Business Law Assignment: Contract, Consumer Law, Terms and Remedies

This business law assignment delves into the intricacies of contract and consumer law. The first part of the assignment focuses on contract formation, specifically examining whether a valid contract was established between Magda and Avinash, analyzing offer, acceptance, and counteroffers. The second part evaluates potential breaches of the Australian Consumer Law (ACL) by Magda, particularly concerning misleading conduct and goods not matching their description, and the rights and remedies available to Elton as a consumer. The final section discusses the terms of a contract, differentiating between express and implied terms, including conditions and warranties, and identifying the type of term violated in the given scenario, with a focus on consumer guarantees.

Running Head: BUSINESS LAW
BUSINESS LAW
Name of the Student:
Name of the University:
Author Note:

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Answer 1A:
Issue:
In the given circumstances the issue that has been identified is whether Magda and Avinash had
entered into a valid contract.
Law:
For a contract to be legally binding upon the parties it has to contain the necessary elements of
contract formation. The necessary elements of a valid contract are:
 Offer and Acceptance
 Consideration
 Capacity to contract
 Intention to create legal relations
 Legitimacy of the terms of the Contract
However, in this given scenario the element of offer and acceptance is of significant importance.
It can be mentioned that there are certain criteria which have been laid down by the provisions of
common law in relation to offer and acceptance.
Offer can be defined as the promise made by the offeror to the offeree to pay consideration for
the fulfillment of the terms of the offer. For an offer to be legally binding upon the offer it has to
be established that the offeror had the intention to e bound by the offer as held in the case of
Carlill v Carbolic Smoke Ball co [1893] 1 QB. However, it can be mentioned that an offer
should be distinguished from an invitation to treat. Acceptance of an offer will create a binding
contract however; an invitation of an offer cannot be accepted. This had been illustrated in the

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case Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401. As held in the case
Partridge v Crittenden (1968) 2 All ER an advertisement is to be treated as an invitation to
treat. An offer has to be accepted on the terms as proposed by the offeror. Any change in the
terms of the offer would constitute a mere counter offer and not acceptance as held in the case of
Hyde v Wrench (1840) 49 ER 132. In the case Scammell & Nephew v. Ouston [1941] AC
251, it had been held that mere enquiries cannot be called offers. It has to be further stated that
for acceptance to be considered, it has o be communicated to the offeror as held in the case
Entorres v Miles Far East [1955] 2 QB 327. An offer gets expired if acceptance is not done on
time as held in the case Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109.
Application:
In the given scenario it can be stated that the price of the portrait as advertised by Magada on 19th
July constituted an invitation to treat as per the provisions of the Partridge v Crittenden (1968) 2
All ER.
Avinash’s act of sending the email to Magada for the purpose of buying the portrait can be
considered to be a valid offer. This offer had been made in relation to the advertisement given
by Magada.
However, Magada did not accept the offer of Avinash on the original terms of the offer and made
a counter offer by raising the price of the portrait by 200 dollars. Thus in this case original offer
made by Avinash gets extinguished as per the decision o the Hyde v Wrench.
The counter offer made by Magada was not accepted on its original terms as Avinash added
additional terms to the offer prior to accepting it. He had stated that he needed to consult with
his wife before he could finalize the transaction.

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Afterwards on 19th February Magada issued a formal offer to Avinash, in which it was mentioned
that the portrait would be sold to Avinash for 1800 and the offer was open for acceptance till
11;59 pm on 21st February.
Avinash on 20th February instead of accepting the offer on its original terms proposed another
counter offer by adding another condition of demanding a certificate of authenticity.
In response to Avinash’s offer Magada replied at 9:30 on 20th February that she was ready to
provide the certificate of authenticity provided that Avinash replies to her offer within 4pm on
20th February.
However, Avinash did not accept the offer within 4pm on 20th February. Therefore, by the
application of the Ramsgate Victoria Hotel v Montefiore case which states that an offer gets
expired if acceptance is not done on time, it can be stated that there was no valid acceptance.
Conclusion
Thus, in conclusion it can be stated that no contract had been formed between the
aforementioned parties.
Answer 1B:
Issue:
In the given circumstances, the issues needs to be discussed are:
 what provisions of the Australian Consumer Law had been breached by the conduct of
the Magada
 what rights do Elton have in this given scenario

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Rule:
Australian Consumer Law which has been provided in Schedule 2 of the Competition and
Consumer Act 2010 governs the right to the consumers in relation to the purchase of goods and
services. As provided in section 3 of the ACL, it can be stated that any person who purchases
goods or services not exceeding the amount of 40,000 dollars for household, domestic or
personal purposes can be defined as consumer.
It has been provided in subsection 18(2) of the Australian Consumer Law that any person who is
engaged in trade and commerce must not indulge in misleading and deceptive conduct or any
conduct which is likely to mislead or deceive the public in relation to purchase of goods and
services.
In the case of Australian Competition and Consumer Commission v Hewlett-Packard
Australia Pty Ltd [2013] FCA 653, the provisions of misleading and deceptive conduct as
provided in section 18 of the ACL had been discussed. The Federal Court in this case imposed a
fine 3 million dollars on HP as the court assessed that HP had made false and misleading
representations about their consumer guarantees and consumer rights.
Further in accordance with section 56 of ACL it can be stated that, goods which are sold by
description, must correspond with their description by which they were sold. There has to be
absolute conformity with the description of the goods. If the goods differ from the description by
which they were sold, it would result in the breach f this section.
Application

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By analyzing the facts of the case it can be stated that Elton can be defined as a consumer as per
the provisions of section 3 of the ACL as he had purchased the portrait for personal use and the
price of the portrait did not exceed 40,000 dollars. Therefore, Elton will have the rights of a
consumer under the Australian Consumer Law.
In this given scenario it is evident that Magda had provided an advertisement in her website
which was meant to be viewed by the customers. This advertisement had been made in trade had
commerce. Further it can be stated that this advertisement was capable of encouraging customers
to purchase the portrait as it was provided in the advertisement that the portrait was a limited
edition and only three copies of the poster were made. Thus by the application of section 18 of
the ACL it can be stated that this conduct of Magda misleading and deceptive in nature as the
information provided by her was false through the advertisement was false.
Further in relation to section 56 of the ACL it can be stated that goods that are sold by
description must correspond with the description of such goods. However, in this case it is
evident that many copies of the portrait had been printed. The advertisement of the portrait as a
limited edition was thus false in this case. Further in this case it has been provided the portrait
had been printed on low quality paper. Therefore it can be inferred in this case that portrait sold
was in breach of section 56 of the ACL as it did not match with its description.
Therefore in accordance with the provisions of the ACL it can be stated that Elton in this
scenario will have the right of repair, replacement as well refund for violation of his consumer
guarantees. In this scenario the relevant remedy is refund and therefore Elton is entitled to get
back the 2000 dollars.
Conclusion

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Thus to conclude, it can be stated that Elton will be entitled to the remedies of replace, repair and
refund as goods sold by Magada were in breach of section 56 of the ACL.
Answer 2
The rights and the obligations of the parties to a contract are provided through the terms of the
contract. Terms of a contract can be classified as express as well as implied terms.
Express Terms
Express terms of a contract are those that are clearly provided in writing or orally. Express terms
of a contract had been provided in case of Wilson v Best Travel.
Conditions
Conditions can be defined as the most important terms of the contract. A condition in a contract
is form of stipulation. In case of breach of the contract the breaching party has the right to
repudiate or rescind the contract. If the conditions of the contract are not fulfilled, the validity of
the contract gets affected. In the case Poussard v Spiers & Pond it had been illustrated when term
of a contract can be defined as a condition
Warranties
Warranties can be described as the less important terms of the contract. In case of breach of
warranties the aggrieved party does not derive the right to rescind or repudiate the contract.
However in case of breach of warranties the aggrieved parties are not entitled to claim damages.
In case of non fulfillment of the warranties of the contract the contract does not get affected,
however subsidiary goal of the contract gets affected. In the case Bettini v Gye, it was assessed
by the courts when a term of the contract can be treated as a warranty.

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Implied Term
It can be mentioned that implied terms in a contract are those which are not agreed upon by the
parties, however such terms are considered to be binding upon the parties the courts assess that
incorporation of such terms are necessary to give efficacy to the contract or for carrying out the
contractual obligations of the parties. In the notable case The Moorcock, the court held that a
term can be attached to a contract if such term was necessary for maintaining the validity of the
contract. In the aforementioned case it had been held that whether a term was implied in a
contract is to be assessed by the perspective of a reasonable person.
In the case Balmain New Ferry Co Ltd v Robertson it had been held that, terms in a contract
can be implied due to past dealings between the parties.
Further in the case of British Crane Hire Corp Ltd v Ipswich Plant Hire Ltd [1974] 2 WLR
856 it had been held that terms in a contract can be implied by the custom of trade in the
industry.
A term in a contract can also be implied by the statutory provisions of the Australian Consumer
law. These implied terms are provided in the Australian Consumer Law as consumer guarantees
and they are included in contract between businesses and consumers. There are certain remedies
available for the breach of the consumer guarantees as provided in the Australian Consumer
Law.
The type of term existing in the given scenario
It can be mentioned that in this given scenario, it has been provided that Elton had purchased a
portrait from Magda. Magda had claimed that the portrait was a limited edition as only three of

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such portraits had been printed. However after purchasing the same it was discovered by Elton
that the portrait was not a limited edition as many copies of the portrait had been printed. Further
it can be stated that the portrait had been printed on low quality paper. Thus, in this case it is
evident that consumer guarantees which are implied in contract between businesses and
consumers had been violated. The portrait did not comply with the consumer guarantee of
delivering goods which match with their description as provided in section 56 of ACL.

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Reference List:
Carlill v Carbolic Smoke Ball co [1893] 1 QB
Pharmaceutical Society of Great Britain v Boots [1953] 1 QB 401
Partridge v Crittenden (1968) 2 All ER
Hyde v Wrench (1840) 49 ER 132
Scammell & Nephew v. Ouston [1941] AC 251
Entorres v Miles Far East [1955] 2 QB 327
Ramsgate Victoria Hotel v Montefiore (1866) LR 1 Ex 109
Competition and Consumer Act 2010
Australian Competition and Consumer Commission v Hewlett-Packard Australia Pty Ltd
[2013] FCA 653
Wilson v Best Travel [1993] 1 All ER 353
The Moorcock (1889) 14 PD 64
Balmain New Ferry Co Ltd v Robertson (1904) 4 CLR 379
British Crane Hire Corp Ltd v Ipswich Plant Hire Ltd [1974] 2 WLR 856