Australian Consumer Law and Product Failure

This assignment examines a case involving Martin, who purchased a washing machine from Mandy that failed to meet its intended purpose, shrinking delicate silk clothes. The analysis focuses on breaches of the Australian Consumer Law (ACL) related to guarantees, particularly sections 54, 55, and 56, which pertain to product functionality, fitness for purpose, and descriptions. The assignment explores Martin's rights to seek remedies such as a refund, repair, compensation, or contract termination. It also discusses the legal implications for Mandy and potential damages recoverable by Martin under section 271 of the ACL.

Running head: LEGAL INSTITUTION
Legal Institution
Name of the Student
Name of the University
Author Note

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Table of Contents
Part 1................................................................................................................................................2
Issue.................................................................................................................................................2
Rule..................................................................................................................................................2
Application......................................................................................................................................3
Conclusion.......................................................................................................................................4
Part 2................................................................................................................................................5
Issue.................................................................................................................................................5
Rule..................................................................................................................................................5
Application......................................................................................................................................6
Conclusion.......................................................................................................................................7
Reference List..................................................................................................................................8

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Part 1
Issue
Can martin seek a refund the expiry of the 12 hours after the delivery of the washing
machine and if he is required to pay the processing fee under the law of contract?
Rule
A contract is an agreement that is enforceable in the court of law. A contractual term is a
provision that forms a part of a contract where each term gives rise to a contractual obligation.
The contravention of such contractual terms shall be give rise to legal action. The terms and
provisions of a contract may be express or implied terms.
However, some terms are not expressly stipulated and some terms are not very essential for
being secondary to the contractual objectives.
Conditions - The terms considered most important terms in a contract and in case of breach, the
contract may be terminated or the aggrieved party may be entitled to damages.
Warranties- the less important terms in a contract are known as warranties in the law of contract1.
The breach of such terms may result in termination of contract and the aggrieved party shall be
entitled to damages.
Innominate terms- these are intermediate terms and serious breach of such terms may result in
termination of the contract by the aggrieved party.
1 Poole, Jill. Textbook on contract law. Oxford University Press, 2016.

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In the law of contract, exclusion clause is a term in a contract which aims at excluding
liabilities of one of the contractual parties or limit their liability to specific listed conditions,
situations and circumstances. In order to rely on an exclusion clause, the party relying must
provide establish that it has been incorporated by notice or signature or by course of dealing.
The party incorporating exclusion clause in a contract must notify the other party about the
same. In the absence of notification of such exclusion clause to the ignorant party, the clause
shall not be enforceable if it amounts to an essential term or a condition of a contract. If the court
is satisfied that the exclusion clause was in knowledge of the ignorant party, the party shall be
bound by such contractual term whether or not the person has read the exclusion clause as was
observed in Curtis v Chemical Cleaning Co [1951]2.
However, the incorporation of an exclusion clause in a contractual document should be made
in a manner, which any prudent person would assume, must include such contractual terms, and
not in any document that is used to recognize payment such as receipt as was ruled in Parker v
SE Railway CO [1877]3.
The inclusion of exclusion clause in a notice can be enforced only of the affected party
was aware of the exclusion clause. Moreover, in Thornton v Shoe Lane Parking [1971]4, the
court held that for giving sufficient notice, it is important that such clause should be printed in
red ink or something equally startling.
2 [1951]1 KB 805
3 [1877] 2 CPD 416
4 [1971] 1 ALL ER 686

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In Olley v Marlborough Court [1949] 1 KB 532, the exclusion clause must be informed
to the party whose contractual rights might be affected from such inclusion. In this case, the
notification about the exclusion clause was not made to the ignorant party while entering into the
contract, which was essential to make the exclusion clause enforceable. The ignorant party
acknowledged the notice after the contract was made, hence such exclusion clause cannot be said
to be a part of the contract.
Application
On the facts here, Martin wanted to purchase a new washing machine for the stables he
managed. He was very particular about his requirement. Mandy assured Martin that he should
purchase the new Genteel Mark II washing machine and rely on her experience with the washing
machine as it is highly recommended from washing such silk clothes. Martin was not notified
about the refund or return of goods policy at the time of purchase.
Under the contract law, Martin can seek a refund after 12 hours as the term that returns
shall not be made after 12 hours was made in a receipt, which does not amounts to sufficient
notice as was observed in Parker v SE Railway case. Further, Martin shall not pay any
proceeding fee as the condition was typed in 6 font which was hardly visible as was held in
Thornton’s case.
As mentioned in Olley’s case, that an exclusion clause must be notified to the other party
otherwise shall not be enforceable. Further, terms were essential to the contract and to make it
enforceable, the parties incorporating such terms should notify the party about the same5. Either
5 McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK), 2014.

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the existence of exclusion clause must be informed to the ignorant party before or at the when
the parties enter into the contract.
Conclusion
As per the contract law, the claim of exclusion clause cannot be enforceable, as it did not
amount to reasonable notice; hence, martin is entitled to a refund after 12 hours without payment
of any processing fee.
Part 2
Issue
Can martin seek a refund the expiry of the 12 hours after the delivery of the washing
machine and if he is required to pay the processing fee under the Australian Consumer law.
Rule
The Australian Consumer Law sets out statutory provisions relating to the consumer
guarantees, which ensure that the products and services are provided to the customers in the good
condition and as per the required quality and description6. Consumer guarantees shall be
applicable to goods that are used for business purpose as well as was observed in the Carpet Call
v Chan [1987]7.
According to section 56 of the ACL if person supplies goods by description to a
consumer in trade or commerce, it amounts to a guarantee. The goods supplied must be as per
6Corones, Stephen G., Sharon A. Christensen, and Nicola Howell. "Submission to Australian Consumer Law
Review Issues Paper." (2016).
7 [1987] ATPR (Digest) 46-025)

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description provided by the consumer at the time of purchase as was observed in Ashington
Piggeries v Christopher Hill Ltd [1972]8. Hence, as stated in UK Sale of Goods Acts and in Sale
of Goods Act 1923 (NSW), the essential elements of this provision include the following:
 Goods supplied as per description;
 Guarantee of correspondence as per description;
According to section 54 of the ACL, goods supplied to consumers must be safe, durable
and of acceptable quality in its appearance. Such goods must serve the purpose for which it was
purchased at the first place9.
According to section 55 of the ACL, the goods supplied to the consumers must be fit for the
purpose for which it was purchased as was stated in Carpets’ case10.
In regards to ‘no fund signs and expired warranties’, it is inconsistent with the ACL for a
business to state that the consumers shall not be entitled to any refund when there has been a
major failure with the product11. Further, there is no fixed expiry date and the consumer may
apply for refund even after the expiry date. Furthermore, the supplier or a manufacturer cannot
deprive the consumer of the right to seek a remedy in respect of any defected goods or services.
The use of signs such as ‘no refunds after seven days, no refunds on sale items’ etc are
completely unlawful and if the product purchased fails to meet the guarantee, the consumer is
entitled to repair, refund, compensation or termination of contract. In addition, the consumers are
8 [1972] AC 441
9 Australian Consumer Law (ACL) Schedule 2 of the Competition and Consumer Act 2010
10 Australian Consumer Law (ACL) Schedule 2 of the Competition and Consumer Act 2010
11 Corones, Stephen G. Competition law in Australia. Thomson Reuters Australia, Limited, 2014.

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entitled to bring legal action against such supplier and manufacturer and recover damages for the
loss sustained because of such failure12.
Application
According to section 56 of the ACL if person supplies goods as per description to a
consumer in commerce or trade but not through a sale in auction, it amounts to a guarantee. After
using the machine, the clothes had shrunk which amounts to a major failure with the product as it
failed to serve the intended purpose, which was to wash delicate silk clothes.
Further, it breached section 54 of the ACL, as it did not serve the purpose for which it
was purchased at the first place. Furthermore, it contravened section 55 of the ACL, according to
which the goods supplied to the consumers must be fit for the purpose as was stated in Carpets’
case13.
As per section 271 of the ACL, Martin is entitled to recover damages for such losses due
to the failure of Mandy to comply with the guarantee under section 54, 56 of the ACL. Martin
may recover any decline in the value of the goods below the price paid by him for the washing
machine14.
Conclusion
Martin is also entitled to seek refund after the expiry of 12 hours after delivery due to
breach of section 54, 55 and 56 of the ACL.
12 Howells, Geraint, and Stephen Weatherill. Consumer protection law. Routledge, 2017.
13Twigg-Flesner, Christian. Consumer product guarantees. Routledge, 2017.
14 Paterson, Jeannie Marie. "Developments in consumer protection law in Australia." Legaldate 25.2 (2013): 2

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Bibliography
Ashington Piggeries v Christopher Hill Ltd [1972] AC 441.
Australian Consumer Law (ACL) Schedule 2 of the Competition and Consumer Act 2010
Carpet Call v Chan [1987] ATPR (Digest) 46-025).
Corones, Stephen G. Competition law in Australia. Thomson Reuters Australia, Limited, 2014.
Corones, Stephen G., Sharon A. Christensen, and Nicola Howell. "Submission to Australian
Consumer Law Review Issues Paper." (2016).
Curtis v Chemical Cleaning Co [1951] 1 KB 805
Howells, Geraint, and Stephen Weatherill. Consumer protection law. Routledge, 2017.
In Olley v Marlborough Court [1949] 1 KB 532
McKendrick, Ewan. Contract law: text, cases, and materials. Oxford University Press (UK),
2014.
Parker v SE Railway CO [1877] 2 CPD 416.
Paterson, Jeannie Marie. "Developments in consumer protection law in
Australia." Legaldate 25.2 (2013): 2.
Poole, Jill. Textbook on contract law. Oxford University Press, 2016.
Sale Of Goods Act 1923 (NSW)
Twigg-Flesner, Christian. Consumer product guarantees. Routledge, 2017.

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UK Sale of Goods Acts 1979