LEGL601 Commercial and Corporations Law: Contract and Consumer Issues

This assignment for a Commercial and Corporations Law course examines several key legal issues. It begins by analyzing whether a valid agreement exists between Johnny and BJ Hi-Fi, focusing on the elements of offer and acceptance, and the concept of 'invitation to treat.' The assignment then assesses a potential breach of statutory implied terms related to fitness for purpose under the Australian Consumer Law (ACL) in a scenario involving a consumer, Shashi, and a shopping cart. Finally, it determines the validity of an exclusion clause and whether an airline can be sued for damages resulting from negligence, considering whether reasonable notice of the clause was given. The assignment uses case law and statutory provisions to support its analysis and conclusions.

COMMERCIAL AND CORPORATIONS LAW
STUDENT ID:
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Question 1
Issue
The key issue is to determine if there is a valid agreement between Johnny and BJ Hi-Fi.
Law
For the formation of a valid agreement, there needs to be a valid offer which then needs to
be followed by a valid acceptance. A noteworthy aspect is that the display of goods in shops
with their price tags and any offers are essentially “invitation to treat” and not offers1. This
has been highlighted in the Pharmaceutical Society of Great Britain v Boots Cash Chemists2.
As a result, in such scenarios, the offer to buy needs to be made by the respective customer
which is then accepted by the store by billing the item at the invoice counter. Further, an
offer by an offeror can be revoked before acceptance is communicated by the offeree. In this
scenario, no enforceable agreement would be formed between the parties3.
Application
In the given scenario, the display of orange ePod for $ 100 instead of being an offer is
invitation to treat as per the discussion in the above section. This implies that an offer to buy
the orange ePod was made by Johnny when he walks to the cashier and conveys his
willingness to buy the product for a consideration of $100. Acceptance to this offer would
have been provided to Johnny by the cashier would have produced an invoice for the same.
However, before the cashier can communicate the acceptance to the offer, it was revoked by
Johnny when he communicated to the cashier that he is unwilling to buy the same. As a
result, there is no agreement formed between Johnny and BJ Hi Fi.
Conclusion
It is evident that offer given by Johnny to buy the ePod was evoked before it could be
accepted by the cashier. As a result, the cashier is wrong and there is no binding agreement
between Johnny and BJ Hi Fi.
Question 2
Issue
1Latimer, Paul, Australian business law, (CCH Australia Ltd, 24th ed., 2015) p. 63.
2Great Britain v Boots Cash Chemists [1953] 1 QB 401
3Jason, Harris,Butterworths Questions and Answers, (LexisNexis Study Guide, 4th ed., 2013) p. 145.

The key issue is to determine if conduct by Neville is in breach of statutory implied term
related to fitness for purpose.
Law
As per the Australian Consumer Law (ACL), there are a host of implied warranties that are
available for the consumer who purchases goods. Section 3 defines consumer as any
individual or entity who buys the goods for personal or non-commercial use. An alternative
condition that can be fulfilled is that the price of the goods is lower than $ 40,0004. In
accordance with section 55, there is an implied guarantee with regards to goods being fit for
any disclosed purpose by the consumer. Even before the enactment of ACL, this implied
guarantee was available in the Sale of Goods Act. A relevant case highlighting the implied
warranty for fitness for purpose is Grant v Australian Knitting Mills5. In this case, the plaintiff
bought underwear which had chemicals resulting in dermatitis. It is decided that the
underwear was not fit for the purpose it is supposed to be used for6.
Application
In the given scenario, the consumer Shashi intends to buy a shopping cart that can be sued
for weekly groceries. She goes to a shop owned by Neville to buy this cart and asks for her
advice in making a suitable choice keeping in mind her use. When Shashi enquires about
Shopper basic, Neville assures her that while it is not as good as the premium model but it
should be sufficient for her use. Clearly, Shashi is a consumer as per s. 3 and hence would
be extended protection under ACL. As a result, the implies guarantee of fitness for purpose
does exist. Further, it is known that Shashi has used to carry the cart for a stack of books
when the cart fabric began to tear. In the given case, there is breach of implied guarantee of
fitness for purpose despite Shashi carrying books instead of groceries as the underlying
purpose does not significantly deviate from the originally stated purpose.
Conclusion
Shashi is a consumer under ACL and tearing of fabric amounts to non-suitability of the cart
for the purpose it is meant to be used.
Question 3
4Gibson, Andy and Fraser, Douglas, Business Law, (Pearson Publications, 8th ed., 2014) p. 189.
5Grant v Australian Knitting Mills (1933) 50 CLR 387
6Pendleton, Wayne and Vickery, Roger, Australian business law: principles and applications, (Pearson Publications, 5th ed.,
2005) p. 364.

Issue
The key issue is to determine whether the exclusion clause would be valid based on which it
would be determined if Ash can sue the airline or not.
Law
For an exclusion clause to be applicable, it is imperative that reasonable attempt on the part
of party inserting the clause should be made to bring this clause to other party’s notice.
Further, this should be done before the enactment of contract. This is evident from the
verdict in Curtis v Chemical Cleaning Co7, where the scope of the exclusion clause was
limited to that which was communicated by the representative of the cleaning company
before the receipt was signed. Yet another case law which highlighted the need for prior
communication of exclusion clause for it to be valid is Thornton v Shoe Lane Parking8.
Another relevant case is White v John Warwick9, which highlights that exclusion clause even
if applicable would not provide immunity in case of negligence unless it was clearly
communicated to the potential plaintiff that even in negligence scenario, there would be no
liability for the defendant10.
Application
In the given scenario, it is evident that the airline has taken no efforts to bring the exclusion
clause into notice of Ash when she entered the Kwantus Club lounge. It was only after
damage was suffered by the plaintiff in the form of her laptop was the exclusion clause
brought to her notice. Considering that the clause was not conveyed to Ash beforehand,
hence even despite signing, the exclusion clause would not be valid. Also, in this case, the
damage suffered by Ash is on account of negligence of the waiter. Hence, exclusion clause
is not enforceable.
Conclusion
The exclusion clause would not be enforceable and hence the airline can be sued by Ash for
damages.
7Curtis v Chemical Cleaning Co [1951] 1 KB 805
8 Thornton v Shoe Lane Parking [1971] 1 All ER 686
9White v John Warwick [1953] 1 WLR 1285
10Davenport, Shayne and Parker, David, Business and Law in Australia, (LexisNexis Publications, 2nd ed., 2014) p. 75.