Analysis of Consumer Law and Contract Issues: Heidi's Coffee Shop

This case study examines various consumer and contract law issues arising from Heidi's attempts to establish a coffee shop. The analysis begins with a discussion of misleading advertising by Machine Express Pty Ltd, focusing on the discrepancy between advertised prices and actual offers, as w...Read More

Assignment:
Due date
Date Submitted
Tutor

Answer to Question A (1)
Issue
 Protection of consumers from misleading advertisements. Heidi was misled Machine
Express Pty a coffee machine selling at her local industrial1. Through an outdoor sign
advertisement, the store claimed to be selling NewBean Coffee Machine at discounted
half price.
 There are two issues involved in the first case between Heidi and Machine Express Pty
Ltd. The first issue is that Machine Express Pty provided misleading advertisement that
was deceptive to Heidi at their coffee shop.
 The sign outside Machine Express Pty advertised that NewBean Coffee Machine was
being sold at half price which was not the case and deceptive.
 The second case in the first issue was that Machine Express Pty Ltd failed to honor their
verbal contract to Heidi and sold a premium NewBean Coffee Machine she had
identified.
Rule
 2According to the 2010 Australian Consumer Laws Act consumers like Heidi are
protected from unfair marketing and advertisement campaigns3. The law prohibits
businesses from providing misleading and false information .This includes information
provided on the seller's websites, electronic media, online applications, and shop front
advertisements. The advertisement by Machine Express Pty was in front of their shop.
 The law also prohibits businesses from giving offers that cannot be substantiated .These
offers include discounts or after sells services. Machine Express Pty had promised to give
half-price discounts on the NewBean Coffee Machines which the store attendant said
they were not obliged to offer to their customers.
Application
1 Allen, H. J. (2015). Financial Stability Regulation as Indirect Investor/Consumer Protection Regulation:
Implications for Regulatory Mandates and Structure. Tul. L. Rev., 90, 1113.
2 2010 Australian Consumer Laws Act
3Bailey, I. H., Bell, M., & Bell, C. (2011). Construction law in Australia. Lawbook Company.
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To understand how The Consumer Protection Law is applicable, this issue will focus on Section
18 of The Consumer Law. This law prohibits businesses that sell goods and services from
providing information that contradict the principles of fair trade. Most of the unfair trade
practices that are in this law are geared towards making the businesses profitable at either the
expense of their competitors or the buyers. Section 33 of the Australian Consumer Protection
Law warns business against misleading the public in advertisements and marketing campaigns.
Reckitt Benckiser v Procter and Gamble 2015
The case of Reckitt Benckiser against Procter and Gamble in 2015 provided a good example of
how the law is applied regarding misleading advertisement. 4The plaintiff, in this case, Reckitt
Benckiser accused the defendants Procter and Gamble of airing a television advertisement that
was misleading to the public regarding their products. The other case was that Procter and
Gamble had displayed in supermarket shopping shelves that their products were better than the
ones for the plaintiff.
The court through Judge Lee ordered the defendant to comply with Sections 18 and 33 of the
Competition and Consumer Protection Laws of 2010 and practice fair trading completion. The
court also found that the consumers were being deceived in both advertisements. Fair trade
practices dictate that no direct attacks are allowed another business.
Conclusion
The Consumer Protection Law Section 18 and 33 applies to Heidi’s case. 5The court applied the
law based on the facts and evidence of the case. The evidence was found to be scientifically
compelling that the products by the plaintiff were of the same quality as the ones for the
defendants. 6The same law will also apply in the case of Heidi. The coffee machine supplier
Machine Express Pty Ltd broke the law by providing false advertisement. It will be upon the
court to determine if the fines will be paid to Heidi or the government. In most cases, the fine is
usually paid to the government.
Answer to Question A (2)
Issue
 The main issue in this case is in regard to contract law.
4 Reckitt Benckiser v Procter and Gamble 2015
5 Frank, I. (Eds.).( 2010) Framing regulation of fast food advertising in the Australian print media. Social science &
medicine, 69(9), 1402-1408.
6 The Consumer Protection Law Section 18 and 33
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 Machine Express Pty Ltd had promised to sell to Heidi the white premium model
NewBean but later sold it to another customer.
 Are verbal contracts legally binding? The shop attendant at Machine Express Pty Ltd had
promised to sell to Heidi the NewBean machine but later negated on the promise.
Rule
 The law in Australia recognizes verbal agreements to be legally binding.
 The law recognizes and allows for verbal contracts in the second issue of Machine
Express Pty Ltd shop attendant not honoring the agreement they had with Heidi. There
are exceptions to the legality of verbal contracts in which buying of the coffee machine is
not applicable. Contracts that involve large amounts of money like mortgages and
automobiles are the ones that the law requires written consent and contracts.
Application
The Application of the second case in the first issue dealing with the contract between Heidi and
Machine Express Pty Ltd relates to the application of contract law. The law recognizes verbal
contracts and in this particular case, the law will be applicable. The main challenge in the
application of this law is in proving the evidence .With no written evidence the defendant can
simply deny having said anything.
Yulema Pty v Simons 2009
This case relates to an unwritten agreement between individuals who owned shares in group
investments.7 Yulema had accused Simons of not honoring a 2009 agreement in which they had
agreed to buy shares and derive interests from ECB Group of companies. The matter was
complicated further because there was no written evidence to the agreement at that particular
time .One the plaintiff’s witness had died and there was no way the court could have heard his
evidence.
Conclusion
7 Case Yulema Pty v Simons 2009
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The ruling of Yulema v Simons is also applicable to Heidi’s case. The court ruled that the
accused that had negated on their part of the verbal agreement be compelled to pay the plaintiff
and honor the verbal contract of 2009. The same application of the law should also apply to the
case of Heidi against Machine Express Pty Ltd. The coffee selling store should be made to
respect the agreement they made to Heidi and pay for both time and resources lost Heidi.
Answer to Question B
Issue
 The second part of this assignment will delve into establishing if there was a binding
contract between Heidi and her manager Gertrude at her initial place of work Caffeine
Stop Pty Ltd.
 The manager Gertrude is accused to have violated an agreement she had made to sell to
Heidi one of the machines at Caffeine Stop Pty Ltd that they were not using .
Rule
 The Australian law recognizes a contract to be composed of an offer and acceptance.
8Both of these components were present in the agreement between Heidi and Gertrude.
 The law recognizes the free agreement between two parties in a financial transaction to
be legally binding even without written consent.
 The basis of the Australian contract law is based on the common law and the English law
with modifications having being made over the years according to different judgments.
Application
Pharmaceutical Society of Britain v Boots Chemist 1952
9This case explains the application of contract law according to Section 2 (d) of the 1980
Contracts Act. This act demands a contract to either have a verbal or written offer of good or
services and terms of acceptance. The case of The Pharmaceutical Society of Britain against
Boots Chemist represents how the different components of contracts are applicable. The
8 Hunt, K. M. (2015). Gaming the system: Fake online reviews v. consumer law. Computer Law & Security
Review, 31(1), 3-25.
9 Pharmaceutical Society of Britain v Boots Chemist 1952
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pharmacists union had sued Boots Chemist for engaging in unethical practices while selling
drugs to customers over the counter. The chemist argued that the drugs were only being used as
invitations for customers to see and then be sold by a qualified pharmacist. The chemist also
argued that it did not have any written or verbal agreement with the buyers.
The court found Boots Chemist to have contravened both the Pharmacists Board Regulations and
The Contract Act. 10This case can be applied to the case of Heidi and Gertrude. The evidence
points to the fact that Gertrude breached the contract she had with Heidi according to The
Contract Act.
Conclusion
The actions by the manager of Caffeine Stop Pty Ltd Gertrude towards Heidi were driven by
greed that resulted in breaking the law. 11Businesses work on the basis of willing buyer willing
seller principle. While Heidi had already agreed to be a willing buyer it was the responsibility of
Gertrude to respect the contract they had. 12The fact that Gertrude wanted to see how much the
Caffeine Stop Pty Ltd coffee machine would fetch online while she had agreed to sell to Heidi
was wrong.
Answer to question C
Issue
 Heidi bought a faulty GreenBean machine from Coffee Supplies Fast Pty Ltd after being
frustrated in her first two attempts to buy the machine.
 The faulty machine broke down on the first day of Heidi opening her new coffee shop
called Roast the Day Away.
 This made her close the coffee shop while she suffered financial losses through the loss
of customers for a whole week. The other financial setback she suffered was when one of
her main investor's called Tate withdrew her financial from Roast the Day Away because
she found it closed on the third day from its opening.
Rule
10 Mulligan, K. (2010). Emotions and values. In The Oxford handbook of philosophy of emotion.
11 Veljanovski, C. (2010). Economic approaches to regulation. In The Oxford Handbook of Regulation.
12 Wei, S. (2015). Wealth Management Products in the Context of China's Shadow Banking: Systemic Risks,
Consumer Protection, and Regulatory Instruments. Asia Pacific Law Review, 23(1), 91-123.
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 The Consumer Laws of Australia protects consumers like Heidi from suppliers like
Coffee Supplies Fast Pty Ltd who sold her the faulty NewBean coffee machine .
 The law guarantees automatic warranty that when a buyer buys goods like electronics or
machines, they are meant to function. 13The law gives consumers the right to return the
faulty NewBean coffee machine to Coffee Supplies Fast Pty Ltd. She can also demand
the machine to be repaired.
 About losing her customers and business partner due to the faulty machine, Heidi’s claim
to Coffee Supplies Fast Pty Ltd will depend if the fault was intentional or a genuine
mechanical fault for her to claim compensation for the business lost.
Application
Brown v Ireland Motor Sports Association (1972)
14This case represents a similar case of Heidi against Coffee Supplies Fast Pty Lt. 15Mr. Brown
sued the Ireland Motor Sports Association for selling to him a faulty race car to compete in 1970.
The car broke down and made him lose the race. After investigations, the court ruled against Mr.
Brown and asserted that the damage to his car was a genuine mechanical problem that had no ill
intentions. The sports association was made to repair the car. 16The same principle will apply to
the case of Heidi and Coffee Supplies Fast Pty, the coffee selling company will be compelled to
refund, repair or provide Heidi with another machine. About compensation for business lost it
will be upon the discretion of the court and investigation authorities if the faulty coffee machine
was a genuine mechanical fault or an act of sabotage to Heidi coffee business. The results of the
investigations will form the basis for compensation on business lost during the one week the
coffee shop was closed.
Conclusion
The Consumer Protection Act shields customers from loses caused by unfair business practices.
The aim of both The Contract Law and Consumer Protection Law safeguard the interests of both
the seller and the buyer. This assignment using Heidi’s case has defined, interpreted and applied
both consumer laws and contract laws in the three different cases in advising Heidi legal choices.
13 Svantesson, D., & Clarke, R. (2010). Privacy and consumer risks in cloud computing. Computer law & security
review, 26(4), 391-397.
14 Brown v Ireland Motor Sports Association (1972)
15 Schwenzer, I., Hachem, P., & Kee, C. (2012). Global sales and contract law. Oxford University Press.
16 Kolivos, E., & Kuperman, A. (2012). Consumer law: Web of lies-legal implications of astroturfing. Keeping good
companies, 64(1), 38.
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