Detailed Analysis of Contract Law Cases and Consumer Guarantees

This document presents a comprehensive case study analysis focusing on contract law principles. It examines two key issues: the formation of a binding contract through offer, acceptance, and counteroffers, referencing legal precedents such as Partridge v Crittenden and Hyde v Wrench; and the application of consumer guarantees under Australian Consumer Law, including the Sales of Goods Act and the Competition and Consumer Act 2010, with a focus on misleading representations and product descriptions. The analysis includes the application of these laws to specific scenarios, providing legal conclusions and outlining the strengths of each party's position. The document also includes an essay discussing the importance of accurate advertising in Australian business, with a focus on the Australian Consumer Law (ACL) and its implications for businesses, referencing cases like ACCC v TPG Internet Pty Ltd and ACCC v Coles, emphasizing the significance of avoiding misleading statements and the consequences of non-compliance.

Running head: Contract LawPAGE \*
1
Contract Law
Name of the Student
Name of the University
Author Note:

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Title 2
Solution 1 3
Issue 1 3
Rule of Law 3
Application of Law 4
Conclusion 5
Issue 2 5
Rule of Law 5
Application of Law 6
Conclusion 7
Solution 2: Essay 7
References 12
Solution 1
Issue 1
Whether there is a binding contract that has formed between the parties?

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Title 3
Rule of Law
Advertisements made in the newspapers are not an offer but an invitation to treat. It means that
there is an invitation to the public in general to make an offer and no promise is attached to this
invitation to treat (Partridge v Crittenden, [1968]).
Counter offer is made to negotiate the final contract. There is automatic rejection of the
original offer once the counter offer is made and there shall not be any contract that is formed
unless there is acceptance made under the new terms. The case of Hyde v Wrench established
this, wherein there was an offer made for selling by Wrench of his land for £1000. Hyde then
made a counter offer for £950 which Wrench did not accept. Hyde then told Wrench that he was
ready to pay £1000 and this communication was ignored. The rule which this case established
was that “ Once a counter offer is made and the original offer rejected, the offeree can no longer
accept the original offer (Hyde v Wrench, [1840]).”
There is a valid contract which is formed only once the offer has been accepted in the
terms that are exact, meaning thereby that there is mirroring of the terms.
Conditions that bring an end to an offer there may be an understanding stated implict
or expressly in an offer on which the offer’s continuous existence depends, if such an
understanding then the offer will come to an end. As opined in the case of Financings Ltd v
Stimpson in this case it was opined that the offer made was subject to the implied condition that
the car is to continue in its unharmed state and failure of this condition led to the lapse of the
offer (Financings Ltd v Stimpson, [1962]).

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Title 4
When the mode of communication of acceptance is instantaneous the general rule of law
shall apply and contract will be formed once the acceptance is communicated (Entores L D v
Miles Far East Corporation, [1955]). One of the most essential elements of contract is
communication it is required to be made certainly and clearly and should be received prior to
the effective date of the contract (Entores L D v Miles Far East Corporation, [1955]). In case of
acceptance through email as in the case Stellard Pty Ltd & Anor v North Queensland Fuel Pty
Ltd a binding contract shall be formed once acceptance is communicated through exchange of
emails (Christensen, 2001) between both the parties (Stellard Pty Ltd & Anor v North
Queensland Fuel Pty Ltd, [2015]). Once an acceptance is made the subsequent purported
withdrawal will not be effective (Dunmore (Countess) v Alexander, [1830]).
Application of Law
In the given scenario the below mentioned would be applicable:
● The advertisement by Mary was merely an invitation to treat for which an offer was made
by Lianne, Mary for this offer gave the proposed price of $10,000 for which a counter
offer of $9,500. A conditional counter-offer was made for this by Mary on the same date
however since the understanding of the offer was not met with as in the case Financings
Ltd v Stimpson this offer was no longer in existence.
● Another offer was made by Lianne as the previous offers ceased to exist for $9,500 to
which Mary did not agree and placed a counter offer. Mary received the acceptance of the
offer and the subsequent revocation of the acceptance, however the agreement became
binding once the acceptance is received by Mary and the subsequent revocation will not
be effective.

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Title 5
Conclusion
The legal position of Mary is stronger and it may be concluded by the Court that there was a
valid contract that came into existence between the two parties.
Issue 2
Whether there is a consumer guarantee available to Lianne in the given scenario?
Rule of Law
It is provided under the Sales of Goods Act Section 13 that the goods and properties
should match with the description, this section is not about the quality but the product’s
description (Arcos v Ranaason, [1933]). It is further stated under section 14(3) where it has been
informed to the seller by the buyer of the certain qualities that are required then there should be
higher standards which are placed. The seller would then be liable in such a situation even
though the safety aspect has been met with respect to the product but the product is not what the
purchaser had required (National Foods Ltd v Pars Ram Brothers (Pte) Ltd, [2007]).
Further the Australian Consumer Law provide guarantee to the consumer wherein the
product supplied does not match with the description. This is regarded as a major problem and
the consumer can reject the product and chose for a replacement or refund or keep the item and
for any drop in value the seller shall compensate (Consumer.vic.gov.au, 2017).
Under section 56 Competition and Consumer Act 2010 (“CCA”) guarantee will be given
by the seller in that the goods that are supplied by way of description by the seller will
correspond with such description (unless they are supplied by auction). This guarantee will apply
even in the situation where the goods had been inspected previously by the purchaser prior to the
actual purchase (Australian Competition and Consumer Commission, n.d.).

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Title 6
Further section 29 of ACL provides with respect to misleading representation with respect to
goods and services. Section 29(1) states that “A person must not, in trade or commerce, in
connection with the supply or possible supply of goods or services or in connection with the
promotion by any means of the supply or use of goods or services: (a) make a false or misleading
representation that goods are of a particular standard, quality, value, grade, composition, style or
model or have had a particular history or particular previous use; or (b) make a false or
misleading representation that services are of a particular standard, quality, value or grade”
A breach of this section leads to civil proceedings and liabilities.
Application of Law
In the given situation the products supplied, the food and the boat, to Leanne did not match the
description of the products based on which the contract had been entered into and there was
breach of section 29 of ACL in providing goods and services that did not match the
representation made. This is a major problem and Lianne can either ask for replacement or
refund.
Conclusion
The legal situation of Lianne is strong in the given situation, she can sue for customer guarantee
as well as breach of terms of contract.
Solution 2: Essay
Advertisement is used by most Australian businesses for promoting their services and
goods. Whether these advertisement are through radio, television, print media or internet, it is
essential that they ensure compliance with the law. This essay discusses why it is important for
business advertisers to be very careful about the statements which they make in the

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Title 7
advertisement since they are subject to various legal rules that are developed by the parliament
and the courts.
The national law Australian Consumer (“ACL”) aims at ensuring in Australia protection
of consumers and fair trade. The ACL is a part of the Competition and Consumer Act 2010
(“Act”). Businesses are prohibited under the ACL to make any statements that are false or
misleading with respect to the services and goods that are provided by them. There are have been
different cases where the courts have found the representations by the businesses to be
misleading and false . In the case of Trade Practices Commission v Pacific Dunlop Limited it
was found by the court that the socks which were being sold by the manufacturer labelled pure
cotton were not actually pure cotton (Trade Practices Commission v Pacific Dunlop Limited,
[1994]). In the case of ACCC v Giraffe World Australia Pty Ltd (1999) there were serious
misrepresentations that were made by the business regarding the negative ion mats therapeutic
benefits (ACCC v Giraffe World Australia Pty Ltd, [1999]).
It will depend on the circumstances whether a representation is considered to be false and
misleading (Smith, 2000). The general provisions relating to misleading conduct which are
applicable on advertisements are found under section 18 of the ACL, breach of this section gives
rise to civil liabilities. Additionally ACL Part 3-1 puts a prohibition on different business
practices which are misleading and false and give rise to liabilities that are both civil and
criminal. The section 18 of ACL also interacts with section 29, while there is a strict liability
which is placed under section 18 in regulation of conduct that is misleading in commerce or
trade, section 29 imposes a liability for representation made which is false regarding a supplier
since they are in a position that is extremely powerful when it comes to having knowledge
regarding a particular good.

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Title 8
There are certain landmark cases which ascertain why businesses should avoid making
any advertisement that can lead to the misleading of the customers. In the case of ACCC v TPG
Internet Pty Ltd [2013], it was opined by the court that the advertisement’s dominant message
was of crucial importance for determining whether an advertisement is deceptive or misleading
or not (ACCC v TPG Internet Pty Ltd, [2013]). A pecuniary penalty of $2 million was imposed
on TPG Internet Pty Ltd with respect to Unlimited ADSL2+ broadband bundle advertisement
campaign. The court further stated that the qualifying statements that accompany the headline
representation are required to be sufficiently clear and prominent so that the customers are not
misled, particularly if such a representation is with respect to the price. This decision of the High
Court is extremely essential for the advertisers to understand the extent and nature of their
obligations under the ACL. The ACCC is also informed under this regarding the strategy of
enforcement. The implications of the decision of the High Court in this case has been that the
importance of test of “dominant message” has been reinforced for determining if an
advertisement would be considered as being deceptive or misleading. An important precedent
value has been attached to the TPG case for the ACCC and will be factored into the process of
the Commission for deciding whether a business is to be pursued for advertisement that is
considered as deceptive or misleading by the ACCC.
In the case of, comparative advertisement, Telstra Corporation Ltd v Singtel Optus Pty
Ltd, (No 2),5 Elliott J., made declaratory orders due to the reason that (Telstra Corporation Ltd v
Singtel Optus Pty Ltd, (No 2), [2014]) there was a real controversy in this case. The claims
which Telstra had made were opposed strenuously. In the judge’s opinion it was appropriate to
make declaration in the given situation where it has been found by the court that deliberately
Optus had engaged in a conduct which was significantly in contravention with the Australian

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Title 9
Consumer over a good period of time. The contravening conduct will be identified clearly by the
conduct, and it publicized the type of advertisement that would constitute as being contravening
thus providing businesses with a warning to no engage in conduct that is misleading or deceptive
or make representations that are false or misleading. The declaratory relief was given particularly
to aid the consumers so as to protect them from making decisions that ae ill-informed regarding
mobile phone plans that are long term.
Further in the case of ACCC v Coles [2014], it was concluded by the court that Coles had
engaged in a conduct that was misleading and in contravention with numerous ACL provisions
which arose from the use of the expression “Baked Today, Sold Today” by Coles in advertising
the bread products which were actually par-baked in a different location, snap frozen and then
completely baked (ACCC v Coles, [2014]). The court passed an order that Coles would be
required to pay a pecuniary penalty of $2.5 million to the Commonwealth for the misleading
advertising under s 224(1) of ACL. It was stated by the chief justice in this case that (Australian
Competition and Consumer Commission, 2015), that taking into accounts matters under the
section 224(2) and other important factors which the parties identified, a fine was imposed on
Coles amounting to $2.5 million.
Therefore, conclusively keeping in purview the legislations and ruling of the courts that
to avoid liability of any kind (civil and criminal) which can also lead to further damaging of the
reputation of the company it is essential that businesses advertising need ensure that the
statements that they make are not deceptive or misleading and care should be taking while
making such statements.

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Title 10
References
ACCC v Coles [2014]FCA 45.
ACCC v Giraffe World Australia Pty Ltd [1999]FCA 1511.
ACCC v TPG Internet Pty Ltd [2013]HCA 54.
Arcos v Ranaason [1933]AC 470.
Australian Competition and Consumer Commission. (2015). Coles to pay $2.5m for
misleading "Baked Today" and "Freshly Baked In-Store" bread promotion. [online]
Available at: https://www.accc.gov.au/media-release/coles-to-pay-25m-for-misleading-
baked-today-and-freshly-baked-in-store-bread-promotion [Accessed 20 Sep. 2017].
Australian Competition and Consumer Commission. (n.d.). Advertising and selling guide -
What are the guarantees?. [online] Available at:
https://www.accc.gov.au/publications/advertising-selling/advertising-and-selling-
guide/consumer-guarantees/what-are-the-guarantees [Accessed 20 Sep. 2017].

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Title 11
Christensen, S. (2001). Formation of Contracts by Email - Is it Just the Same as the Post?.
QUT Law Review, 1(1).
Consumer.vic.gov.au. (2017). Consumer guarantees that apply automatically. [online]
Available at: https://www.consumer.vic.gov.au/products-and-services/refunds-repairs-
and-returns/guarantees-that-apply-automatically [Accessed 20 Sep. 2017].
Dunmore (Countess) v Alexander [1830]9 Shaw 190.
Entores L D v Miles Far East Corporation [1955]EWCA Civ 3.
Financings Ltd v Stimpson [1962]3 All ER 386.
Hyde v Wrench [1840]49 ER 132.
National Foods Ltd v Pars Ram Brothers (Pte) Ltd [2007]2 SLR 1048.
Partridge v Crittenden [1968]1 WLR 1204.
Smith, R. (2000). Deceptive and Misleading Conduct On-Line Advertising and Business
Practice. [online] www.asic.gov.au. Available at:
http://www.aic.gov.au/media_library/conferences/other/smith_russell/2000-10-crf.pdf
[Accessed 20 Sep. 2017].
Stellard Pty Ltd & Anor v North Queensland Fuel Pty Ltd [2015]QSC 119.
Telstra Corporation Ltd v Singtel Optus Pty Ltd, (No 2) [2014]VSC 3.
Trade Practices Commission v Pacific Dunlop Limited [1994]FCA 1043.