unforeseeable  Wagon Mound No 2 – if damage foreseeable, reasonable man takes steps to minimize  Bolton v Stone – the higher the risk the higher the DOC – if the degree the damage is high, then ure expected to have higher standard of DOC  Ginger beer bottles exploding – foreseeable, likely  Damage caused – great  Burden to prevent – low – tell Richie about the unrefrigerated problems  There is a breach – high DOC 3) Was there damage, loss or harm? Bottle: - Close connection and a direct line of causation between William’s breach of duty and the exploding bottles. This was foreseeable and not too remote. Window: - Was the broken glass caused by negligence? Yes, unbroken chain of causation. It is foreseeable that an exploding glass bottle would also cause damage to things around it William’s partial defence: - Contributory negligence: Richie also negligently contributed to the damage as he left the glass bottles unrefrigerated overnight  Damage must be foreseeable result of breach i. Reasonable person must have foreseen (WMn2)  Must not be too remote  “BUT FOR” – but for actions, bottles not exploded i. Foreseeable – window – damage to surroundings – not too remote  Contributory Negligence Act 1947 i. William not pay the full amount bcs Richie also contributed by not refrigerating the bottles Vicarious liability: 1) Authorised Acts 2) Authorised acts done in an authorized way -

Cassey would be vicarious liable for William’s act

Potential remedies o Injunction o Damage – only compensatory o Contemptuous o Nominal damages – no damage but there’s a social wrong and the court want to recognize that o Compensatory – for the broken bottles and window o Exemplary/ Punitive – unintentional acts that cause harm Diligence – Cassey should have got 3rd party insurance – don’t have to pay for the damages Tutorial 6 Relationship between trust and contracts, with a focus on international contracts. ⁃ Trust human behaviour psychology ⁃ Contracts interact with human behaviour and psychology. ⁃ Reason why we have contracts: we do trust each other 100%. ⁃ Contract is a way to protect against this distrust. ⁃ Scenario: Two companies are from 2 different countries. Distrust is exacerbated by the companies being from different backgrounds. This is natural human response. Intention to enter into a binding agreement. ⁃ Just a presumption, not legally bounds: - Social setting, don’t need intend to be legally bound. - Business setting (commercial), do intend to be legally bound. - These are only presumptions, so they don’t always apply ⁃ Scenario: Confusion as it which presumption applies: - 2 companies discussing a formed business arrangement. - Social setting of being in a restaurant with drinks and a meal. - May not be the right context to set up a business contract. Human motivations to enter into a contract. ⁃ Class example: Player a + b ($5) , the ultimatum game ⁃ Scenario: Taking company B out dinner + drinks may not maximize profit (CFO comment) but they are disregarding extra human motivating for entering into a contract. ⁃ e.g. Nice people, good conversations. Oral vs written contract ⁃ Advantage of written contract: Certainty of obligations entered into as this is with down on paper and singed. ⁃ Disadvantage of written contract: - Cost. - The risk of transaction (size, money involved) may not warrant paying legal fees to get a contract written up. - Formalities. - May undermine trust. e.g. prenuptial agreement. ⁃ Scenario: - Company B wants a relationship based on trust, rather than a written contract. They are seeking mutual respect, which may be undermined by a written contract. Incomplete contracts ⁃ Contract need to be sufficiently certain. They cannot cover every scenario possible. The question to ask about a term that has not seen agreed upon is whether it is an essential term of the contract? ⁃ Scenario: - 3rd paragraph, some aspects of the contract have not been agreed upon. They have only agreed on remedies and exclusivity. - Context of business people: they probably have trusted their management towards to the terms heading to be discussed, but as they have not agreed upon these, likely to still be in negotiations and therefore no contract exist. Point of no return/meeting of the minds.

⁃ Point where negotiations become contract. ⁃ Meeting of minds, on to obligations under contract. ⁃ Scenario: - Risk of discussing in restaurant as the points become blurred. Intoxication ⁃ Freedom of contract: - having the free will to enter into a contract. ⁃ Scenario: - Dinner drinks. Company B may argue against validity of the contract become thus they were too intoxicated to make the decision Forum of the dispute ⁃ international business - Japan and NZ. Need to decide upon which country needs to dispute and under which law. ⁃ Scenario: - Not agreed upon this, so probably no binding contract still in negotiations...