Legal Issues and Australian Consumer Law: Case Studies

This text contains three case studies that explore legal issues and Australian consumer law. The first case study discusses partnership laws and the authority of partners to bind the firm. The second case study examines the Australian Consumer Law and the protection it provides to consumers. The third case study focuses on contract formation and consideration.

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Contents
Case Study 1....................................................................................................................................2
Issue.............................................................................................................................................2
Law...............................................................................................................................................2
Application...................................................................................................................................3
Conclusion...................................................................................................................................3
Case Study 2....................................................................................................................................4
Issue.............................................................................................................................................4
Law...............................................................................................................................................4
Application...................................................................................................................................4
Conclusion...................................................................................................................................5
Case Study 3....................................................................................................................................5
Issue.............................................................................................................................................5
Law...............................................................................................................................................5
Application...................................................................................................................................6
Conclusion...................................................................................................................................6
Reference List..................................................................................................................................7

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Case Study 1
Issue
i. Whether the Partnership will be bound by the contract made between Lance and
Lynton?
ii. Is there any action that can be taken by the partners against Lance?
Law
Partnership is one form of business which can be operated in Australia. To establish a valid legal
partnership, the main essential requirements include: (Krawitz A, 2002)
i. There must be two or more than 2 persons to form a valid partnership;
ii. The persons must come together to fulfill a common objective and is held in (Smith v
Anderson (1880);
iii. The objective is achieved by carrying on a business;
iv. The purpose to form the partnership is to seek profits and share losses.
Compliance of all the elements results in partnership. the persons who form the partnership are
called the partners. As per Lang v James Morrison & Co Ltd (1911), the partners are the
firm’sagents and are the agents of each other. Thus, any act taken by the partner will bind upon
the firm and all the other partners and vice versa. (Egert 2007).
The authority within which the partners can bind the firm and the other partners can be
distinguished as:((McLaughlin 2013)
i. Actual authority – The authority sought by the partners directly from the firm or the
partnership agreement is an actual authority ([Hely-Hutchinson v Brayhead Ltd
[1968]. It can be
a. Express – The authority imposed on the partners directly either orally or in
written form is an express actual authority.
b. Implied – The authority which is required and which are attributed to the partners
along with the express authority is an implied authority, they are required to
comply with the express authority and thus are based on implications and is held
in Australia and new zealand bank, ltd. V. Ateliers de constructions electriques de
charleroi. [1966].

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i. Ostensible authority –When the firm or any partners to the firm on behalf of the form
makes a representation to an outsider making him believe that a person is the authored
representative of the firm and has the power to bind the firm by his acts, then, any
contract made amid such an outsider and the person is binding upon the firm and the
other partners under the ostensible authority and is held in Freeman & Lockyer (A Firm)
v Buckhurst Park Properties (Mangal) Ltd [1964].
The partners are required to comply with several duties which includes the duty to avoid conflict
of interest not to make secret profits, to act within authority, to act with honesty, etc. If any
partners exceed his authority then, the other partners can sue the defaulting partners personally
for the loss so suffered by the firm.
Application
The Herbal Product Business has three partners, one of them is Lance. The Lance power to
establish contract on behalf of the business was limited to $20,000. Thus, the actual authority of
Lance was to establish contract but is limited to worth $20,000.
But, Lance exceeded his authority and enters into contract with Lynton (sales person of Mighty
Motors Pty Ltd) for the purchase of ute which is worth $ 25,000. Thus, Lance exceeded his
authority.
i. Now, the contract amid Lance and Lynton is valid and is binding upon the Herbal
business. It is submitted that Lynton is not aware that the power of Lance to enter into
contract is limited to worth $20,000. It is assumed that Lynton is of the belief that
Lance has the power to take contract on behalf of the firm and has no reason to
believe regarding the restriction of the powers of Lance. Thus, Lance has the
ostensible power to take contract on behalf of herbal business. Further, since all the
partners are agents of each other, thus, the acts of lance will bound the other partners
and the contract is binding in herbal business as well;
ii. Lance has violated his duty to cater is actions within his authority. Thus, he is
personally liable for the loss that is incurred to the firm and the other partners because
if his actions.

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Conclusion
Thus, the contract between Lance and Lynton is valid and is binding upon herbal business. Also,
Lance is personally liable for the loss to the firm as he has violated his duty to act with diligence
and within his authority.
Case Study 2
Issue
i. Whether Saqlaim can cancel the contract with Lance regarding the purchasing of the
car?
ii. Whether the consumers has any claim regarding the moisturizer which is advertised
by Xiaojing ?
Law
Australian Consumer Law is the enactment that is framed for the protection of the interest of the
consumer. Some of the important provisions include: (Paterson JM & Wong, 2014)
i. As per section 18 of the Act, every person dealing in trade/commerce should not
behave in such a manner which is misleading or deceptive in nature. Any such acts
are misrepresentations and the contract based on such are void and is held in
(Australian Competition and Consumer Commission v TPG Internet Pty Ltd [201]
and (Commercial Bank of Australia v Amadio [1983]).
ii. As per section 20 of the Act, when there are two parties, one superior and one
inferior, then, if the inferior party take unnecessary advantage to himself at the cost of
the inferior because of lack of knowledge, understanding etc, then, the acts are not
valid as they are unconscionable actions and is held in Blomley v Ryan [1956]). (Vout
P, 2013)
iii. As per section 29 of the Act, the contracts based on misleading and false
representations makes the contract void;
iv. As per section 33-34, when the misleading information regarding the suitability ot
quantity or process or characteristics of the product is made, then, such contract are
invalid and is held in (Australian Competition and Consumer Commission v Reckitt
Benckiser (Australia) Pty Ltd (No 4) [2015] )

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The violation of the above provisos will grant right to the consumer to cancel the contract and
sue for damages and compensation.
Application
The facts are now applied.
i. Xiaojing sold the car to Saqlaim, but, Saqlaim has the right to terminate the car and
sue Xiaojing for inducing in unconscionable acts. Lance the sales person of
unconscionable acts is aware that Saqlaim is hard of understanding English but Lance
with his charismatic and fast English enters into a contract with him. Thus, Lance
took advantage of his superior position and take undue advantage of the inferiority of
Saqlaim. So, the transaction is invalid.
ii. The moisturizer sold by Xiaojing was advertised as a slow effect of ageing which was
a false statement. The statement was made within trade and is misleading, thus, there
is breach of section 18. Also, the statement is misleading and thus there is breach of
section 29. There is breach of section 33-34.
Conclusion
The contract amid lance and Saqlaim is invalid as it is suffering from unconscionable acts. The
consumers can also sue Xiaojing for breach of Australian consumer acts provisions.
Case Study 3
Issue
Can Felix has the right to sue Xiaozing for the promise made by the company to him?
Law
A contract is the combination of few contractual elements which includes an offer which is then
reciprocated by an acceptance resulting in the formation of an amendment. The agreement is
then combined with consideration making it enforceable in law. The parties making the promises
must have legal intonation and must be capable to establish a contract in law. (Clark J, 2013)
The consideration is one of the significant elements which are required in any contract formation
for making it enforceable in law. a consideration is anything of value which has some
significance and value in law (Chappel v Nestle [1960] AC 87. It is very much required as it

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makes the agreement enforceable ion law. If the contract is not supported with consideration,
then, it is gratuitous in nature and is held in Coulls v Bagots Executor & Trustee Co Ltd. (1967)).
A consideration is valid provided it is made for present or future promises. That consideration
which supports past promises are invalid in nature and is thus not enforceable in law and is held
in Roscorla v Thomas (1842). However, at times the promisor assures to give consideration for
the past promises then, in such cases, such consideration is enforceable [Pao On v Lau Yiu Long
[1980].
Application
Felix is the student of twenty years of age. A contract is made amid Felix and Xiaojing wherein
Xiaojing is paying $25 for picking up of the lavender. This is a valid contract made amid the
two.
But, later, Xiaojing promises to Felix that he is so impressed by his work that they will pay him
extra $100 for the work he did yesterday. Now, as per Roscorla v Thomas (1842), the
consideration is made for the work already done by Felix, thus, the consideration is invalid and is
not enforceable.
But, as per Pao On v Lau Yiu Long [1980], if Felix has acted as per the desire of Xiaojing, then,
the consideration would have been valid.
Conclusion
So, Felix cannot sue Xiaojing as the promise made by Xiaojing is a past consideration.

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Reference List
Books/Articles/Journals
Krawitz A (2002) Protecting Outsiders to Corporate Contracts in Australia, Volume 9, Number
3 (September 2002).
Paterson JM & Wong (2014) Fine Print Disclaimers May Not Protect Advertising from being
Misleading: Australian Competition and Consumer Commission v TPG Internet Pty Ltd.
Vout P (2013) Unconscionability And Good Faith In Business Transactions - 21 OCTOBER
2013 - NATIONAL COMMERCIAL LAW SEMINAR SERIES.
McLaughlin S (2013) Unlocking Company Law 2nd Edition, Routledge.
Case Laws
Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54.
Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd (No
4) [2015] FCA 1408
Australia and new zealand bank, ltd. V. Ateliers de constructions electriques de charleroi.
[1966] 1 Lloyd's Rep. 463.
Blomley v Ryan [1956] HCA 81.
Chappel v Nestle [1960] AC 87 .
Coulls v Bagots Executor & Trustee Co Ltd. (1967)).
Commercial Bank of Australia v Amadio [1983] HCA 14
Freeman & Lockyer (A Firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480.
Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 .
Lang v James Morrison & Co Ltd (1911) 13 CLR 1.

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Pao On v Lau Yiu Long [1980] AC 614.
Roscorla v Thomas (1842).
Smith v Anderson (1880) 15 Ch D 247
Online Material
Egert G (2007) Defining A Partnership: The Traditional Approach Versus An Innovative
Departure ‐ Do Queensland Appeal Court Decisions Point To The Need For A Review Of The
Traditional Approach To Interpretation Adopted By Australian Courts? 19.1 BOND LAW
REVIEW.