BLO5540 VU Sydney: Contract Law and Australian Consumer Law

This assignment presents a case study involving Magda, a photographer, and Avinash, a potential buyer, to analyze contract law principles such as offer, acceptance, and counteroffer. It also explores Elton's consumer rights under the Australian Consumer Law (ACL) concerning a purchased painting. The analysis determines whether a valid contract was formed between Magda and Avinash and whether Elton is entitled to remedies under the ACL due to misleading information about the painting's limited edition status and archive-quality paper. The assignment references relevant case laws and sections of the ACL to support its conclusions, ultimately finding no contract between Magda and Avinash and determining Elton's entitlement to remedies under ACL.

Running head: BUSINESS LAW ASSIGNMENT
Business Law Assignment
Name of the Student
Name of the University
Author note

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Answer 1(a):
Issue: The issue in this situation narrates whether there was an agreement existing between
the parties who had formed the contract and if they had agreed on the terms and conditions of
the contract.
Rule: A contract can only be formed when there is involvement of an offer and acceptance.
The party making the offer is known as the offeror and the party receiving the offer is called
the offeree. Therefore, an offer can be constituted when a party makes an offer to the other
party. Hence, a contract can be made enforceable in law when it includes all the elements.
The elements therefore, consists of the parties forming the contract, making the offer and
acceptance, consideration and capacity. Therefore, the parties creating the contract must
agree on the conditions and terms of the contract jointly. Legal intention must be present
when the parties creating the contract. If these essential elements are not present in the
contract then a contract will be treated to be invalid. There must be involvement of
communication when the contract is formed. Thus, for the development of the contract, there
must be a legal relationship between the parties forming the contract. Hence, there was a
communication. Such kind of a situation was observed in the matter of Balfour v Balfour
[1919] 2 KB 571. In this scenario, a valid contract was created when offer and acceptance
were involved. Due to this, the contract had commenced legally. It also involves legal
intention in this situation.
Thereafter, it was observed in the Air Great Lakes Pty Ltd v KS Easter (Holdings)
Pty Ltd [1989] 2 NSWLR 309 states that a person who is making the offer must communicate
properly for the offeree. This concept generally refers to an invitation to treat. Hence, this
kind of a contract will not be treated to be a valid contract. In the case of AGC (Advances)
Ltd v McWhirter (1977) 1 BLR 9454, the Court had held that no valid contract was formed

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between the parties. Therefore, the Court had held that the contract, which was formed was
invalid. Hence, the offer that was made was in the form of an advertisement that was
considered to be an unilateral offer. For establishing the validation of the offer, it must be
accepted based on the specifications that have been made in the offer. No modifications must
be made in the contract after both the parties have agreed to the terms and conditions. If
either of the party makes any kind of alteration then it will be considered to be a counter-
offer. It was observed in the case of Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd
[1989] 2 NSWLR 309. The offer that was formed must not have an outcome in the counter-
offer between the parties. Such kind of a contract cannot be formed.
Application
The case states the Magda had put up the painting in her own website for sale.
Thereafter, the case of Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2
NSWLR 309 is the almost of the same scenario where the advertisement was not considered
to be an invitation to treat. However, the painting was supposed to be purchased by Avinash
for an amount of $1600 on February 19. In this scenario, the above mentioned case of
Balfour v Balfour [1919] 2 KB 571 was applied. This is because Avinash had made a valid
offer since it had the legal intention for binding the parties in the contractual terms. On
February 20 a counter-offer was constituted by Avinash. In the counter offer it was stated that
it needed a certificate of authenticity. However, the authenticity of the certificate did not clear
the amount of paying it as per the request of the necessary information and neither any sort of
inquiry. It can thereafter be said that the offer was however made and existed between the
parties forming the contract. Therefore, Magda made an offer of $1800 for the painting.
Depending on the case of Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd [1989] 2
NSWLR 309, there was an extra condition of the consultation that was offered for purchasing
the painting. Therefore, in this situation a valid and legal contract was formed but it will only

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be considered to be valid till February 21. Magda however had revoked the offer due to
which the date got changed. The alterations that took place were informed by Avinash and it
lapsed based on the ground of the time which was prior on the acceptance that Avinash made.
Hence, there was no legal and valid contract formed between Avinash and Magda.
Conclusion: Lastly, it can be concluded that there was no contract formed between Magda
and Avinash for non-acceptance which was the outcome of the actual contract.
Answer 1(b):
Issue: In this situation the issues states that whether Elton will be entitled for the rights that
have been mentioned in the Australian consumer after Australian competition and consumer
act 2010.
Rule: As per the Australian consumer law a person will be considered to be a consumer of
Australia when he or she has fulfilled all the necessary elements are Essentials that have been
levied under section 3 of the above mentioned act. Hence the individual who has purchased
the vehicle for transportation must also fulfill the conditions for the purchase he made.
Secondly for the products the amount that was paid and even for the services should not
exceed the amount of $40,000. In the end as mentioned above the products and services
purchased must be put for household purposes. Lastly the goods and services that are
purchased must not be used for we supply.
According to Section 18 of the Australian consumer law any kind of omission or
conduct while carrying on the business the seller can therefore prevent it from happening.
Along with the mentioned, Section 56 of the same act states that it can provide guarantee to
all the customers of Australia who are buying and selling the products. There after section
268 the Australian consumer law an aggrieved customer can file for a claim for getting a

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refund for the damage that has been caused to this individual. This results in the infringement
of the party. However the seller should be held liable if the customer or consumer has
suffered any kind of loss or damage after consuming the products that have been purchased.
The most established case of Australian Competition and Consumer Commission
versus Hewlett-Packard Australia PVT Ltd 2013 FCA 653 that a consumer is protected
when he or she exercises the guarantees they are provided with in those certain situation. If
the product was deceptive or misleading and had created a confusion among the consumers
they can file a claim by using the guarantees as per the legislation. Hence it has been
observed in this particular case that it was not accurate and the customers should not have
relied on the information that was provided by the sellers.
Application: In this scenario it can be said I noticed that the painting was sold to Elton by
Magda and the painting was there after print it on a high quality paper. Just because the
painting was already published in the website it was assumed that the colour of the painting
can get removed as it has already happened in this case. In reality as per the facts of the case
if for the painting the quality of paper was high then the colour would not have waited and
state intact as it is. Such a situation can be handled if the relevant provision of section 18 and
56 of the above-mentioned act is applied. Therefore it is an outcome of infringement in this
scenario. The causes an of the infringement happened when the advertisement was provided
to the seller and it was found to be misleading and deceptive. Therefore, it was noticed that
the customers had purchased and suffered injury and damages. In this particular scenario, the
seller stated that the painting was advertised and the edition of it was a limited one on the
website. Since Magda had sold around 10 copies of the painting, it therefore did not have any
limited edition.

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Conclusion: Lastly, it can be stated that it did not constitute in a breach since the purchased
goods was not similar to the description details if Section 261 of ACL is applied. Refund was
asked for the painting.
Answer 2:
The terms of a contract define the duties and obligations of both parties to the same.
Ideally the terms of a contract aid in the interpretation of contractual relationships.
Contractual terms can be categorized into two types- they can be implied or express. Terms
that are specifically incorporated into the contract are known as express terms. The judgment
in Commonwealth v Amann Pty Ltd (1991) 174 CLR 92 sets out that in case of a written
contract, an incorporated term that expressly sets out the contractual relationship between the
parties would be considered an express term. Thus an express term one that is conspicuously
inferred from the terms set out in the contract.
An implied term to a contract is one that can be statutorily inferred from a contract.
These are thus terms that are not specifically incorporated into the contract but are binding on
the parties due to the law they are governed by or was that becomes an apparent obligation
due to the facts surrounding the contract. The terms of a contract, which can be inferred from
the fact surrounding the contract would also be considered as an implied term. In the case of
Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149
CLR 337 it was held that generally implied terms form a part of the contract and thus are
binding on the parties to the contract. Additionally the terms that are implied in law are also
binding on the parties even if they are not specifically incorporated. A requirement under
common law that in cases of a tenancy the tenant has an absolute right to peaceful enjoyment
of the leasehold property the same would be binding on all leases even if not specifically
incorporated into the same.

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A contract can be formed through various means however as long as it has the
essentials of a contract it would be legally enforceable. In case a party fails to observe its
duties and obligations in the contract it would result in a breach and the innocent party would
be entitled to damages or compensation for the same. Conditions that are implied in a
contract are also terms and thus the breach of the same would result in legal action. In
Australian consumer law the implied consumer guarantees are statutorily defined and the
action and subsequent damages are also defined by the act. Thus these form a part of all
consumer contracts and transactions between buyers and sellers which the act applies to.
Section 56 of the act defines the consumer guarantee relating to misleading and/or deceptive
statements and information given by the seller. This was thus a breach of her duties under the
act when acting as a seller in a consumer transaction. Thus the statements relating to the
painting being a limited edition which only had 3 copies (when in fact there were many more)
and the archive quality acid-free paper were clearly misleading and deceptive. As this was a
major failure to observe a consumer guarantee on behalf of the seller Elton would be entitled
to remedies prescribed under Section 260 of the ACL.

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References:
Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd
Australian Competition and Consumer Commission v Hewlett-Packard Australia Pty Ltd
[2013] FCA 653
Australian Woollen Mills Pty Ltd v The Commonwealth
Balfour v Balfour [1919] 2 KB 571
Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149
CLR 337
Commonwealth v Amann Pty Ltd (1991) 174 CLR 92