Source of legal rights Torts Contract: Express Terms Statute:
Consumer Guarantees
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Terms
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Statement prior to contractRepresentation Misrepresentation:
Not contract Possible action in equity or statute (s18) Puff Not
contract No action in equity Possible action under statute (s18)
Term Part of contract
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Term or representation? Objective test of intention reasonable
man Hospital Products Ltd v United States Surgical Corp (1984) 156
CLR 41 Indicative factors include 1. Importance of statement 2.
Time between statement and contract 3. Special knowledge or skill
or access to truth of one party 4. Inclusion of statement in any
subsequent document Ellul &Ellul v Oakes (1972) 3 SASR 377
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What kind of term? A term may be either: a Condition Essential
term Breach entitlement to terminate/or damages a Warranty
Ancillary term Breach damages, but no termination an Innominate
term Intermediate term Breach termination if sufficiently
serious
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Test: how essential was the promise? The question whether a
term in a contract is a condition or a warranty, i.e. an essential
or a non-essential promise, depends upon the intention of the
parties as appearing in or from the contract. The test of
essentiality is whether it appears from the general nature of the
contract considered as a whole, or from some particular term or
terms, that the promise is of such importance to the promisee that
he would not have entered into the contract unless he had been
assured of a strict, or a substantial, performance of the promise,
as the case may be, and that this ought to have been apparent to
the promisor. Jordan CJ in Tramways Advertising v Luna Park
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Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) CLR
633 Associated Newspapers Limited v Bancks (1951) 83 CLR 322
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Warranty Bettini v Gye (1876) 1QBD 183 per Blackburn J said at
188: [a condition is] a stipulation [which] goes to the root of the
matter, so that a failure to perform it would render the
performance of the rest of the contract a thing different in
substance from what the defendant has stipulated for.
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Innominate terms: Hong Kong Fir There are, however, many
contractual undertakings of a more complex character which cannot
be categorised as being conditions or warranties.Of such
undertakings, all that can be predicated is that some breaches
will, and others will not, give rise to an event which will deprive
the party not in default of substantially the whole benefit which
it was intended that he should obtain from the contract; and the
legal consequences of a breach of such an undertaking, unless
provided for expressly in the contract, depend on the nature of the
event to which the breach gives rise and do not follow
automatically from a prior classification of the undertakings as a
condition or a warranty. Diplock LJ 69/70
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Innominate terms Approved by High Court in Koompahtoo Local
Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61
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Sale of Goods Act NSW (1923) Implies terms into Contracts For
sale (money consideration) Of goods (not services) Cf Australian
Consumer Law 13
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What is implied? S17: title to sell S18: correspondence with
description S19(1):fitness for purpose S19(2): merchantable quality
S20: correspondence with sample 14
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Eg s17Sale of Goods Act s 17 Implied undertaking as to title
etc In a contract of sale, unless the circumstances of the contract
are such as to show a different intention, there is: 1) an implied
condition on the part of the seller that in the case of a sale the
seller has a right to sell the goods, and that in the case of an
agreement to sell the seller will have a right to sell the goods at
the time when the property is to pass, 2) an implied warranty that
the buyer shall have and enjoy quiet possession of the goods, 3) an
implied warranty that the goods shall be free from any charge or
encumbrance in favour of any third party not declared or known to
the buyer before or at the time when the contract is made.
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Consumer? 62 Definition In this Part, consumer sale means a
sale of goods (other than a sale by auction) by a seller in the
course of a business where the goods: (a) are of a kind commonly
bought for private use or consumption, and (b) are sold to a person
who does not buy or hold himself or herself out as buying them in
the course of a business.
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Relationship between legislation and case law Common law system
use cases to understand/interpret legislation e.g. What do terms
such as merchantable quality, sale by description and reliance on
seller mean? Find answers in case law such as: Ashington Piggeries
v Christopher Hill [1972] AC 441 Grant v Australian Knitting Mills
(1935) 54 CLR 49 David Jones Ltd v Willis (1934) 52 CLR 110 17
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Australian Consumer Law
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Revise: How to read a statute E.g. Competition and Consumer Act
2010 (Cth) s18 Misleading or deceptive conduct (1) A person shall
not, in trade or commerce, engage in conduct that is misleading or
deceptive or is likely to mislead or deceive.
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Elements of a section: Person In trade or commerce Engage in
conduct Misleading or deceptive Defined by legislation (definitions
section) or by courts (case law.)
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Legislation Competition and Consumer Act 2010 (Cth) Schedule 2
- Australian Consumer Law Application scheme Commonwealth Act only
applies to corporations Why?
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Application Scheme How does Australian Consumer Law (ACL) apply
to all jurisdictions in Australia? Why do we find it at Schedule 2
of the Competition and Consumer Act 201o (Cth)?
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Part 3-2: Consumer Guarantees Division 1Consumer guarantees
Subdivision AGuarantees relating to the supply of goods 51
Guarantee as to title 52 Guarantee as to undisturbed possession 53
Guarantee as to undisclosed securities etc. 54 Guarantee as to
acceptable quality 55 Guarantee as to fitness for any disclosed
purpose etc. 56 Guarantee relating to the supply of goods by
description 57 Guarantees relating to the supply of goods by sample
or demonstration model 58 Guarantee as to repairs and spare parts
59 Guarantee as to express warranties
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56 Guarantee relating to the supply of goods by description (1)
If: (a) a person supplies, in trade or commerce, goods by
description to a consumer; and (b) the supply does not occur by way
of sale by auction; there is a guarantee that the goods correspond
with the description. (2) A supply of goods is not prevented from
being a supply by description only because, having been exposed for
sale or hire, they are selected by the consumer. (3) If goods are
supplied by description as well as by reference to a sample or
demonstration model, the guarantees in this section and in section
57 both apply.
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Common elements a person supplies, in trade or commerce, goods
to a consumer Common Elements: Person/corporation Supply Trade or
commerce Goods Consumer
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S2:trade or commerce trade or commerce means: (a) trade or
commerce within Australia; or (b) trade or commerce between
Australia and places outside Australia; and includes any business
or professional activity (whether or not carried on for profit).
And case law
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S2: goods goods includes: (a) ships, aircraft and other
vehicles; and (b) animals, including fish; and (c) minerals, trees
and crops, whether on, under or attached to land or not; and (d)
gas and electricity; and (e) computer software; and (f) second hand
goods; and (g) any component part of, or accessory to, goods.
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S3: consumer (1) A person is taken to have acquired particular
goods as a consumer if, and only if: (a) the amount paid or payable
for the goods, as worked out under subsections (4) to (9), did not
exceed: (i) $40,000; or (ii) if a greater amount is prescribed for
the purposes of this paragraphthat greater amount; or (b) the goods
were of a kind ordinarily acquired for personal, domestic or
household use or consumption; or (c) the goods consisted of a
vehicle or trailer acquired for use principally in the transport of
goods on public roads. (2) However, subsection (1) does not apply
if the person acquired the goods, or held himself or herself out as
acquiring the goods: (a) for the purpose of re supply; or (b) for
the purpose of using them up or transforming them, in trade or
commerce: (i) in the course of a process of production or
manufacture; or (ii) in the course of repairing or treating other
goods or fixtures on land.
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Case law of a kind ordinarily acquired for personal, domestic
or household use or consumption Carpet Call Pty Ltd v Chan (1987)
ATPR 41-025
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ordinarily acquired for personal, domestic or household use or
consumption Not just personal use Business use as well e.g. Carpet
in a nightclub (Carpet Call v Chan (1987) ATPR (Digest) 46- 025)
Not just goods of a kind used in households Commercial versions of
domestic products as well E.g. Commercial grade, decoratively
coated insulation in Bunnings warehouses ( Bunnings v Laminex
[2006] FCA 682 ) Mixed use? Common sense approach E.g even though
ostrich egg incubator could be used for home hobbies, if used
commercially not consumer (Crago v Multiquip (1998) ATPR 41-620
)
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56 Guarantee relating to the supply of goods by description (1)
If: (a) a person supplies, in trade or commerce, goods by
description to a consumer; and (b) the supply does not occur by way
of sale by auction; there is a guarantee that the goods correspond
with the description. (2) A supply of goods is not prevented from
being a supply by description only because, having been exposed for
sale or hire, they are selected by the consumer. (3) If goods are
supplied by description as well as by reference to a sample or
demonstration model, the guarantees in this section and in section
57 both apply.
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S56: elements Common elements Supply by description Guarantee
of correspondence with description
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Case law UK Sale of Goods Act S19(2) Sale of Goods Act 1923
(NSW) s71(1) Trade Practices Act 1974 (Cth) Presumptions in
statutory interpretation
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Case Law Ashington Piggeries v Christopher Hill [1971]
1AllER847 Grant v Australian Knitting Mills (1936) 54 CLR 49
Sale/Correspondence with description
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Ashington Piggeries case: Viscount Dilhorne: Did the presence
of DMNA merely affect the quality of the herring meal or did it
make a difference in kind? If the former, then there was no failure
to deliver in accordance with the description. If the latter, there
was.
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55 Guarantee as to fitness for any disclosed purpose etc. (1)
If: (a) a person (the supplier) supplies, in trade or commerce,
goods to a consumer; and (b) the supply does not occur by way of
sale by auction; there is a guarantee that the goods are reasonably
fit for any disclosed purpose, and for any purpose for which the
supplier represents that they are reasonably fit. (2) A disclosed
purpose is a particular purpose (whether or not that purpose is a
purpose for which the goods are commonly supplied) for which the
goods are being acquired by the consumer and that: (a) the consumer
makes known, expressly or by implication, to: (i) the supplier; or
(ii) a person by whom any prior negotiations or arrangements in
relation to the acquisition of the goods were conducted or made; or
(b) the consumer makes known to the manufacturer of the goods
either directly or through the supplier or the person referred to
in paragraph (a)(ii). (3) This section does not apply if the
circumstances show that the consumer did not rely on, or that it
was unreasonable for the consumer to rely on, the skill or judgment
of the supplier, the person referred to in subsection (2)(a)(ii) or
the manufacturer, as the case may be.
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S55: elements Common elements Particular purpose made known by
consumer Consumer relied on skill/judgement of supplier Reasonable
to rely
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Case Law Purpose made known? Obvious purpose? Underpants Grant
v Australian Knitting Mills Reliance on sellers judgement?
Ashington Piggeries v Christopher Hill
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S54: Guarantee as to acceptable quality (1) If: (a) a person
supplies, in trade or commerce, goods to a consumer; and (b) the
supply does not occur by way of sale by auction; there is a
guarantee that the goods are of acceptable quality. (2) Goods are
of acceptable quality if they are as: (a) fit for all the purposes
for which goods of that kind are commonly supplied; and (b)
acceptable in appearance and finish; and (c) free from defects; and
(d) safe; and (e) durable; as a reasonable consumer fully
acquainted with the state and condition of the goods (including any
hidden defects of the goods), would regard as acceptable having
regard to the matters in subsection (3).
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(3) The matters for the purposes of subsection (2) are: (a) the
nature of the goods; and (b) the price of the goods (if relevant);
and (c) any statements made about the goods on any packaging or
label on the goods; and (d) any representation made about the goods
by the supplier or manufacturer of the goods; and (e) any other
relevant circumstances relating to the supply of the goods. (4) If:
(a) goods supplied to a consumer are not of acceptable quality; and
(b) the only reason or reasons why they are not of acceptable
quality were specifically drawn to the consumers attention before
the consumer agreed to the supply; the goods are taken to be of
acceptable quality.
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(5) If: (a) goods are displayed for sale or hire; and (b) the
goods would not be of acceptable quality if they were supplied to a
consumer; the reason or reasons why they are not of acceptable
quality are taken, for the purposes of subsection (4), to have been
specifically drawn to a consumers attention if those reasons were
disclosed on a written notice that was displayed with the goods and
that was transparent. (6) Goods do not fail to be of acceptable
quality if: (a) the consumer to whom they are supplied causes them
to become of unacceptable quality, or fails to take reasonable
steps to prevent them from becoming of unacceptable quality; and
(b) they are damaged by abnormal use. (7) Goods do not fail to be
of acceptable quality if: (a) the consumer acquiring the goods
examines them before the consumer agrees to the supply of the
goods; and (b) the examination ought reasonably to have revealed
that the goods were not of acceptable quality.
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Case Law fit for all the purposes for which goods of that kind
are commonly supplied Rasell v. Garden City Vinyl and Carpet Centre
Pty Ltd (1991) ATPR 41-152 Carpet Call Pty Ltd v Chan (1987) ATPR
41-025
Remedies Breach of contract: Remedies on the contract e.g
damages Breach of term implied into the contract: Sale of Goods Act
Remedies on the contract Breach of statutory guarantee Australian
Consumer Law Remedies provided by statute
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Statutory Remedies The remedies relating to the consumer
guarantees are found in Part 5-4 of the ACL. Range from refunds and
replacements to compensation and costs. The appropriate remedy
against suppliers of goods and services varies depending on whether
or not the failure to comply with the guarantees is major and
whether it can be remedied.
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Consumer Guarantees - remedies If the failure is major or
cannot be remedied, the consumer (not the supplier) may choose to
reject the goods or may choose to keep the goods but ask for
compensation to make up the difference in value caused by the
failure: see section 259 (3). If the failure to comply with a
guarantee is not a major failure and can be remedied, the consumer
may require the supplier to remedy the failure within a reasonable
time: see section 259 (2). The supplier may then choose to remedy
the failure by repairing or replacing the goods or refunding money
paid for the goods: see section 261.
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Flooring: Mavis was particularly interested in flooring as she
had difficulties keeping her slate tiles clean. She searched for
low maintenance flooring and after extensive shopping decided on
single sheet vinyl flooring. She saw just the thing at Discount
Lino Barn, close to Kylies home. Kylie indicated that she didnt
share her mothers preference for vinyl flooring as it was cold
underfoot and had suggested kitchen carpet. Kylie and Mavis spoke
to Mike at Discount Lino Barn who suggested under-floor heating
could address Kylies temperature issues. Kylie provided details of
the under floor heating options while her mother left the
conference room to offer slices of her coffee cake to the other
staff.
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She is also angry about the flooring she has had installed.
Despite Kylies protests she went with the single sheet vinyl, and
did not have under floor heating installed. The vinyl, while easier
to clean than the slate, is marking and scuffing badly however. She
has only had it down 6 months, and already there are a number of
wear marks. Her cupcake classes which she runs 5 times a week and
more often in school holidays are now so popular that she has at
least 20 students per class. Because of her renovations she has
room for them all around her lovely new island bench, but the vinyl
around the island bench almost looks like a race track.
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It is as if her students have worn a path around the bench and
in only 6 months. The vinyl was quite expensive as she had heavy
grade domestic installed but Mavis is very unhappy. She hasnt yet
paid the bill for the vinyl as she has been arguing with the
company. They are, according to Mavis, now getting nasty, and want
their $45,000 immediately.
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Fridge She also advised that her mother was having problems
with Whitegoods World from which she had bought her fridge. Kylie
advised that her mother required a French door fridge with freezer
drawers underneath to accommodate the large baking trays she used
for her cakes. She had ordered the fridge she needed from
Whitegoods World but had experienced delivery problems.
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Her oven purchase was much more successful than her fridge
which, on the very day it was due to be delivered not only did not
arrive, but the shop called her to advise that delivery was delayed
for one month. Mavis said to the shop keeper: Well thats no good to
me. I ordered that fridge for today. I need that fridge today. I
told you when I needed the fridge. The only reason I ordered from
you was that you told me I could have it today. If you cant give it
to me today, you can just keep your fridge!! I dont want it
anymore. Mavis then rang Quick Fridge and ordered and received
another fridge that afternoon suitable for her requirements.
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However, one month later, Whitegoods World delivered the fridge
originally ordered and demanded payment. Mavis refused to accept
the fridge or to pay, and advised them that the order had been
cancelled. They are threatening to sue Mavis for the price of the
fridge - $5,500.
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Oven Mavis returned to the conference room. She advised that
she had had to make a large coffee cake that morning, even though
her preference would have been to make cup-cakes. In fact, one of
her legal problems was her cup-cake oven. Cake Cookers is a
specialist retailer which sells products designed for those who
like to cook cakes. It retails a number of specialist pans and
other baking utensils many imported from America and not readily
available in Australia - as well as a special range of cake
ovens.
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They are located in Broome and Mavis lives in NSW, but Cake
Cookers sells throughout Australia by catalogue. Mavis wanted a
special cake oven in her new kitchen. She saw an oven that looked
perfect for her in their catalogue the picture showed 8 slide out
patty pan trays instead of oven trays exactly what she wanted.
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She rang the store and spoke to Cathy. She told Cathy all about
her cupcakes, her favourite recipes, and her interest in the patty
pan oven in their catalogue. Cathy told her that the patty pan oven
had eight slide out patty pan holders instead of oven racks and
that each patty pan holder would take one dozen patty pans. Even
better, they came with self cleaning silicone inserts. Mavis was
delighted about the self cleaning but concerned that each tray
would only take one dozen patty pans. Although after discussion
with Cathy, she was convinced that the overall capacity of the oven
was appropriate, and so she placed an order.
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Mavis advised that even if she had known about the cake order
she would have had difficulty fulfilling it because of problems
with her newly installed cake oven. When the oven arrived she saw
that instead of Australian sized delicate patty pan holders, the
cake trays were American size muffin holders and two trays were
even jumbo sized Texas muffin size holders. This is not what Mavis
wanted at all. Mavis rang Cathy and told her the oven was not what
she had wanted at all, and not suitable for the cakes in which she
specialised. Cathy said she was sorry that Mavis was disappointed,
but there is nothing that they can do about it now. Mavis wants to
know if she still has to pay the $8,000 for the special cake
oven.