Introduction to Business Law - ILAC Question and Short Response

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Introduction to Business Law

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Hypothetical ILAC Question
I: Issue
Whether Gym & Tonic can enforce Karen to pay back the $100
cancellation fee as per the terms of the contract? Whether any provisions
of the Australia Consumer Law is violated by Gym & Tonic, and if so, did
Karen have any remedies available?
L: Law
The Australian Consumer Law has been established by the Australian
government to ensure that corporations operating in the company did not
violate the rights of customers and provided them high-quality products
and services. In order to implement these regulations on individuals, the
government has enacted the Competition and Consumer Act 2010 (Cth)
which applies to all territories of Australia. Based on the guidelines of this
act, the corporations are prohibited from engaging in any trade or
commerce related conducted which is misleading or deceptive as given
under section 18. Furthermore, the act provides that while advertising
their products, the corporation should not make false claims regarding
their products or services to induce customers into buying them. A
company can be held liable under section 29 in case an advertisement is
posted by the company which is a misleading or deceptive advertisement
or likely to mislead or deceive.
In Australian Competition and Consumer Commission v TPG Internet Pty
Ltd (2013) HCA 54 case, the court held the company liable for violating
section 18 and 29 of the act. In this case, a company advertised that it is
giving ADSL2+ unlimited broadband for $29.99 monthly. A notice is also
written in the advertisement in small print which provided that this offer is
only available for customers who have a home line rental which costs $30
monthly. The court provided that the advertisement of the company is
misleading and deceptive and imposed a penalty on the company. As per
the guidelines of the common law, a contract becomes voidable which is
formed based on misrepresentation, and it can be set aside. The remedies
available for parties include rescission, specific performance, repudiation,
damages, and injunction.
A: Application
Karen got the gym membership based on the advertisement of Gym &
Tonic in which the company depicted that it is giving unlimited access to
the entire gym for $30 rather than $60. This advertisement was false
since access was only available to weight equipment and the original
monthly gym membership was for $40. Gym & Tonic has breached section
18 and 29 of the Competition and Consumer Act based on which the court
can impose a penalty on the company. Karen can rescind the contract
since it is voidable, and she can demand damages as the remedy.