Financial Compensation for Contract and ACL Violations

This study material discusses the financial compensation that Brian would offer Clara for contract and ACL violations. It covers the issues, laws, applications, and conclusions related to the case. The document also provides insights into the subject, course code, and college/university.

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Title Page
Your name
Student ID
Tutorial day & time
Tutor’s name
Word count

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Contents
I...................................................................................................................................................................3
Issue........................................................................................................................................................3
Law..........................................................................................................................................................3
Application..............................................................................................................................................3
Conclusion...............................................................................................................................................4
II..................................................................................................................................................................4
Issue........................................................................................................................................................4
Law..........................................................................................................................................................4
Application..............................................................................................................................................4
Conclusion...............................................................................................................................................5
III.................................................................................................................................................................5

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I.
Issue
What financial compensation Brian would offer Clara if he was taking his responsibilities under
contract?
Law
Before the parties enter into contract, they make negotiations. Whether the negotiations are
binding or not depends upon whether the parties intend to be abide by them or not? So:1
i. The negotiations which are part of the contract are contract terms and must be comply
with. If the parties does not comply them then, it is contractual breach. The relief
depends upon the kind of term that is violated:
a. The terms which are essence to the contract because of which the contract was
established are called conditions. If the condition is breached then the contract can
be cancelled and damages can be ascertained2;
b. The terms which are not essential to contract formation are warranties and the
party can only sought damage3.
ii. Those negotiations which are not made part of the written contract but are intended
by the parties to be comply with are collateral contracts. These are binding and
enforceable but must coincide with the written terms4;
iii. But those representations which were never intended by the parties to be enforce or
which are mere puffs are not contract terms and thus not enforceable.
Application
Clara was interested in coding through which she can create computer software and mobile apps.
She bought a pink laptop from Brian @ $1,000. Brain guaranteed in writing that the laptop was
‘near new and ‘freaking powerful’.
It is submitted that these are the written terms and these terms must be comply with by Brian in
every aspect.
Further, Brian also verbally assured that the laptop ‘had no scratches on the screen and it had up
to 10-hour battery life’.
These are not written terms but are part of the collateral contract as these are the terms which
both Brain and Clara intend to be enforced. Thus, these terms are also contract terms.
Now,
Clara found it perfect for her use. She by trusting Brain did not inspect the laptop and signed the
contract. When Clara used the laptop for the first time she found that:
i. A small crack near the bottom of the screen;
ii. Within ten minutes, the laptop suddenly shut down before the battery was even low.
Thus, the two verbal terms upon which Clara relied before entering into contract were found to
be not true. Also, when the laptop was switched on, the screen displayed 90% of usable image
but a black spot appeared on the screen around the crack. Thus, the written terms that the laptop
is powerful and new are also found to be untrue.
So, all the representations that are contractual terms are found to be false. These terms are
contract essentials and thus are violated by Brian.
1 Andy Gibson and Douglas Fraser, 2013. Business Law 2014. Pearson Higher Education AU.
2 Ellul and Ellul v Oakes (1972).
3 Shepperd v The Council of the Municipality of Ryde (1952).
4 Ellul and Ellul v Oakes (1972).

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Conclusion
The representations that are made by Brian were found to be untrue. Thus, Brain must refund
$1000 to Clara and must also compensate for the trouble that is faced by her.
II
Issue
What financial compensation Brian would offer Clara if he was taking his responsibilities under
Australian Consumer Law (ACL)?
Law
ACL has laid down consumer guarantees with the prime objective that the interest of the
consumers must be protected. In order to secure the interest of the consumer, there are few
consumer guarantees that are imposed5:
i. No seller should carry out acts which mislead/deceive consumers (section 18);
ii. No false or misleading representation must be made(section 29)
iii. Any misrepresentation towards products nature is not allowed (section 33)
iv. The goods so supplied should be of acceptable quality (section 54)6
v. The goods should be fit for the acquired purposes (section 55)7
The remedies that can be attained by a consumer include repair, replacement, refund or
compensation.
Application
Clara called Brian and complained about the faulty laptop. She demanded the cost of the laptop.
Brain asked Clara to visit her store ‘Tech Geek’. Brian submitted that she will look after her and
will find a best laptop for coding. Clara visited the store and returned the old pink laptop and
paid extra $1500 to buy a new laptop which was recommended by Brain. She later downloads
the necessary coding software from the Internet. However, the laptop crashed because it could
not support the coding program.
Clara can bring an action against Brain as she violated the consumer guarantee which includes:
i. The new laptop that was sold to Carla was on the recommendations of Brain. Brain is
aware that Clara needs the laptop for coding purposes and she is also aware that the
new laptop that is sold to Clara does not support the coding programme. Thus, Brain
mislead and deceive Clara and thus there is violation of section 18
ii. Brain assured that the new laptop will comply with the needs of Clara and thus a false
and misleading representation is made and misleading statements are made towards
the products nature resulting in breach of section 29 and section 33;
iii. The laptop that is supplied by Brian is not safe and the laptop crashed, thus, is not of
acceptable quality as per section 54.
iv. The purpose for which the laptop is acquired is not met and thus there is breach of
section 55;
Clara can thus sought replacement of the laptop and ask for damages.
5 Stephen G. Corones and Philip H. Clarke, 2011, The Australian Consumer Law: Commentary and Materials, Thomson Reuters
(Professional) Australia Limited.
6 Grant v Australian Knitting Mills (1935)
7 David Jones v Willis (1934)

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Conclusion
Brain is on violation of the consumer guarantees and thus Clara can sue for replacement and
damages.
III
Considering the facts of the case, there are considerable numbers of issue that can be faced by
brain. However, one of the significant risks that can be faced by Brain is for negligence.
Negligence implies that every manufacture or supplier must carry out his acts so that no loss is
caused to the plaintiff.
In the given case, Brain is the supplier of the laptop. He has a duty in law to make sure that the
laptop that is provided by him to Clara should in no manner cause any kind of harm to her. The
duty exists because Clara and brain are in proximate relationship and Brain can reasonably
foresee Clara.
But, this legal duty is not comply with by brain as the laptop so supplied is not of acceptable
quality. Because of the breach, Clara is not able to carry out his coding activities and thus face
damages.
Thus, Brain is negligent in his actions.
In the given scenario, one suggestion that can be given to Brain by which he could be better
managed in the future is that he must make sure that the product that is supplied by him is
adequate. He can also rely on the exclusion clause and limit his liability which might arise
because of any contractual breaches. The clause must be made part of the contract with the
approval of the other party.