Contract And Consumer Law Essay

Questions:

1. The issue in this situation is to determine whether jack is entitled to enforce clause 13 with respect to the condition of carriage so that he may be able to gain compensation for being forced to vacate the flight?

2. The issue in this case is to determine whether Smithy’s Fine Jewelers can rely on the exclusion clause which excludes their liability for any loss to the consumers.
3. The issue in this case is to determine whether Smithy’s Fine Jewelers can rely on the exclusion clause which excludes their liability for any loss to the consumers.

4. The issue in this case is to find out whether statement made by Smithyin relation to the nickel content in the watch is considered as false misrepresentation?

Answers:

Answer 1:

Law:

An electronic transaction can be considered as valid transaction under section 8 of the Electronic Transactions (Queensland) Act 2001. This section states, transaction cannot be considered as invalid transaction under state of law, just because transaction took place from 1 or more electronically transactions

As stated above, there is difference between offer and supply of information, and this difference can be understood through case law Harvey v Facey [1893] UKPC 1, [1893] AC 552. In this case, Court stated that indication of lowest price cannot be considered as offer. Rather it was considered as offer to treat.

For the purpose of ensuring the certainty of terms in online contracts court considers intentions of the parties. In case law Goldstein v. Jumbo Corporation Limited [2006] VCAT 2472, court stated that parties were bound to the terms of the agreement if they click the button of ‘I Agree’

In the case of eBay International AG v Creative Festival Entertainment Pty Limited) [2006] FCA 1768 the court had to determine the question that whether terms on a website would be considered as a part of the contract. The court used the common law principles in this case to determine the issue which states that the party to a contract cannot be relying on terms of a contract if all what was necessary was not done by the incorporator to bring the term to the attention of the parties. The court thus in this case ruled that to make a party rely on condition which were not adequately brought to their notice is a misleading or deceptive conduct. In addition the case ruled that the basic rights of the consumers have to be considered by the sellers before making a contract.

Application:

In the present case, contract exists between Jack and airlines as the offer made by the AusFly was accepted by Jack and there was a valid consideration. The contract was only formed when Jack had made the payment for booking the flight. Therefore, in the present case there is valid contract between Jack and airlines, and terms of this contract are binding on parties.

For the purpose of determining whether a term has been properly incorporated into a contract or not it has to be analyzed that when the term was brought to the notice of the party. If the term was brought to the notice of the party before the contract was formed it becomes a part of the contract.

In the case of --- it was provided that anyone who signs a contract is bound to it terms even if they did not know about them, however there should not be any misrepresentation or fraud involved in the contract. Thus Jack is bound to the contractual terms with AusFly if there is no Misrepresentation as he has accepted the contract based on the Goldstein case principles by clicking I agree.

However, it is the obligation of airlines to consider the basic rights of buyer while making the online contract and any provision which contravenes the basis right of buyer will not be considered as valid provision as per the principles of the Ebay case. Which was also done by AusFly through Clause 13. There was no misrepresentation in including the clauses into the contract.

As per clause 13 of the contract, passenger cannot recover the amount of seat vacant if passenger fails to meet the check in deadline. Jack fails to meet the check in deadline, and not able to recover the cost because clause 13 is also applicable on jack.

In addition clause 6 states that timing related to check-in is strictly imposed and the reservation may be cancelled, passengers may be refused to be carried and service fee may be required. The clause is also valid as it allows for damages provided by law.

Conclusion:

There is valid contract between the parties, and jack is bound by the terms of the contract by clicking the button of ‘I Agree’. Therefore, jack cannot enforce clause 13 of the contract.

Answer 2:

Law:

Schedule 2 of Competition and Consumer Act 2010, introduce new provisions related to unfair terms.

Section 23 of the Act states, term of contract is considered as unfair term if such term is unfair and contract is standard form of contract.

Section 24 of the Act states, term of contract is unfair if such term result in imbalance in the rights and obligations of the parties, term cause detriment to the party, and not necessary for protecting the legitimate interest of the party.

Application:

In the present case, clause 13 stated that passengers are not able to recover their compensation related to the vacant seat if passengers fail to meet the check in deadline.

Consumer contracts are those contracts which are entered between the parties to the contract for the supply of goods and services. In case law, Director of Consumer Affairs Victoria v AAPT Limited (Civil Claims) [2006] VCAT 1493 Court stated, acquisition of goods and services must be by natural person for the purpose of determining the actual use of the goods.

It must be noted that standard form of contracts are not defined by the unfair terms of the contract, and in general form this contract is considered that type of contract which is formed by the one party and not subject to negotiation between the parties. In other words, it is offered on the basis of take it or leave it.

In the present case, contract between jack and airlines is standard form of contract because in this contract is formed by Ausfly airlines and there is no scope of negotiation.

As stated in section 24, clause 13 of the terms and conditions can be considered as unfair term because this term cause detriment to the jack and it is not necessary for the enforcement of the contract, and this term is stated under the standard form of the contract. Therefore, clause 13 can be considered as unfair term under section 23 of the Act.

Conclusion:

Under section 23 of the Act, if term is of unfair nature and stated under standard contract, then such term can be considered as unfair term.

Answer 3:

Law:

Exclusion clauses are those clauses which state that one party to the contract will not be held responsible for specific events or happenings. It must be noted that these clauses can be considered as valid clause only if:

  • These clauses are properly incorporated under the contract.
  • These clauses are not contrary to the law.
  • These clauses have to be brought to the attention of the other party with all reasonable efforts

Application:

In the present case, board behind the counter stated that Smith’s would not be held responsible for any personal injury caused because of smithy, its agents, contractors, and employees.

In the case of Causer v Browne it was ruled by the court that exclusion clause has to be notified to the buyer which in this case was as Jack had seen the clause in the shop before the contract had been formed.

Smithy cannot rely on this exclusion because this exclusion clause is not valid, as it is contrary to the law and not included in the contract.

For the purpose of properly incorporated the exclusion clause in the contract, it is necessary that clause must not be stated after the contract has been made. This can be understood through case law Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER 686. In this case court stated that driver of the car who collects the ticket from the machine was only bound by the terms of the ticket if such terms would inform him before signing the contract. In other words, owner of the parking were can rely on the exclusion clause if such clause was already informed to the driver by the owner. In this case, jack is aware about the exclusion clause as it is assumed to be visible behind the counter.

Exclusion clause must be legal, which means Act imposed some important obligations on trader which must be compiled by the trader and cannot be excluded through any clause. However, some of these obligations are stated below:

  • Goods supplied by the trader must be fit for the purpose for which such goods are manufactured by the manufacturer.
  • Goods must match with the description of the goods, whether such description is given in writing or verbally.
  • In some cases, seller of the goods provide extra guarantee related to the characteristics, quality, and performance of the goods. It is necessary that goods must match with that special guarantee (ACCC, n.d.).
  • In this case as per s 3, 64, 54 of the ACl the goods were not of acceptable quality which is a legal ability and cannot be excluded
  • In this case a per s54 of the ACL the watch contained nickel which was not fit for the asked purpose for jack and as this is a legal liability it cannot be excluded.
  • It was described by the seller that the watch did not contain nickel which it did and this is a breach of legal liability under s56 and cannot be excluded.

In this case, Exclusion clause is not valid because exclusion clause is not legal because it excludes some statutory obligations of the trader. Clause stated on the board exclude the above stated guarantees because employee of smith clearly states that watch is free from nickel. In actual watch contains nickel and it cause severe physical injury to jack. Therefore, smithy cannot rely on this exclusion clause.

Conclusion:

Smithy cannot rely on exclusion clause because clause is not included in the contract and it is not valid it excludes some statutory obligations of the trader.

Answer 4:

Law:

Section 18 of the ACL states that any person included in trade or commerce must not engage in misleading or deceptive conduct.

Section 29 of the Act states that any person in trade or commerce and with connection with the supply of goods or services must not made any false representation related to the goods that goods are of particular standard or particular characteristics.

Application:

In the present case, employee of Smith make false representation related to characteristics of the goods. As she stated that watch does not include nickel and it is purely manufactured from steel. In actual watch contains nickel and cause severe injury to the Jack. Statement is considered as false representation if such statement include following elements:

  • Seller knows that statement is not right.
  • Buyer enter into contract by rely on that statement.
  • Buyer suffer damage from the representation made by seller .

Conclusion:

In the present case, all essential elements are present. Therefore, Smith is liable for false representation under section 29.

Issue 5: the issue in this case is to find out whether jack is entitled for damages in relation to AusFly and Smithy’s Fine Jewellers.

Law: If the consumer guarantees provided by the ACL are breached the consumers are entitled to gain a repair, refund, replacement of the product. In case of any additional damage caused by the product as it was not fit for the purpose asked the consumers may also claim the additional personal damage.

In case of a contractual breach the party has the right to rescind the agreement which meas to repudiate it and also claim compensation for any losses.

Application:

Under section 23 of the Act, if term is of unfair nature and stated under standard contract, then such term can be considered as unfair term. In this Jack has following remedies:

  • Jack can terminate the contract.
  • Jack claim for damages.

In this jack can file claim against the airlines for unfair term in the contract and sue airlines for damages.

In case of smith jack can claim for personal injury caused because of the false representation made by smithy’s employee and the breach of consumer guarantees

Conclusion:

jack can claim for damages from both Ausfly airlines and smithy jewelers

References:

ACCC. Consumer Guarantee. Retrieved on 7th September 2017 from:

ACL. Terms of a Contract. Retrieved on 7th September 2017 from:

ACL. Unfair terms. Retrieved on 7th September 2017 from:

Competition and Consumer Act 2010- Section 18.

Competition and Consumer Act 2010- Section 23.

Competition and Consumer Act 2010- Section 24.

Competition and Consumer Act 2010- Section 29.

Director of Consumer Affairs Victoria v AAPT Limited (Civil Claims) [2006] VCAT 1493.

eBay International AG v Creative Festival Entertainment Pty Limited (ACN 098 183 281) [2006] FCA 1768.

Electronic Transactions (Queensland) Act 2001- section 8.

Goldstein v. Jumbo Corporation Limited [2006] VCAT 2472.

Harvey v Facey [1893] UKPC 1, [1893] AC 552.

Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER 686.

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