Analysis of Contract Law and Consumer Rights: MPA Assignment

This assignment, completed for a Master of Professional Accounting (MPA) program, analyzes various aspects of contract law and consumer protection within the Australian legal framework. It begins by examining a scenario involving misleading advertising and the obligations of a business under the ...Read More

Running Head: MASTER OF PROFESSIONAL ACCOUNTING
Master Of Professional Accounting
Name of the Student:
Name of the University:
Author’s Note:

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MASTER OF PROFESSIONAL ACCOUNTING
Table of Contents
Part A.........................................................................................................................................2
Answer to the 1st question......................................................................................................2
Answer to the 2nd question.....................................................................................................4
Part B..........................................................................................................................................6
Answer to the 3rd question......................................................................................................6
Part C..........................................................................................................................................8
Answer to the 4Th question.....................................................................................................8

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Part A.
Answer to the 1st question
Issue
1. The advertisement for selling the coffee machine at a discounted price was an offer
from the Machine express Pty LTD. This has been done to attract more customers to
the store but fails to make the supply of the product which has been advertised.
2. The company or the advertiser has generated an offer to their consumer rather than
putting an invitation for buying the product.
Rules
3. Fails to act in accordance with ACL regulation as the company could not supply the
product to their customer. As per the Australian consumer law sec 35, the business
offering something to their customer must met the supply of the product1.
4. According to the ACL. Sec. 35, a business entity can give offer of selling product at a
lower price but this should state the inadequacy of the product while the product is not
available for sales.
5. The invitation can be recognised as the 1st stage of going into an offer. An offer is a
legal term where the company or the advertiser needs to identify the importance of the
offer and the legal obligations.
6. In any case the company does not seem to be capable of providing or supplying the
offered product then the company/Machine Express Pty LTD. would be considered as
responsible for breach of contract and ACL regulation.
1Weatherall, Kimberlee, "The Consumer As The Empirical Measure Of Trade Mark Law" (2017) 80(1) The
Modern Law Review

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MASTER OF PROFESSIONAL ACCOUNTING
Application
Understanding the issue and depending on the regulation this has been understood that
the lack of knowledge over the difference between contract and agreement has led the
company or the manager to breach the ACL regulation. As per the consumer Act. 2010 the
agreement has been formed after agreeing upon buying the half priced coffee machine and
the agreement has been converted into contract as the information has generated an offer and
promised through the advertisement2. There must have an evidence of a mutual intention
from all parties for the agreement to be legally enforceable.
The invitation has been a process of inviting on an offer while on the other hand the
offer refers to the proposal. This means inviting someone to make a proposal. Along with
that, the offer can be described as an intention towards entering into a contract which puts the
company or the advertiser in the position of obligation towards maintain the contract terms.
The offer represents an obligation towards the fulfilment of promise3. The invitation does not
put the advertiser or the company into the contract rather this just invites consumer with a
proposal. Hence, this can be identified as an offer, as the company has promised their
consumers to provide their product at a lower price, depending on the availability of the
product4.
2 Hu, Zhenyu and Wenjie Tang, "Size Matters, So Does Duration: The Interplay Between Offer Size And Offer
Deadline" [2018] SSRN Electronic Journal
3Koerner, Theodore G., "Contracts: Offer And Acceptance: Newspaper Advertisement As Offer To Sell" (1958)
56(6) Michigan Law Review
4 Legislation.gov.au, "Competition And Consumer Act 2010", Legislation.Gov.Au (Webpage, 2019)
<https://www.legislation.gov.au/Details/C2013C00620/Html/Volume_3#_Toc368657577>.

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Conclusion
The misleading has been done through the advertisement, as the offer which has been
provided in the advertisement of selling the coffee machine at half price was a misleading of
advertisement. Hence, this has been identified as an offer on selling rather than invitation
towards selling. Hence this can also be said that the advertisement is an informative offer.
Therefore, here the responsibility of selling the product with having the discount lies on the
owner of the company or manager of the Machine express Pty LTD.
Answer to the 2nd question
Issue
1. The machine has been sold to other customer without letting the Heidi know about the
fact.
2. The issue has been associated with the breach of contract as the regulation of breach
of contract has not been known to the manager and the customer.
3. The beach of contract has not been done by the manager but customer claims him to
be liable for providing the Premium coffee machine.
Rules
1. A claim from customer refers to the consumer’s right in the breach of contract by the
seller5.
2. If the contract does not exist into an agreement this would reduce the possibility of
claim.
3. The discount on the premium white model was an invitation for every customer which
was common to all. Hence the manager is not bound to sell the product towards a
5Grundmann, Stefan, "Regulating Breach Of Contract – The Right To Reject Performance By The Party In
Breach" (2007) 3(2) European Review of Contract Law

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specific customer. The manager has not entered into any kind of contract with the
Heidi for selling this specific model.
4. Heidi has no legal right which she can take against the manager for selling the
premium before her appearance6.
5. The company has also not charged any money as an advance from the Heidi7. Hence,
This has been observed that there is a presence of agreement but not the contract,
therefore the breach of contract is not possible and this is the reason why the Heidi
can never claim the manager for not selling the machine to her or rather selling this to
other.
6. The claim by the Heidi has been recognised as False and misleading claim as per the
ACCC consumer law8.
Application
As the manager has not entered into any kind of contract, the manager is not liable
to sell the product to that specific customer. However, the manager could wait for the
Heidi for some time but this generates risk on selling the product. Hence, depending on
the issue and the rules which has been stated above this can be said that the legal action
cannot be taken as there was no breach of contract has been recognised while manager
sold the machine to other customer, neither the offer has been made from the manager’s
6Klijnsma, Josse, "Contract Law As Fairness" (2015) 28(1) Ratio Juris
7 Consumerlaw.gov.au, "Consumers And The ACL – Australian Consumer
Law", Consumerlaw.Gov.Au (Webpage, 2019) <http://consumerlaw.gov.au/consumers-and-the-acl/>
8 Australian Competition and Consumer Commission (2019). Consumer rights & guarantees. [online]
Australian Competition and Consumer Commission. Available at:
https://www.accc.gov.au/consumers/consumer-rights-guarantees [Accessed 30 Apr. 2019].

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side hence9. Therefore, this can be said that the customer does not need to be protected
through the consumers’ guarantee Act.2010. This is because the product has not been sold
to the Heidi and neither the promises nor contract has been made for selling this specific
product to that specific customer10. This also refers to the consumer’s right towards the
breach of contract but the breach of contract would only exist if there is an agreement and
the agreement has been converted into void contract. From the case study this can be said
that, between Heidi and manager there has only existence of verbal agreement which has
no evidence that can help the agreement to convert into a voidable contract.
Conclusion
As there was no voidable contract was existing between them, hence, the customer or
Heidi losses her opportunity towards claiming against the manager for selling the machine to
another person.
Part B.
Answer to the 3rd question
Issue
1. Heidi has been proposed with a proposal to buy the old machine and has been invited
verbally rather than involving into a contract.
9 Owen Hodge Lawyers, "Contracts Between Businesses For Supply Or Sale Of Goods", Owen Hodge
Lawyers (Webpage, 2019) <https://www.owenhodge.com.au/commercial-property/commercial-contracts-
between-businesses/>.
10Sella, Anna, "2015/19 Successfully Appealed Pre-Transfer Dismissal Revives Employment Contract
Retroactively, Causing Contract To Transfer (UK)" (2015) 0(0) European Employment Law Cases

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2. There is a presence of agreement between both the parties at the initial stage but due
to the non-presence of 3rd party which could have acted as evidence in future or any
other evidence; the agreement could not become a contract.
3. Gertrude did not meet with his commitment of giving the coffee machine to the Heidi.
Rules
1. A contract exists while a formal way of involving into an agreement has been
followed by both the parties depending on the visibility of the aim of contract.
2. For involving into a contract there is a need of agreement from both the parties for a
common purpose and aiming towards a common goal.
3. As per The Competition and Consumer Act. 2010 a contract can be generated through
the written and verbal agreement11. The contract requires evidence. Hence the written
agreement is the best evidence towards a legal contract. On the other side, the verbal
contract requires evidence such as, a presence of 3rd person who can assure that the
contract exists between those two parties12.
4. With the presence of 3rd party the contract become voidable where any of the party is
unable to back out from the agreement13.
Application
Understanding the issue and depending on the regulation this has been identified that,
although both parties have agreed upon the common aim but since there is no presence of
evidence or any written agreement the agreement/invitation cannot be considered as the
11Maulidiana, Lina, "IMPLEMENTATION OF FRANCHISE AGREEMENT PERSPECTIVE IN CONTRACT
LAW" (2017) 1(1) Saburai International Journal of Social Sciences and Development
12 lawbuddy (2019). Contracts In Australia - LawBuddy. [online] lawbuddy. Available at:
https://www.lawbuddy.com.au/contracts-in-australia/ [Accessed 30 Apr. 2019].
13 "EFFECTIVE CONTRACT IN EDUCATION: ESSENCE, FUNCTIONS, CHARACTERISTICS"

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contract. However, if there was a presence of evidence for the future purpose or the
agreement could have been noted in written format then the agreement could have been
recognised as the contract14. Hence this can be said that in spite of presence of agreement
between Heidi and Gertrude there was no contract have been formed in between them.
Conclusion
This also can be said that no contract was present there in between them. Therefore,
Heidi cannot take any legal action against the Gertrude rather; the offer can only be identified
as an invitation or a verbal agreement towards buying and selling the coffee machine.
Part C
Answer to the 4Th question
Issue
1. This has been recognised that Heidi has faced an issue from the supply of defective
coffee machine.
2. The machine did not last long as this became use less on the very fast day, and this
has led her business to face a huge loss for a full week.
3. Due to the defective machine she had to shut down the business and had to return the
invested money to the investor.
Rules
14 Collier, Benjamin and Marc A. Ragin, "The Influence Of Sellers On Contract Choice: Evidence From Flood
Insurance" [2018] SSRN Electronic Journal

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1. According to the Australian Consumer Laws (ACL), being Schedule 2 to the
Competition and Consumer Act. 2010 is uniform legislation for consumer protection15
this protects customers from being cheated and provides rights on valid claims.
2. The damage cost refers to the cost which has been lost due to the damage of the
business. This includes the business loss.
3. The Australian consumer law provides right to the Consumers/Heidi for recovering
the losses. This means that she can recover her money fully/ partly depending on the
loss.
4. According to the consumer’s law of Australia, the consumers are facilitated with the
30 days return policy where the compensation includes the cost that has lost due to the
problem with the product and the service.
5. As the cost cannot be estimated into an exact figure the recovery cost depends on the
consumer’s choice.
Application
Understanding the issue and depending on the rules and rights of the consumer in the
Australia, this can be said that the recovery can be done through estimating the business
loss16. Along with that, the recovery cost depends on the money which has been asked by the
investor after being closing off the store for the full week. The recovery cost can be estimated
through identifying daily estimated sales. Further, the damage cost has been identified
through estimating the money spent on the business and into buying the ingredients. This has
been recognised that, Heidi has the right to claim a full benefit for her business loss. Along
with that Heidi can also ask for a damage charge for her business reputation. This refers to
15North, Gill, "Regulation Governing The Provision Of Credit Assistance And Financial Advice In Australia: A
Consumer's Perspective" (2015) 43(3) Federal Law Review
16Hurtley, S. M., "Faulty Channels, Not Faulty Synapses" (2016) 352(6286) Science

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the loss of goodwill that the company has lost due to the faulty machine. A further cost is
involved with the purchase of the product.Hence this cost is also required to be recovered
from the company.
Conclusion
Therefore she can claim all her damage charges through understanding the money
incurred for the start of the business and the working capital employed to run the daily
activities of the business and also the estimated the loss. As there is a presence of exchange of
monetary value, this makes the contact stronger between buyer and seller of the coffee
machine which provides higher possibility of recovery to the Heidi.