Enterprise Law Assignment: Case Studies on Contract and Consumer Law

This report provides a detailed analysis of two case studies related to Enterprise Law, specifically focusing on contract and consumer law within the Australian legal framework. The first case examines a situation where an individual, Nick, attempts to claim payment from his uncle for abstaining from alcohol, delving into the elements of contract formation, the importance of legal relationships, and the absence of evidence in supporting the claim. It references key legal principles and case examples like Balfour v Balfour to illustrate the requirements for a legally binding agreement. The second case involves a gemstone transaction between Donald and Hugh, where Donald purchased a stone believing it to be a diamond, only to discover it was a topaz. The analysis considers consumer rights, particularly regarding refunds, misleading conduct, and the responsibilities of both the seller and the buyer under the Australian Consumer Law. The report evaluates the legal implications, determining Donald's eligibility for a refund based on the circumstances and the actions of both parties involved, highlighting the importance of due diligence and the potential for misleading representations.

Running head: ENTERPRISE LAW
Enterprise Law

ENTERPRISE LAW
Table of Contents
Question 1..................................................................................................................................3
Issue........................................................................................................................................3
Rules.......................................................................................................................................3
Legal Result...........................................................................................................................5
Question 2..................................................................................................................................6
Case Overview.......................................................................................................................6
Rights and Legal Implications...............................................................................................6
a. Lack of Discussion.........................................................................................................6
b. Belief of Topaz as Rough Diamond...............................................................................7
c. Telling Hugh about Pleasing Quality.............................................................................7
d. Assumption on believing it to be Diamond....................................................................8
References..................................................................................................................................9
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Question 1
Issue
Nick had a bad habit of drinking heavily, and his uncle i.e., Frank worked on a plan to
motivate his nephew by offering to pay $1,000 if he totally abstained drinking alcohol for a
time-period of 1 month. Even before Nick was unaware of his uncle’s offer, he signed a
document with the Alcoholics Anonymous (AA) which stated that he would put his utmost
effort to completely stay away from alcohol for one month. Committing himself towards
succeeding to do so as promised, he failed to receive the payment of $1,000, which was
offered by his uncle since he seeks to find a legal way, through which he could claim this
price as his uncle possessed the same motive.
Rules
Based on the legislations of the Contract Law in Australia, it can be stated that one of the
major issues being faced by both the parties comprise the lack of essential elements when
agreeing upon meeting a contract between the two parties. These elements can be cited as an
offer made by a party, acceptance of the contract by the other party, similar intentions of the
two parties to develop a legal relationship, and consideration of money.
A legal issue as observed in the current case scenario of the two parties i.e., Nick and his
uncle (Frank) can be cited as the lack of legal agreement between the two parties i.e., Nick
and Frank. This can be referred as the major issue, which can prohibit Nick from claiming the
fees, which would be offered by his uncle only if he had avoided heavy drinking habits for a
month (AustLii 2002).
Another legal issue which is observed in the case scenario is the lack of awareness by Nick
regarding the offer proposal of paying him $1,000 if he would abstain from the consumption
of alcohol for 1 month.
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Another issue was that this offer did not lead to any verbal or written contract between Nick
and Frank. This is also a problem for Nick because this meant lack of evidence for him to
legally claim the unmet offer made by Frank (Small Business Development Corporation
2019).
Analysis
The legal principles highlighted under the Australian Contract Law portrays that a general
legal rule must be followed by parties or family members when entering into an agreement or
a legal contract. A legal relationship is important for two or more parties at the same time so
as to make the contract legal and applicable. Without fulfilling any of these legal
requirements in a contract agreement between the two family members, the benefits can
never be bound with monetary claims. Emphasizing the current case scenario, Nick does not
have any evidence, based on which legal claims can be made for acquiring the sum of $1,000
which was actually proposed by his uncle (Frank) (Australian Contract Law 2019)
Under the newly reformed Contract Law 2019, even oral contracts formed between the two
parties in most cases have been directly dismissed by the court. A legal contract must be
made between the family members. In the current cases, no evidence is available for Nick to
justify and order a claim of $1,000 from his uncle. Moreover, no written or oral contract was
also found to have been made by him with his uncle. The offer of $1,000 was never known
even after he came to a legal contract agreement with Alcoholic’s Anonymous (AA). Since
the court has introduced a non-legal contract condition, contract or agreements that are not
legally bound must comprise of ‘Ebuttable Presumption’ requirement in a case. Even with
this requirement, the courts have stated that a party must hold a capability to form an
agreement but in the case of Nick and Frank, this capability was missing. A presence of this
criterion in the current case could have empowered Nick to legally claim $1,000 from his
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uncle (Frank) (Rule of Law Institute of Australia 2019). A legal case example can be cited as
a case of Balfour v Balfour, where husband and wife were involved in a legally agreed
contract, as per which the husband promised to pay $30 every month but only till the time she
resided in England. Even though Mrs. Balfour was suffering from illness, she succeeded in
making a legal claim because in the terms and conditions, Mr. and Mrs. Balfour were in
amicable terms throughout the specified time (Australian Contract Law 2018).
Legal Result
Based on the legal findings of Family of Contract Law, its principle and legislations depicts
that in the current case scenario, Nick is not eligible for making legal claims for $1,000 which
was offered by his uncle i.e., Frank on his successfully avoiding heavy drinking habits for
one month. Nick’s legal claim actually lacks absence of legal relationship with his uncle,
legal requirements and legal evidence to prove his eligibility so as to receive the overall sum
from his uncle. Furthermore, these legal obligations will obstruct Nick’s decision on claiming
the sum.
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Question 2
Case Overview
This case scenario highlights two parties i.e., Donald and Hugh, who were actually the
members from gemstone clubs. During the meeting, Donald purchased a stone from Hugh
and set it in his ring at a price of $450. After several days of usage of this stone, it was clearly
visible that the stone was actually a topaz. Due to this issue, Donald aims to return it to Hugh
and even wishes to claim the amount paid during the purchase of the stone.
Rights and Legal Implications
a. Lack of Discussion
According to the Australian Consumer Law, the consumer enjoys the right to regain refund
on the purchased products. However, this is applicable only if the product purchased has
faces any problem. Besides, the consumers must also enter into a legal contract with the seller
during the period of product purchase. Trade Practices Act 1974 (the Act) legally favors the
consumers to receive a refund after purchasing the product but there are certain conditions
that need to be met. These statutory rights of the consumers are applicable when the product
purchases are damaged at the time of purchase or are found to be artificial. On the basis of
these two acts, Donald can be held legally ineligible to claim refund form the seller i.e.,
Hugh. Statutory rights entail the fact that a contract must be met with a promise of refund
under certain product problems that could be expected. Similarly, in the current case scenario,
there was no such contract evidenced between Donald and Hugh over the purchase of the
selected stone. In addition, there was no guarantee or refund made over the product purchased
at a price of $450. So, Donald is ineligible to receive a claim on the product refund (ACCC
2011; Commonwealth of Australia 2009).
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b. Belief of Topaz as Rough Diamond
The Australian Consumer Law considers the fact that sellers are not always responsible for
the loss faced by the consumers. Besides, it is the duty of every consumer to ensure that the
product quality is good and receives services such as guarantee or warranty from the seller.
One of the most important tests to be conducted by the consumer is the product quality.
Consumers are legally empowered to hold this type of test in the product during the period of
purchase so as to ensure that the product quality or material is good or bad. During this phase,
guarantee or warranty upon the product tested can be claimed by the consumers
(Commonwealth of Australia 2013). Thus, Donald did not confirm the product material and
did not even perform any test on the stone to make sure that the stone selected and purchased
was actually a diamond.
c. Telling Hugh about Pleasing Quality
The Consumer Law of Australia empowers sellers to enjoy the benefits of judging a decision
on selling different products. Most importantly, these judgments are directly based on the
responses of the consumers, when they purchase the products from sellers. Usually, a good
response from the buyers does not bother the seller and so they directly put them on sale. This
decision can be considered as the seller’s main motive, which is always to clear out products
with bad quality. Since Donald told Hugh that he was pleased with the quality of the stone, he
found out that the product met his requirement of setting it in his ring (Commonwealth of
Australia 2013). Even in the current case, Hugh’s motive of selling the topaz as a rough
diamond was fulfilled as Donald was not aware of it at the time of purchase. So, the person at
fault in this case scenario is observed to be Donald and this further makes him ineligible to
tell Hugh about the stone quality later on.
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d. Assumption on believing it to be Diamond
Usually, sellers selling the poor product or low-quality product are legally referred to as a
misleading act as per the Australian Consumer Law. This type of misleading acts performed
by the product sellers are further sued and along with it, they also need to pay the damaged
product prices or provide a refund to the consumers, who were actually deceived by his/her
behaviour. These types of activities are referred as an erroneous representation or false
representation of the products and the sellers are legally penalized (ADMA 2007). This is
relevant to the current case because Hugh knew about the fact that he had sold topaz by
transforming its outlook into a diamond. Thus, this act of Hugh depicts that Donald can
legally claim a refund of $450.
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References
ACCC 2011, ‘Refunds and returns’, Australian Consumer Law, pp. 1-1.
ADMA 2007, ‘Advertising and selling’, Commonwealth of Australia, pp. 1-76.
AustLii 2002, Contract and the family: Whither intention?, Melbourne University Law
Review, viewed 31 August 2019,
<http://classic.austlii.edu.au/au/journals/MelbULawRw/2002/30.html>
Australian Contract Law 2018, Balfour v Balfour, Overview, viewed 31 August 2019,
<https://www.australiancontractlaw.com/cases/balfour.html>
Australian Contract Law 2019, Formation of contracts intention to create legal relations,
Overview, <https://www.australiancontractlaw.com/contractlaw/formation-
intention.html#intentiondomestic>
Commonwealth of Australia 2009, ‘Warranties and refunds’, A Guide for Consumers and
Business, pp. 1-44.
Commonwealth of Australia 2013, ‘Consumer guarantees’, A Guide for Consumers, pp. 1-26.
Commonwealth of Australia 2013, ‘Electrical and whitegoods’, An Industry Guide to the
Australian Consumer Law, pp. 1-20.
Rule of Law Institute of Australia 2019, ‘Contract law in Australia – 2019’, Rule of Law, pp.
1-2.
Small Business Development Corporation 2019, Contracts and agreements, Government of
Western Australia, viewed 31 August 2019, <https://www.smallbusiness.wa.gov.au/business-
advice/legal-essentials/contracts-and-agreements>
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