Business Law

This document discusses the validity of an exclusion clause under common law and the rights of a consumer under the Australian Consumer Law. It covers the rules, application, and conclusion for each issue. The document also includes relevant case laws and legislation.

Running head: BUSINESS LAW
Business Law
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BUSINESS LAW
Part B
Issue 1
Whether the exclusion clause mentioned behind the receipt is valid under the common
law.
Rule
Exclusion clause is a condition incorporated in a contract that lets a party relying on it
avoid certain responsibility vested on him. It must be expressly drafted and incorporated in
the agreement for both the parties to agree and acknowledge it, thereby making it a valid
clause. The validity of an exclusion clause can be tested by way of the incorporation test
which states that a document which bears the signature of all the parties to the agreement
shall imply that the parties have the knowledge about the terms and conditions that have been
incorporated in the contract as held in L'Estrange v F Graucob Ltd1. The fact that the parties
to the agreement have a knowledge about it connotes that the exclusion clause is valid. As for
an unsigned document, it must be ensured by the party relying on such exclusion clause must
undertake every possible way to intimate the other party about the existence of such
exclusion clause. By way of the Contractual Document test it is tested and determined that
any reasonable man of ordinary prudence would have comprehended the exclusion clause and
therefore same is expected from the other party to the contract. By the help of Reasonable
Notice test it is observed that whether the other party has been given a reasonable notice
about the existence of such exclusion clause.
However, the rule of Contra Proferentem is used in case the exclusion clause has
certain ambiguity or dilemma which makes its application meaningless or unfair. In
Darlington Futures Ltd v Delco Australia Pty Ltd, the rule of Contra Proferentem was
1 L'Estrange v F Graucob Ltd [1934] 2 KB 394.

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applied and stated that when there is ambiguity regarding the exclusion clause, it must be
construed against the relying party2.
Application
In this section of the case, Span and Spic had provided John with a receipt which
mentioned about the exclusion clause at the back. John had no idea about such exclusion
clause that frees the drycleaner from any liability or damage that might be caused to John’s
suit. Had John known this fact, he may not have entered into the agreement with Span and
Spic. The inclusion of the clause at the back of the receipt establishes that the agreement meet
the incorporation test, even though it was an unsigned document. However, the Contractual
document test that requires any reasonable man to understand the exclusion clause and the
Reasonable Notice test requiring the other party to get a notice of the exclusion clause was
both not meet in this situation. Therefore, it can be said that John had no idea about the
exclusion clause when he entered into the contract while it was the duty of the drycleaner to
make sure that John knew and agreed to it, which they did not comply.
Conclusion
Therefore, the exclusion clause mentioned behind the receipt is void under the
common law.
Issue 2
Whether John is a consumer under the Australian Consumer Law (ACL) and the
various rights that John have as a customer under the Australian Consumer Law.
Rule
The Australian Consumer Law (ACL) strives to protect the consumers from the wrath
of the deceiving or misleading sellers and suppliers. However, it is important to establish that
2 Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82.

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a person seeking remedy under the Australian Consumer law must be a consumer within the
meaning of section 3 of the ACL, which requires a person to have purchase a goods or
service of $40,000 or less3.
Section 60 of the Australian Consumer Law directs a supplier to provide a service
with due care and skill to the consumer4. On the other hand, Section 61 asks the supplier to
provide for a service that is reasonably fit for the purpose for which the consumer is
purchasing the service5. The customer usually make the supplier know about his specification
regarding the service he requires. And the supplier, hence is required to meet the requirement
of the customer as held in Thornton v Shoe Lane Parking Ltd6.
Section 267 of the Australian Consumer Law takes sever steps against the supplier in
case he fails to provide the necessary service, either by default or by way of deception7. If the
fault of the supplier is minor and can be mended or remedied, he shall be given the required
time and opportunity to resolve the issue. However, if the fault is major and cannot be
remedied, then in that case the consumer shall be liable to ask for a refund along with a claim
for compensation from such supplier who has failed to provide the necessary service that
does of fit the necessity of the consumer, which was foreseeable and could have been
avoided.
Application
In this part of the case, John is a consumer and the Span and Spic is the supplier as per
the provision of the Australian Consumer Law, for he opted to receive a service from Span
and Spic in exchange of a consideration amount.
3 Australian Consumer Law, s 3.
4 Australian Consumer Law, s 60.
5 Australian Consumer Law, s 61.
6 Thornton v Shoe Lane Parking Ltd [1970] EWCA Civ 2.
7 Australian Consumer Law, s 267.

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As per the provision of Australian Consumer Law, as a consumer John had certain
expectation from the drycleaner that they would do their best to clean his suit, which they
have failed. Therefore, the non-performance of the terms of the contract implies that Span
and Spic had breached its duty as a supplier to provide the necessary service that it had
agreed to provide.
Such breach of compliance states that he would be liable to sue the drycleaner for
damaging his expensive suit which he had given for cleaning purpose. The damage caused to
the suit is a major damage which cannot be remedied by the drycleaner as a portion of the suit
was discoloured. Therefore, this constitute an absolute breach, giving rise to the right to claim
damages.
Conclusion
Therefore, John is a consumer under the Australian Consumer Law and he shall be
eligible to sue Span and Spic for damages.

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Bibliography
Case laws
L'Estrange v F Graucob Ltd [1934] 2 KB 394
Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82
Thornton v Shoe Lane Parking Ltd [1970] EWCA Civ 2
Legislation
Australian Consumer Law