2105AFE Introduction to Business Law

Published : 01-Sep,2021 | Views : 10

Question:

Liddy Bindu lives in a remote Indigenous community. She had leased a shop in Yarrabah, Cairns where she ran a ‘Native Food and Herbs Café for the local community. Liddy is now 70 years old, suffers from poor eyesight, speaks an Aboriginal language and understands limited English. Bob Shifty, Liddy’s landlord, knowing of Liddy’s age, medical conditions, and limited English, presents Liddy with a new lease contract for ‘Native Herbs & Tea Café, insisting that she sign the new lease and return it to him tomorrow.

When Liddy protests that she needs more time to look over the document, Bob tells her that her original lease has run out and that the rental and other conditions of the new lease are exactly the same as the prior lease. Bob doesn’t recommend Liddy seek separate legal advice regarding the new lease. Rather, he threatens her that if she doesn’t sign the new lease immediately he will rent the shop to another tenant. Liddy signs the new lease. However, its conditions, including the rental payable, are significantly different from her prior lease and substantially favour Bob.

Liddy was concerned about the safety and cleanliness of the crockery used for serving food and drinks. She bought a pack of dishwashing liquid ‘Kleen-Up’ for use in the Café. Kleen-Up is manufactured and distributed by Avon Ltd located in Sydney. It was sold by a door-to-door sales representative of Avon Ltd. It has been selling a pack of ‘Kleen-Up’ at a normal price with a leaflet that says, ‘Fantastic new product – very soft and mild on hands - no gloves needed – your dishes will love it!’ The packaging only showed a picture of a bottle of Kleen-Up held by a smiling lady surrounded by full of sparkling dishes and appliance. Liddy’s daughter Lottie who casually helps in the Café developed a severe skin rash on her fingers and hands after using the dishwashing liquid.

Advise Liddy as to whether Bob Shifty has breached the Australian Consumer Law (ACL).What remedies (if any) are available for Liddy under the ACL
Advise Lottie if she has an action against Avon Ltd for her injuries under the Australian Consumer Law. What remedies (if any) are available for Lottie under the ACL

Mrs Lena Breitenfeldt was attending the Wondertown Junior Cricket Club (WJCC) for the first time since moving from Germany, to watch her grandson play his first cricket match. She arrived at dusk, having walked 500 metres from the RSL club, where she previously met with friends for an early dinner to celebrate her 72^nd birthday. During the match, Lena left the spectator seats and walked down a narrow path leading behind the clubhouse. After 3 glasses of wine with dinner, she was in need of the bathroom and was looking for the Ladies toilets.

Earlier that day, Pete had been tidying up the surrounding gardens and paths at the Cricket Club. As the Groundsman, it was Pete’s job to fix the gardens as they were getting untidy and the club liked to keep things neat. The Cricket Club was very proud of their reputation in the community and had recently won several awards due to their environmentally conscious activities. Pete had been in the process of installing water-saving sprinklers when he received an important call and had to leave for the day. He had already swapped the lightbulbs in the outdoor lights overlooking the surrounding paths with some energy saving globes that he came across in the storage room. The outdoor lights were set to turn on automatically at 5pm so Pete decided not to test the lights after changing the bulbs.

Pete was in a hurry to leave and was more concerned with the risk posed by leaving the semi-attached sprinkler hoses across the path. Pete found some cardboard and quickly scribbled ‘DANGER’ with an arrow pointing ahead, and then placed it at the start of the path as a warning sign.

Lena noticed the sign as she entered the path but could not read out all the letters. The energy saving globe bulbs Pete installed were for ‘indoor use only’ so the external lights failed to turn on at 5pm, leaving the paths and surrounding area very dimly lit. As Lena walked down the dimly lit path, she tripped over a length of sprinkler hose and landed heavily on her right arm, fracturing her elbow and wrist.

Due to her right-handed injuries, Lena has been unable to write and cannot complete her extreme crossword challenge from the newspaper each morning and also play lawn bowls. To avoid boredom, she began searching the internet for extreme crossword puzzles which could be completed online with her left hand. Lena was confident that she would do crossword puzzles very well with her right hand. Whilst she did win at first, she lost all other puzzles, it has since developed into an addiction and she has to date lost $40,000 from online gambling.

Advise Lena whether she can sue Wondertown Junior Cricket Club (WJCC) under the tort of negligence, and if so what damages she may recover. Make reference to relevant case law and the Civil Liability Act2003 (Qld) in your answer.

Answer:

Issue: Whether Bob Shifty contravenes any provisions of Australian Consumer Law, and if yes then remedies available to Liddy for such breach?

Law: Unconscionable conduct refers to those transactions which occurred between dominant and weaker parties. Therefore, it also includes duress and undue influence. This type of conduct is prohibited by both common law and Equity, and now by statute also.

According to Section 20 of the Competition and Consumer Act 2010 - Schedule 2 states, any corporation which conducts operations related to trade or commerce must not involve in any conduct which is of unconscionable nature as per the definition of unwritten law. The main aim of this section is to introduce number of remedies which are available to the victim of unconscionable dealing. It also helps the ACCC to conduct investigation related to the matter of unconscionable conduct, and if necessary take legal action.

Section 21 of the ACL prohibits any conduct which is of unconscionable nature of any individual who is engaged in the supply of goods and services.

Court determine various factors while assessing 1the behavior of the person engaged in supply of the goods and services, and all these factors are stated in section 22 of the ACL. Some of these factors are stated below:

Bargaining power of the parties.
Whether stronger party impose any condition on the weaker party which is not necessary for protecting the legitimate interest of the stronger party.
Whether weaker party is able to understand the effect of the documents.
Extent up to which stronger party acts in good faith.
Willingness of the stronger party to negotiate (Competition and Consumer Act, 2010).

This can be understood through case law Commercial Bank of Australia v Amadio (1983) 151 CLR 447; [1983] HCA 14. In this case, contract was signed by Mr. and Mrs. Amadio with the Commercial bank of Australia for providing surety related to the debts incurred by the company of their Son. In this, Mr. and Mrs. Amadio sign the contract by believing that amount of debt was only $50,000 but in actual amount of the debt was more than $50000.

Mr. and Mrs. Amadio were not able to read and understand the documents because of the less knowledge of English language, and bank also fails to provide independent advice to Mr. and Mrs. Amadio.

In this case, Court stated that Mr. and Mrs. Was not liable towards the commercial bank of Australia, because in this both bank and their son was liable for unconscionable conduct.

Remedies- following are some remedies which can be provided by Court in case of unconscionable conduct:

Damages
Penalties of financial nature
Contract declared void in whole or in part
Change the terms of the contract
Refund or performance related to particular services (ACCC, n.d.).

Application: In the present case, Liddy runs café in the Cairns which named as Native Herbs & Tea Café. Landlord of Liddy presents new contract of lease for ‘Native Herbs & Tea Café. This new lease stated the terms which are completely different from the old lease and mostly terms favor Bob.

In this case, Liddy can sue the landlord under unconscionable conduct, and terminate this new contract with Bob. Section 21 of ACL prohibits the Bob to engage in any such conduct. Court can determine following factors for deciding this:

Liddy is 70 year old lady with poor eyesight, and unable to understand the English language, because of which she is not able to understand the documents.
Bob fails to provide advice to Liddy for taking legal assistance.
Bob does not act in good faith, and threatens the Liddy that if she is not signing the contract then he will lease the property to another tenant.

in this case, Liddy can terminate the contract with Bob because contract is affected by Section 21 of ACL.

Issue: Whether Lottie can take legal action against Avon Ltd under the Australian Consumer Law for her injuries, and if yes then remedies available to Lottie

Law: Section 18 of the ACL states, any person related to trade or commerce must not engage in any such conduct which is of misleading or deceptive nature or is likely to mislead or deceive. This section covers wide range of activities such as contractual agreements, other commercial negotiations, and advertisements. Engaging in misleading or deceive conduct also means doing any act or refusing to do any act. It also includes making or giving representation related to something.

Misrepresentation is considered as false statement which is made by one party for the purpose of inducing other party to enter into contract. In case any party enters into transaction because of misrepresentation then such party can seek for relief. Following are some essential element of misrepresentation:

Statement must be related to some present or future fact, which includes statement of opinion, statements to future intention, and statement of law.
Statement must be false in nature, and person who made the statement must believe that statement is false.
Plaintiff must rely on the statement for the purpose of enter into contract.

It must be noted that reference made to trade or commerce excludes private sales but it mainly includes all commercial activities. In case Section 18 of the ACL is breached then following remedies are available:

Variation in the terms of the contract.
Damages
Termination of contract

In other words fraudulent presentation related to any goods and services includes those situation in which representator:

Believes that representation is not true.
Made representation recklessly.
Does not care whether representation made, is true or false.

This can be understood through case law Derry v Peek (1889) 14 App Cas 337. In this case, Prospectus of the defendant company stated that company was allowed to use steam or mechanical power, and plaintiff purchased the company’s shares on the basis of information stated in the prospectus. Defendant genuinely believes that company had absolute right for using steam or mechanical power. Later, Board of trade refused the application of company to use steam or mechanical power. Company was wound up, because it was not able to complete its work. Plaintiff file claim against the company for fraudulent misrepresentation of the facts.

Court stated that defendant was liable towards the plaintiff because all essential elements of fraudulent misrepresentation are present in the case:

Statement stated in the prospectus is related to future fact.
Defendant known that statement was not true.
Plaintiff relied on the fact and enters into contract.

Application: in the present case, door to door salesman of Avon Ltd sold dishwashing liquid named as ‘Kleen-Up’ by saying that “‘Fantastic new product – very soft and mild on hands - no gloves needed – your dishes will love it!”. Liddy purchased the product, and her daughter Lottie used the product with bare hands. After using liquid with bare hands she developed a severe skin rash on her fingers and hands.

In this case, Avon Ltd is liable for fraudulent misrepresentation because salesman of Avon Ltd make fraudulent misrepresentation that liquid can be used with bare hands. Lottie can claim damages from Avon Ltd, as all the elements are present:

Statement stated by sales representative is not true.
Liddy purchased the product by rely on that statement.
Lottie suffered severe injury because of the statement.

Issue: Whether Mrs Lena Breitenfeld can file suit against the Wonder town Junior Cricket Club (WJCC) under the tort of negligence. If yes, what damages she may recover?

Law: negligence occurred when person who owns duty of care towards other person act recklessly or carelessly. In other words, person fail to act with reasonable standard of care that any other person would act in similar circumstances, and such act cause damage or injury to any other person. Negligent occurred either by doing any act or failed to perform any act. Three elements must be stated in the contract for the purpose of proving negligence in Queensland:

Defendant must owned duty of care towards the plaintiff.
Defendant must breach duty of care.
Breach of duty cause damage to the plaintiff.

Section 9 of the Civil Liability Act 2003 states, duty to take precautions against any risk of harm is not breached by person unless:

Such risk was foreseeable in nature, which means person knew or must reasonably know that risk.
Risk was not insignificant in nature.
In such circumstances, any reasonable person in similar position would have taken those precautions.

These section further states, for deciding whether defendant would have taken such precautions or not Court consider following factors:

Chances of the harm, if defendant fails to take reasonable care.
Seriousness related to the harm.
Burden imposed on party for taking precautions for the purpose of avoiding risk of harm.
Social utilization of the activity which creates risk of harm.

Section 11 of the Act states, Court consider following factors for the purpose of deciding whether breach of duty caused particular harm:

Breach of duty must be the necessary condition of the occurrence of harm.
Scope of the liability

Section 23 of the Civil Liability Act 2003 states, those principles which determine whether person has breached any duty also determine whether person who suffered harm has been guilty for contributory negligence in failing to take precautions against the risk of harm.

These section further states, Court consider following factors for that purpose:

Whether such person who suffered harm take standard of care that any person in the similar position would take.
Matter is decided on the basis of knowledge of the person who suffered harm related to the risk of harm.

Section 24 of the Act states, while deciding the reduction in damages because of the contributory negligence, Court reduce the damages up to 100% if court considers it just and equitable. In other words, Court can defeat the claim of damages.

This can be understood through case law Wills v Bell & Ors [2002] QCA 419. In this case, Vehicle of the respondent was driven by the defendant, and defendant crashed the vehicle into the Bridge in Queensland. It was found that at the time of the accident defendant was intoxicated, and concentration level of alcohol in blood was about 27 per cent. Both, appellant and defendant was the insurer under the provisions of the Motor Vehicles Insurance Act 1936. Court rejects the contention of the appellant that defendant does not own duty of care towards the respondent because both involved in the illegal action.

Appellant allowed the defendant to drive the vehicle of the respondent, even though defendant was grossly intoxicated. In other words, appellant voluntary take the risk of driving with the person who was intoxicated, and the respondent was contributory negligent because he agreed to travel with the person who was drunk and not able to drive the vehicle properly. Court stated that, appellant was not allowed to recover the sum of judgment from the respondent. Appellant files appeal against the conclusion of the judgment.

Court stated that, appellant discharged its burden of proof related to contributory negligence on the part of the respondent, because appellant fails to take necessary precautions as he fail to wear seat belt and apportioned liability against the respondent up to 20%. No appeal was filed against this decision of the Court.

In case law McPherson v Whitfield At 478, Judge stated that test for the purpose of assessing the failure of the person who suffered harm to take reasonable care of standard of his own safety involves attention of the person related to the level of care expected from any reasonable person in the similar circumstances.

There is one more case law which helps us in understanding the situation of the present case Jackson v McDonald’s Australia Ltd [2014] NSWCA 162. In this case, plaintiff file claim of personal injury against the McDonalds and cleaning contractor that was Holistic Facility Services (Holistic).

Jackson entered into the McDonalds for lunch and notice sign of the wet floor while moving towards the counter. Floor was wet because few minutes ago floor was mopped by cleaner of holistic. Jackson did not purchase anything, and fell off on the wet floor when he steps down from stairs.

In this case, Court stated that Jackson was also contributory negligent as he notice the sign of wet floor and fails to take reasonable care while walking on the floor. Therefore, claim of damages would be reduced up to the necessary extent.

Application: in the present case, Mrs. Lena Breitenfeldt was attending the Wonder town Junior Cricket Club (WJCC) club for the first time. At the time of the match Lena left the seats and walked down a narrow path leading behind the clubhouse for using the ladies toilet. Lena consumed 3 glass of Wine with dinner.

In this case, Pete failed to take reasonable care that any person would take in similar situations, because negligent occurred either by doing any act or failed to perform any act. Pete failed to take reasonable precaution:

Risk was foreseeable in nature, and Pete was aware about the risk.
Risk was not insignificant in nature.
Any reasonable person in similar position would have taken those precautions.

Pete was the employee of the WJCC and failed to take reasonable precautions while installing water-saving sprinklers. WJCC is vicariously liable for the acts of its employees and agents. Therefore, WJCC can be held negligible for the actions of its employees. Three elements for proving negligence are stated in this case:

WJCC owned duty of care towards the plaintiff.
WJCC breach their duty of care.
Breach of duty cause damage to the plaintiff.

In this case, Mrs Lena can also be held liable for the contributory negligence; because she also fails to take reasonable care that any reasonable person would take in similar circumstances. As Mrs Lena was intoxicated after consuming three glasses of wine and she also ignore the sign board of danger warning. Therefore, claim filed by Mrs Lena was reduced up to the extent of contributory negligence.

Mrs Lena can file claim against the WJCC club for the negligent actions of its employees, but such claim is reduced up to the extent of contributory negligence of Mrs Lena.