Ebony Melani Contracts- assessment- updated version PDF

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Contracts - Assessment 1- Cert IV legal services - TAFE NSW...

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Ebony-Ella Melani - C4 FTD G 1

Scenario 1 Question 1 A contract is much more than an agreement between two people, but there must be 4 vital elements present in order for a contract to exist. These include offer, acceptance, consideration and intention. Offer:  Scrooge made the offer and the cuppa coffee shop accepted it Acceptance:  Communication is not required in acceptance  Scrooge accepted the offer through her actions, she paid money for the coffee and consumed it in an ordinary matter. Consideration  Money in exchange for the coffee Intention  By selling coffee, there is intention for the product to be fit for purpose There was not explicitly an invitation to treat mentioned, however if a sign advertised the price of the coffee, this could have been an invitation to treat.

Question 2 The parties to the contract are M/s scrooge and Tetra P/L�

Question 3 There was a fundamental breach of an essential condition. This is a breach that goes to the heart of the contract and is not a warranty, but a condition that was implied when the contract was formed (product in exchange for money). This is vital, as a breach of condition enables the party not at fault to terminate the contract.

Question 4 The conditions which have been breached include:  The coffee cup was not fit for purpose o Sale of Goods Act (NSW)  The sale of goods was not of merchantable quality o Sale of Goods Act (NSW)

Question 5 The condition is implied. The most important implied terms in this contract are those in consumer protection legislation, which imply conditions about quality and fit for purpose, and exercise of duty of care and skill into various types of consumer contracts. In Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337, Justice Mason set out the conditions necessary for implying a term as set out by the majority in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council HCA 40  it must be reasonable and equitable;

Ebony-Ella Melani - C4 FTD G 1 it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it;  it must be so obvious that 'it goes without saying';  it must be capable of clear expression;  it must not contradict any express term of the contract.' This can be related to Scrooge’s case, as his claim in reasonable, obvious and clear of expression, as it is expected that the coffee cups would be of merchantable quality, however they were not fit for purpose, and there was nothing in the contract to contradict this implied condition. 

The common law considers certain terms to be a normal incident of implied terms into certain categories of contracts. For example:  in contracts for the sale of goods, an implied term that goods are fit for their intended purpose  in contracts for professional services, an implied term that they will be rendered with reasonable car The national Australian Consumer Law removed this 'implied terms' regime, replacing it with a set of 'statutory guarantees' for which there are independent statutory remedies (rather than contractual remedies). However, these remedies remain relevant to contract, as they may enable a party to escape a contract or provide another avenue for parties to enforce contractual promises (for example, it may be both a term of the contract and a 'statutory guarantee' that goods will be able to perform a certain function; where that is the case the aggrieved party may make a contractual claim for breach or a claim under the statutory guarantee regime).

Question 6 Tetra P/L is liable to pay the damages and not Cuppa, as a business name is not a legal entity. A legal entity cannot be a business name. Corporations Act 2001 "entity": for the purposes of Chapter 2E an entity is any of the following:  a body corporate;  a partnership;  an unincorporated body;  an individual;

Question 7 The Common Law division of the Supreme Court Supreme Court Act 1970 (NSW):  contract and negligence cases  equity (such as matters involving trusts)

Ebony-Ella Melani - C4 FTD G 1   

probate (matters involving the validity of wills and the functions of executors of wills, or administrators if the deceased person died without a will) admiralty (matters involving ships) commercial (such as building disputes).

The Common Law Division deals with civil, criminal and administrative law matters. The Civil matters include:  claims for damages for personal injury  breach of contract  professional negligence  possession of land  defamation. This is a case for breach of contract, so will be dealt with in Common Law Division. Being a case that deals with contract and negligence, it is going to be heard in the Supreme court.

Question 8   

ACL s 13-> loss or damage to include injury ACL s 61-> fit for a particular purpose o Cup was not able to hold hot coffee ACL s54-> guarantee as to acceptable quality o The cup was unsafe and had faults as it broke and the coffee fell through.

Question 9 Consumer guarantees applying to goods (related to Competition and Consumer Act), which states that goods:  are of acceptable quality – the goods must be safe, lasting, have no faults, look acceptable and do all the things someone would normally expect them to do  are fit for any purpose that the consumer made known to the business before buying (either expressly or by implication), or the purpose for which the business said it would be fit for  have been accurately described The goods Scrooge received were not of acceptable quality and were not fit for purpose, therefore these can be used as a cause of action.

Question 10 It wasn’t the act of driving that caused the injury, it was the fault in the cup. The same injury could have occurred if she wasn’t driving. The product still wasn’t fit for purpose (s61). These words do not mean that she has contributed to her own injury and would only be applicable if the act of driving actually caused an injury (not a faulty cup). If it was written on the cup, Scrooge could argue that whether she was driving or not the cup was faulty and a risk of injury could still have arisen. Tetra P/L, could argue that Scrooge “breached” the

Ebony-Ella Melani - C4 FTD G 1 contract of the use of the cup by driving, which lessens their liability as she did not use it as they instructed.

Question 11 If Scrooge’s friend Mack purchases the her the coffee, under the privity of the contract, those who are not contract cannot be bound by it, therefore Scrooge would not be able to sue on a contract, but instead under the tort of negligence. Scrooge has protection under tort law of negligence, as it is a breach of duty of care and it could also be a statutory breach. She also still has remedies under Statute ACL S 61, S 54.

Scenario 2 Question 12 The remedy for the breach of contract would be termination, due to the other party’s breach (supplying faulty goods). Scrooge is able to terminate the contract, as under Common Law, one is able to terminate a contract if there is:  a breach of an essential term;  a sufficiently serious breach of a non-essential term; or  the repudiation or renunciation of the contract by the other party In Scrooge’s case there is a breach of an essential term.  Competition and Consumer Act 2010 (Cth) s271(1): Action for damages against manufacturers of goods (1) If: a) the guarantee under section 54 applies to a supply of goods to a consumer; and (b) the guarantee is not complied with; an affected person in relation to the goods may, by action against the manufacturer of the goods, recover damages from the manufacturer. Under this, it is clear that Scrooge can take damages against the manufacturer, as her goods were not acceptable quality (s54).

Ebony-Ella Melani - C4 FTD G 1

Question 13 The damages that Woolworth could claim include:  Loss of commercial bargain/market advantage o Ruined their reputation->Loss of sales due to this  Loss of profit o Now they have to pay more for their cups o S 272 Damages that may be recovered by action against manufacturers of goods (1) In an action for damages under this Division, an affected person in relation to goods is entitled to recover damages for: (a) any reduction in the value of the goods, resulting from the failure to comply with the guarantee to which the action relates, below whichever of the following prices is lower: (i) the price paid or payable by the consumer for the goods; (ii) the average retail price of the goods at the time of supply; and (b) any loss or damage suffered by the affected person because of the failure to comply with the guarantee to which the action relates if it was reasonably foreseeable that the affected person would suffer such loss or damage as a result of such a failure. o The retail price of the goods at the time was cheaper than what they will have to pay.  Money spent on faulty product o Refund money spent on this  Extra cost $1,000 / 10,000 cups for unexpired period the contract was to run for

Question 14 The rule in Hadley v Baxendale is that the innocent party cannot claim unusual or extra damages, unless the other party was given notice of the prospect of the unusual loss or damages at the time or before the contract was formed

Question 15 The remedy of recession ab initio is not available in this case, because in the first 12 months there was no complaints about the product, so Woolworths was able to profit from it during that time and the products had been used and consumed. It is due to this reason that it is not available, as it is not possible to put the parties back into the same position they were in before the contract was entered....