HA2022 Business Law: Case Study on Contract & Civil Liability

This assignment presents a case study focusing on key legal issues in business law, specifically contract law and civil liability. Part A examines whether Smith’s Parking can rely on an exemption clause to avoid liability for injuries sustained by Jones, analyzing relevant case law such as Olley v Marlborough Court and Thornton v Shoe Lane Parking Ltd to determine if the exclusion clause was properly incorporated into the contract. Part B addresses whether John has any rights under the Australian Consumer Law (ACL) against Brown Suppliers Pty Ltd, focusing on unconscionable conduct as defined in sections 20-22 of the Competition and Consumer Act 2010 (Cth). The analysis considers whether Brown Suppliers Pty Ltd exploited John's vulnerability and imposed unfair surcharges, referencing cases like Blomley v Ryan and Commercial Bank of Australia Ltd v Amadio to assess potential breaches of consumer protection laws. The assignment concludes by evaluating the likelihood of success for both Jones and John in their respective legal claims.

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Business Law

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Part A
I: Issue
The key issue is whether Smith’s Parking is likely to succeed to rely on the
exemption clause and protect itself from any legal action taken by Jones.
R: Rule
The parties who form a contractual relationship between each other are bound
by the terms of the contract. The contractual parties can legally enforce each other to
comply with the terms. In case these terms of the contract are breached, then the
aggrieved parties have the right to demand compensation from the breaching party.
Thus, a liability can be imposed on the contractual parties in case they did not comply
with the terms of the contract. However, the parties have the right to exempt
themselves from the liability which they face for breaching the contractual terms by
relying on the exclusion clause (Gibson, 2017). The parties of a contract can include
the exclusion clause into the contract which allows them to eliminate their liability
arise in case the contractual terms are breached. The objective of including exclusion
clause in a contract by a party is to exclude their liability completely or limit their
liability to a fixed sum of money. In the case of companies or businesses, exclusion
clauses are often displayed by them on the premises in the way of notice or on printed
tickets or receipts (Sekendiz, Ammon & Cannaughton, 2016). Many times parties
incorporate these clauses in the contract while entering into a contractual relationship
third parties. While determining whether the exclusion clause is valid or not, the court
enquiries upon the circumstances in which those terms become a part of the contract.
The general rule of incorporation of an exclusion clause in the contractual
terms provides that the term must be brought into the attention of the contracting party
while the contract is being formed or before its incorporation. In this context, a
relevant judgement was given by the court in the case of Olley v Marlborough Court
[1949] 1 KB 532. In this case, a hotel room was booked by the claimant who signed a
contract on the reception desk of the hotel. Later when she when into her room, a

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notice was mentioned behind customers’ hotel room to exclude the liability of the
hotel if their belongings are damaged or stolen. It was held by the court that this notice
is not valid based on which the liability of the hotel cannot be removed because it was
not incorporated while complying with the general rule (Stone, 2013). It was not
brought into the attention of the claimant when she signed in the contract at the
reception desk or before signing the contract. It is important that reasonable steps are
taken by the party to being the exclusion clause in the attention of another party while
the contract is formed or before its formation.
In the case exclusion clause is written on a ticket, then the circumstances of the
case are evaluated by the court to determine whether it is valid or not. A relevant
judgement was given in Causer v Browne [1952] VLR 1 in relation to ticket or receipt
containing terms. In this case, the court provided that it is important to determine
would a reasonable person assumes that the ticket is a part of the contract or whether it
is a mere receipt, acknowledgement of voucher and not a contractual document at all
(Graw, 2012). Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 is another relevant
case in this context. In this case, the claimant has issued a ticket by putting money in a
parking machine while he was entering into the car parking. In small print, it was
mentioned on the ticket that there are certain terms and conditions which are binding
on customers and they are mentioned inside the parking. The terms stated an exclusion
clause which provided that the parking will not be held liable in case the customers
were injured. Due to the negligence of the defendant, an injury was suffered by the
claimant. A suit was instituted by the claimant, and a question was raised whether the
terms were mentioned while the contract was formed between the parties (Monaghan
& Monaghan, 2013). The court provided that the claimant gave his acceptance by
putting his money in the machine and the ticket was given after the acceptance took
place; thus, the exclusion clause was not incorporated in the contract, and the
defendant cannot rely on its defence.
A: Application
In the given case study, Jones was injured when she comes back into the car
parking to get her car. A notice was written outside the parking which stated that the

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owners park their vehicles at their own risk. Jones has issued a ticket by the ticket
machine in which it was mentioned that certain terms are applied on the customers
which are written inside the parking. The terms provided that the car parking company
will not be held liable for any injury suffered by the customer on the premises. As per
the general rule of incorporating the exclusion clause discussed in the case of
Thornton v Shoe Lane Parking Ltd, the notice written outside the car parking was
brought into the attention of Jones before she formed a contract with the car parking
based on which it is valid. A contract was formed when Jones gave her acceptance to
the machine after which a ticket was issued to acknowledge the payment. The ticket
was issued after a contract was constructed between the parties based on which it is
not the part of the contract. Thus, the terms written inside the car parking are not
enforced on Jones. As discussed in the case of Thornton v Shoe Lane Parking Ltd,
since the terms were not a part of the contract, the car parking cannot rely on the
exclusion clause to eliminate its liability towards Jones.
C: Conclusion
In conclusion, Smith’s Parking is likely to fail in relying on the exclusion
clause to protect itself from the legal action taken by Jones.

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References
Causer v Browne [1952] VLR 1
Gibson, A. (2017) Business Law (3rd ed). Sydney: Pearson.
Graw, S. (2012). An introduction to the law of contract. Toronto: Thomson Reuters.
Monaghan, C., & Monaghan, N. (2013). Beginning Contract Law. Abingdon:
Routledge.
Olley v Marlborough Court [1949] 1 KB 532
Sekendiz, B., Ammon, R., & Connaughton, D. P. (2016). An Examination of Waiver
Usage and Injury-Related Liability Claims in Health/Fitness Facilities in
Australia. Journal of Legal Aspects of Sport, 26(2), 144-161.
Stone, R. (2013). Q&A Contract Law 2013-2014. Abingdon: Routledge.
Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163

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Part B
I: Issue
The key issue is whether any rights are available for John under the Australian
Customer Law against the Brown Suppliers Pty Ltd.
R: Rule
The Competition and Consumer Act 2010 (Cth) (CCA) is introduced in order to
provide standards relating to trade and commerce in order to prohibit unfair trade
practices and promote consumer protection policies. Section 2 of this act provides its
object which is to enhance the welfare of Australians through the promotion of
competition between corporations and ensuring fair trading by enterprises. Schedule 2
of CCA provides the key provisions which provide the necessary safeguard and
protection to customers to ensure that their rights are not breached by unethical
trading practices (Gibson, 2017). Along with contractual remedies, statutory
protection is available for customers in relation to unconscionable conduct. Section 20
to 22 of the CCA provides the key provisions to protect customers from
unconscionable conduct. It is referred to a statement or action which is so
unreasonable that it defies good conscience. Section 21 of the Australian Consumer
Law (ACL) prohibits corporations from engaging in unconscionable behaviour in
connection to supplying of goods and services or the acquisition of goods and services
while engaging in business related transactions (Austlii, n.d.). Pursuant to section 22
of the CCA, there are certain elements or circumstances which comes under the
definition of unconscionable conduct. Section 22 (a) provides that the use of relative
strengths of the bargaining position by the supplier against the customer while setting
the goods or services is considered as unconscionable conduct (Gibson, 2017).
Section 22 (d) prohibits the businesses from using undue influence or unfair
trading practices to put pressure on the customer or a person who is acting on behalf
of the customer in relation to supply of the goods or services. Section 22 (e) provides
that the amount for which the customer can acquire identical or equivalent goods or

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services other than the supplier can come under unconscionable conduct if the supplier
is charging more from the specific customer (Legislation, n.d.). This principle
established by the High Court in the judgement of Blomley v Ryan [1956] HCA 81. In
this case, the court established that intoxication might preclude capacity of a person to
form a contractual relationship. The court provided that the supplier should not take
unfair advantage of the condition where he/she can dominate the customer to form a
particular contractual relationship in relation to goods or services (Brereton, 2013).
Moreover, a relevant judgement was given by the court in the case of Commercial
Bank of Australia Ltd v Amadio [1983] HCA 14. In this case, the respondent was an
elderly Italian migrant couple, Mr and Mrs Amadio, who give guarantee to the bank
for their son’s loan.
The bank manager knew that their son had misrepresented the facts to his
parents while giving the guarantee; however, the bank manager continued with the
guarantee. The son and the bank manager took unfair advantage of the poor English
skills of the respondents to enter them into a legal relationship. The court provided
that Mr and Mrs Amadio can set aside the contract based on the principle of
unconscionable conduct (Kiefel, 2016). They misused their dominant position in order
to enforce the respondents to form a contractual relationship. They also take unfair
advantage of their poor English skills to enforce the contractual terms on them. The
court provided that the rights of customers were breached by the applicants based on
which the contract can be set aside, and it cannot be considered as valid (Fee, 2018).
Thus, the unfair contact which is formed between seller and customer in relation to
supply of goods or services which is based on unconscionable conduct is considered
as invalid. Moreover, the Competition and Consumer Amendment (Payment
Surcharges) Act 2016 imposed a ban on corporations operations in Australia on 25th
February 2016 in relation to the imposition of excessive surcharges on their products
(ACCC, 2016). The objective of this ban is to stop the businesses from charging
surcharges on their customers which are excessive.

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A: Application
In the given case study, John is an unemployed 19 years old who formed a
contractual relationship with Brown Suppliers Pty Ltd. He left the school when he was
14. The contract formed between the parties specific that John would receive
electronic appliances for the next 12 months. The contract also specifies that the goods
which are supplied to John are subject to a 20 percent surcharge on the sales price.
John later found out that the company is charging more from him for the appliances
than compared to the normal price. The rights of John as a customer are protected
under the ACL. As per section 21 of the Act, Brown Suppliers Pty Ltd is prohibited
from using unconscionable conduct against its customers while supplying its goods to
them. In the given scenario, John left the school when he was 14 years old due to
which he was in an inferior position. Brown Suppliers Pty Ltd used its dominant
position to form a contact with John in which he had to pay a surcharge of 20 percent
above the sales prices which is a violation of section 22 (e). The company is charging
way higher prices to John than compared to normal prices by misusing its dominant
position. The judgement of Commercial Bank of Australia Ltd v Amadio applies in
this scenario since the company misused the fact that John had left school when he
was 14 years old to form a contract which is unfair. Moreover, the imposition of
excessive surcharge is prohibited by the government under the Competition, and
Consumer Amendment (Payment Surcharges) Act 2016 as well.
C: Conclusion
In conclusion, John has rights under the ACL which were breached by Brown
Suppliers Pty Ltd by misusing its position and using unconscionable conduct to form a
contract with John. Thus, John can set aside the contract and claim remedies for his
loss.

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References
ACCC. (2016). Payment surcharges. Retrieved from
https://www.accc.gov.au/business/pricing-surcharging/payment-surcharges
Austlii. (n.d.). Competition and Consumer Act 2010 – Schedule 2. Retrieved from
http://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/toc-sch2.html
Blomley v Ryan [1956] HCA 81
Brereton, P. (2013). Binding or bound to fail?: Equitable remedies and rectification of
financial agreements. Australian Family Lawyer, 23(2), 31.
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14
Competition and Consumer Act 2010 (Cth)
Competition, and Consumer Amendment (Payment Surcharges) Act 2016
Fee, J. (2018). Undue Influence: Inspirations from Australia?. Hong Kong Law
Journal, 48, 375-388.
Gibson, A. (2017) Business Law (3rd ed). Sydney: Pearson.
Kiefel, S. (2016). Good faith in contractual performance: A background paper for the
Judicial Colloquium. Brief, 43(5), 26.
Legislation. (n.d.). Competition and Consumer Act 2010. Retrieved from
https://www.legislation.gov.au/Details/C2013C00620