Business Law: Contract Termination and Remedies for Misleading Conduct

This study material discusses the issue of contract termination and remedies for misleading conduct in business law. It explains the provisions of Australian Consumer Law and their implications. The material also provides a hypothetical ILAC question and a short response question related to native title and land rights.

ntroduction to usiness awI B L

Hypothetical ILAC Question
Issue
Whether Karen can terminate the contract with Gym & Tonic and whether she is liable to pay
$100 as cancellation fee? Whether Gym & Tonic has breached any provisions of Australian
Consumer Law and what remedies are available for Karen?
Law
While managing their business operations in Australia, individuals and entities have to
comply with the provisions given in the Australian Consumer Law (ACL) to avoid legal
penalties. These regulations bind the parties to legal relationships while there are conducting
trade practices in Australia. The Competition and Consumer Act 2010 (Cth) provides key
provisions which are necessary to comply by people and organisations. Section 18 of the act
imposes restrictions on businesses by providing that they must not engage in any conduct
which can be considered as misleading or deceptive or likely to do so regarding trade or
commerce. Section 29 of the act imposes similar restrictions on individuals and entities by
providing that they should avoid making misleading or deceptive representations regarding
their products in advertisements. Individuals and corporations should not make any
statements made regarding products or services which are false and likely to mislead or
deceive customers.
ACCC v TPG Internet Pty Ltd (2013) HCA 54 is a recent example in which the company
misleads its customers regarding the prices of ADSL2+ unlimited broadband. In its
advertisement, the company provided that the cost of its product for a month is $29.99. The
company also included in small print that this cost is bundled with a home line rental which
costs $30 per month. The High Court provided that the advertisement is misleading and
deceptive and ordered the company to remove it along with imposing penalty on the
company. As per common law, a contract which is formed based on misrepresentation is
considered as voidable. The party who has signed the contract has the right to either set aside
the contract or comply with its terms. Remedies for breach of these provisions include
damages, rescission, specific performance, injunction, and repudiation.
Application
In the given case study, Karen entered into a contract with Gym & Tonic based on the
advertisement posted by the company in which the company shows that it is giving its $60
member for only $30 per month. The advertisement displayed unlimited access to the gym
along with a picture of people working with different equipment. However, Karen finds out
that unlimited access is limited to weight equipment only and the cost of monthly
membership is $40.
Gym & Tonic has breached section 18 and 29 of ACL by engaging in misleading conduct and
making false representations regarding its services respectively. Since the contract is based
on misleading conduct of the company, Karen has the right to set it aside due to which she
did not have to pay $100 fee as discussed in ACCC v TPG Internet Pty Ltd case. Moreover,
Karen can demand the remedy of damages in this case to compensate the loss suffered by her
due to the misleading advertisement.
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Conclusion
In conclusion, Karen can terminate the contract, and she is not liable to pay $100 fee. Gym &
Tonic has violated section 18 and 29 of ACL and Karen can demand the remedy of damages
from the company.
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Short Response Question
Question 1
The name of the island which was claimed in Mabo case is Torres Strait Island which is a
part of Queensland, Australia. People who occupy the island are called Torres Strait
Islanders.
Question 2
The claimant received land rights which are recognised under the Torres Strait Islander Land
Act 1991. Based on the land title, the government recognised the traditional rights and interest
of Torres Straits Islanders on their land. The land rights of claimants comprise freehold or
perpetual lease title along with establishment of procedure for transfer, grant and claim the
land. As per Justice Brennan’s judgement, the foundation of native title was disappeared with
the abandoning of traditional laws and customs of the indigenous people and clans. The
traditional laws were disappeared along with European settlement of Australia.
Question 3
Graeme Neate explained that there are many fundamental differences between the native title
and land rights. The land rights are referred to the rights which are created and recognised by
the Australian, state or territory governments. Generally, the land rights of aboriginal people
comprise freehold or perpetual lease title. These rights also include establishment of a
procedure for transfer, claim, and grant of the lands. On the other hand, the native title rights
arise based on the recognition made by the Australian common law regarding pre-existing
indigenous rights and interests which are given to aboriginal people based on traditional
customs and laws. The native title given to the aboriginal people is not a grant or right that is
created by the government which is the key difference between the land rights and native
title.
Question 4
Native Title Act 1993 (Cth) was introduced after the Mabo decision. The court decided in
Wik decision that indigenous people who can prove their connection with the land hold the
rights to perform traditional ceremonies as long as they did not interfere with pastoralists’
legitimate activities. The decision provided that native title might co-exist on pastoral leases,
but the rights of pastoral leaseholders prevail in case of inconsistency.
Question 5
Yorta Yorta people filed for native title in February 1994, and the decision was given on 12th
December 2002, thus, 12 years passed from the filing of the claim to the final decision. The
claim was unsuccessful because the court provided that the ‘tide of history’ had ‘washed
away’ the traditional customs and laws of Yorta Yorta people. Strict requirements are
adopted by the High Court for aboriginal people to made claims for native titles.
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