Australian Consumer Law: Case Study Analysis

Running head: BUSINESS LAW AND ETHICS
BUSINESS LAW AND ETHICS
Name of the Student
Name of the University
Author Note

1BUSINESS LAW AND ETHICS
Factual Background
Sangita entered into transactions with one “Myers Stores” through their online portal
which she had been browsing. Once the ordered products were delivered various latent defects
were found in the products. By virtue of Australian Commercial Law the transactions should
ideally be protected and Sangita should have remedies available for the same (Corones 2014).
Scenario (a)
Issue
The issue here is to determine if:
 ACL applies to Sangita’s transaction relating to the rice cooker she purchased from
“Myers Stores”
 What implied guarantee has been breached by the seller.
 Remedies available to Sangita.
 Effect that the statement in the receipt.
Rule
Schedule 2 to the Competition and Consumer Act, 2010 (cth) defines and regulates
Australian consumer law (ACL) (Howells and Weatherill 2017). According to Section 3 of the
ACL a transaction that is below $40,000 and is entered into for a household/domestic purpose
would fall under the ambit of ACL as long as they are made in the capacity of the ultimate
consumer (Hunt 2015).

2BUSINESS LAW AND ETHICS
Section 56 of the ACL embodies various consumer guarantees which cannot be amended,
modified or avoided by a person who is acting in the capacity of a seller in a consumer
transaction (Dietrich 2015). Section 259 of the act provides for remedies in case the seller in a
consumer transaction breaches one or more of the consumer guarantees (Knake 2013). This
section provides that in case Section 56 is breached and the breach is a major failure to observe
implied consumer guarantees then the buyer would have the right to reject the delivery of goods
and demand compensation for any form of reduction in value [Section 259 (3)] and claim
damages for any foreseeable loss or damage [Section 259 (4)] (Howell 2015).
Section 23 (1) of the ACL provides that any unfair term incorporated into a standard
contract would be deemed void. Section 24 (c) of the ACL states that any contractual term that
causes detriment to the rights of any party to the contract would be declared as an unfair term
and thus in effect would be void (McKendrick and Liu 2015).
Application
This was a transaction that was entered into for the purchase of a rice cooker. A rice
cooker was bought as a household/domestic good and thus would fall within the ambit of Section
3 of the ACL.
The product delivered by “Myers Stores” does not fit the purpose it was purchased for
and thus is a breach of the implied consumer guarantees embodied in Section 56 of the act. Since
this is a major failure to observe consumer guarantees Sangita would be entitled to reject the
goods and claim compensation for any reduction in value as prescribed in Section 259 (3) and/or
claim damages for the same as prescribed in Section 259 (4) of the act.

3BUSINESS LAW AND ETHICS
The statement in the receipt causes a detriment to the rights of Sangita and thus under the
provisions of Section 24 (c) it would be deemed an unfair contractual term. Thus following the
provisions of Section 23 (1) of the ACL the term contained in the receipt would be deemed void.
Conclusion
 Sangita’s transaction is covered by the ACL.
 Myers Stores breached the consumer guarantees embodied in Section 56 of the ACL.
 Sangita would have the remedies prescribed in Section 259 (3) and (4) of the ACL.
 The term contained in the receipt would be deemed void.
Scenario (b)
Issue
The issue here is to determine:
 If the transaction is covered by the ACL.
 What implied guarantee has been breached by the seller.
 Remedies available to Sangita.
 Effect that the statement in the receipt.
Rule
As provided for in Section 3 of the ACL a transaction that is under $40,000 and if it is
purchased in the capacity of the ultimate consumer it would fall within the ambit of the ACL
(Pearson 2017). Section 54 (1) of the ACL states that in consumer transactions the goods
delivered must be of acceptable quality this is an implied consumer guarantee (Barratt, Seear and
Lancaster 2017). Thus the goods delivered to the buyer must adhere to a particular standard of