Using case law and legislation to solve legal problems

Source of legal rights Contract Torts Statute

We will look at: Contract Australian Consumer Law Example of use of common law (cases) Australian Consumer Law Example of use of legislation (and inter-action with case law) How to use case law and legislation in legal problem solving.

What is a contract? How do we know whether or not a contract has been formed? Case law

A contract is an agreement that is enforceable at law.

Source of law How do we find the law of contracts? Mainly case law e.g. Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Carlill v Carbolic Smoke Ball [1893] 1 QB 256 Unilateral contract Offer can be made to world at large Distinguish offer from invitation to treat by looking at intention of offeror Unilateral contract – offer made at large, but only accepted by those who actually perform Unilateral contract – communication of acceptance not required Consideration can equal detriment/effort

OFFER/ACCEPTANCE ANALYSIS + = AGREEMENT ACCEPTANCE INTENTION CONSIDERATION

Offer “the indication by one person to another of his or her willingness to enter into a contract with that person on certain terms” Carter and Harland, “Contract Law in Australia” 4th edn p28 Case law?

"Lowest price for Bumper Hall Pen £900.“ An offer is not.... A request or the supply of information Harvey v Facey [1893]AC552 From Harvey to Facey: "We agree to buy Bumper Hall Pen for the sum of nine hundred pounds asked by you. Please send us your title deed in order that we may get early possession." From Facey to Harvey: "Lowest price for Bumper Hall Pen £900.“ From Harvey to Facey: "Will you sell us Bumper Hall Pen? Telegraph lowest cash price-answer paid;”

Harvey v Facey Lord Morris at 556 “the mere statement of the lowest price at which the vendor would sell contains no implied contract to sell at the lowest price.” Lord Morris at 556

An offer is not... An invitation to treat Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1QB 401

Examples of Invitations to Treat advertisements/circulars price lists displays of goods in shops calls for bids at auctions, and calls for tenders. So, is every ad an invitation to treat?

What do the cases tell us about offers? The offeror must intend to be bound by the offer E.g Harvey v Facey Boots case We can often determine this intention by looking at the amount of detail in the offer (it should contain enough detail to allow a binding contract to come into existence) E.g Carlill v Carbolic Smoke Ball The offer must be communicated to the offeree All cases

All an offer needs is a ‘yes’ to make a contract

OFFER/ACCEPTANCE ANALYSIS + = AGREEMENT ACCEPTANCE INTENTION CONSIDERATION

Acceptance A FINAL and UNQUALIFIED assent to the terms of an offer made in the manner specified or indicated by the offeror The “yes” which ends negotiations

Acceptance must respond to the offer So, only those persons: to whom the offer was made; and who have the offer in mind at the point of “acceptance” may accept

Acceptance must be communicated Silence is not sufficient Felthouse v Bindley (1862) 142 ER 1037

OFFER/ACCEPTANCE ANALYSIS + = AGREEMENT ACCEPTANCE INTENTION CONSIDERATION

Wedding cake As well, Mavis is being threatened with legal action by Chrissie Saranrap. Chrissie was married a month ago and was expecting Mavis to provide her specialty – the “nouveau doveau” - a tiered tower of cupcakes, iced in white and arranged to resemble the wings of doves – as the centrepiece cake for her wedding reception. Mavis loves doing cakes for weddings – in fact she now makes more money from doing wedding cakes than she does from her regular cooking classes.

Chrissie saw information about Mavis’ cake services after an article in the local paper, and called round to see Mavis, and look at the different cakes she could make. They discussed possibilities and pricing and Chrissie left with a price list. Apparently, Chrissie called and left Mavis a message on the answering machine ordering the “nouveau doveau” for her wedding, to be delivered on 2nd May at the wedding reception, for $2,000 COD. In her message, Chrissie had said: “If I don’t hear to the contrary, I’ll assume everything is OK. Call me if there is a problem – otherwise I will see you on the 2nd. Looking forward to your lovely creation.”

Unfortunately, because of all the work being done to the kitchen and problems with electrical work and electrical supply, Mavis had experienced a number of black outs which had interrupted her answering machine. Mavis – never received the message from Chrissie, and so of course, had not provided the cake. Chrissie is very angry and claims her wedding was ruined without the cake. She has threatened to sue Mavis.

Legal problem solving – using case law and legislation Part II

Source of legal rights Contract: Express Terms Torts Statute: Consumer Guarantees

Contents of the Contract Terms

Part of contract Puff Misrepresentation: Not contract Statement prior to contract Representation Misrepresentation: Not contract Possible action in equity or statute (s18) Puff No action in equity Possible action under statute (s18) Term Part of contract

Term or representation? Objective test of intention “reasonable man” Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 Indicative factors include Importance of statement Time between statement and contract Special knowledge or skill or access to truth of one party Inclusion of statement in any subsequent document Ellul &Ellul v Oakes (1972) 3 SASR 377

What kind of term? Essential term A term may be either: a Condition Essential term Breach – entitlement to terminate/or damages a Warranty Ancillary term Breach – damages, but no termination an Innominate term Intermediate term Breach – termination if sufficiently serious

Test: how essential was the promise? “The question whether a term in a contract is a condition or a warranty, i.e. an essential or a non-essential promise, depends upon the intention of the parties as appearing in or from the contract. The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict, or a substantial, performance of the promise, as the case may be, and that this ought to have been apparent to the promisor…. Jordan CJ in Tramways Advertising v Luna Park

Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) CLR 633 ‘ Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) CLR 633 Associated Newspapers Limited v Bancks (1951) 83 CLR 322 Associated Newspapers Limited v Bancks (1951) 83 CLR 322

Innominate terms: Hong Kong Fir “There are, however, many contractual undertakings of a more complex character which cannot be categorised as being “conditions” or “warranties”….Of such undertakings, all that can be predicated is that some breaches will, and others will not, give rise to an event which will deprive the party not in default of substantially the whole benefit which it was intended that he should obtain from the contract; and the legal consequences of a breach of such an undertaking, unless provided for expressly in the contract, depend on the nature of the event to which the breach gives rise and do not follow automatically from a prior classification of the undertakings as a “condition” or a “warranty”.” Diplock LJ 69/70

Innominate terms Approved by High Court in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61

Australian Consumer Law Consumer Guarantees: Australian Consumer Law

Revise: How to read a statute E.g. Competition and Consumer Act 2010 (Cth) – s18 Misleading or deceptive conduct (1) A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

Elements of a section: Person In trade or commerce Engage in conduct Misleading or deceptive Defined by legislation (definitions section) or by courts (case law.)

Legislation Competition and Consumer Act 2010 (Cth) Schedule 2 - Australian Consumer Law Application scheme Commonwealth Act – only applies to corporations Why?

Application Scheme How does Australian Consumer Law (ACL) apply to all jurisdictions in Australia? Why do we find it at Schedule 2 of the Competition and Consumer Act 201o (Cth)?

Part 3-2: Consumer Guarantees Division 1—Consumer guarantees Subdivision A—Guarantees relating to the supply of goods 51 Guarantee as to title 52 Guarantee as to undisturbed possession 53 Guarantee as to undisclosed securities etc. 54 Guarantee as to acceptable quality 55 Guarantee as to fitness for any disclosed purpose etc. 56 Guarantee relating to the supply of goods by description 57 Guarantees relating to the supply of goods by sample or demonstration model 58 Guarantee as to repairs and spare parts 59 Guarantee as to express warranties

56  Guarantee relating to the supply of goods by description              (1)  If:                      (a)  a person supplies, in trade or commerce, goods by description to a consumer; and                      (b)  the supply does not occur by way of sale by auction; there is a guarantee that the goods correspond with the description.              (2)  A supply of goods is not prevented from being a supply by description only because, having been exposed for sale or hire, they are selected by the consumer.              (3)  If goods are supplied by description as well as by reference to a sample or demonstration model, the guarantees in this section and in section 57 both apply.

Common elements a person supplies, in trade or commerce, goods to a consumer Common Elements: Person/corporation Supply Trade or commerce Goods Consumer

S2:trade or commerce trade or commerce means:                      (a)  trade or commerce within Australia; or                      (b)  trade or commerce between Australia and places outside Australia; and includes any business or professional activity (whether or not carried on for profit). And case law

S2: goods goods includes: (a) ships, aircraft and other vehicles; and                      (b)  animals, including fish; and                      (c)  minerals, trees and crops, whether on, under or attached to land or not; and                      (d)  gas and electricity; and                      (e)  computer software; and                       (f)  second‑hand goods; and                      (g)  any component part of, or accessory to, goods.

S3: consumer      (1)  A person is taken to have acquired particular goods as a consumer if, and only if:                      (a)  the amount paid or payable for the goods, as worked out under subsections (4) to (9), did not exceed:                               (i)  $40,000; or                              (ii)  if a greater amount is prescribed for the purposes of this paragraph—that greater amount; or                      (b)  the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption; or                      (c)  the goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads.       (2)  However, subsection (1) does not apply if the person acquired the goods, or held himself or herself out as acquiring the goods:                      (a)  for the purpose of re‑supply; or                      (b)  for the purpose of using them up or transforming them, in trade or commerce:                               (i)  in the course of a process of production or manufacture; or                              (ii)  in the course of repairing or treating other goods or fixtures on land.

Case law ‘of a kind ordinarily acquired for personal, domestic or household use or consumption’ Carpet Call Pty Ltd v Chan (1987) ATPR 41-025

‘ordinarily acquired for personal, domestic or household use or consumption’ Not just personal use Business use as well e.g. Carpet in a nightclub (Carpet Call v Chan (1987) ATPR (Digest) 46-025) Not just goods of a kind used in households Commercial versions of domestic products as well E.g. Commercial grade, decoratively coated insulation in Bunnings warehouses (Bunnings v Laminex [2006] FCA 682) Mixed use? Common sense approach E.g even though ostrich egg incubator could be used for home hobbies, if used commercially not consumer (Crago v Multiquip (1998) ATPR 41-620 )

56  Guarantee relating to the supply of goods by description              (1)  If:                      (a)  a person supplies, in trade or commerce, goods by description to a consumer; and                      (b)  the supply does not occur by way of sale by auction; there is a guarantee that the goods correspond with the description.              (2)  A supply of goods is not prevented from being a supply by description only because, having been exposed for sale or hire, they are selected by the consumer.              (3)  If goods are supplied by description as well as by reference to a sample or demonstration model, the guarantees in this section and in section 57 both apply.

S56: elements Common elements Supply by description Guarantee of correspondence with description

Relationship between legislation and case law Common law system – use cases to understand/interpret legislation e.g. What do terms such as ‘acceptable quality’, ‘sale by description’ and ‘reliance on seller’ mean? Find answers in case law such as: Ashington Piggeries v Christopher Hill [1972] AC 441 Grant v Australian Knitting Mills (1935) 54 CLR 49 David Jones Ltd v Willis (1934) 52 CLR 110

Why can we use this case law UK Sale of Goods Act s19(2) Sale of Goods Act 1923 (NSW) s71(1) Trade Practices Act 1974 (Cth) s55 Australian Consumer Law Presumptions in statutory interpretation

Case Law Ashington Piggeries v Christopher Hill [1971] 1AllER847 Grant v Australian Knitting Mills (1936) 54 CLR 49 Sale/Correspondence with description

Ashington Piggeries case: Viscount Dilhorne: “Did the presence of DMNA merely affect the quality of the herring meal or did it make a difference in kind? If the former, then there was no failure to deliver in accordance with the description. If the latter, there was.”

55 Guarantee as to fitness for any disclosed purpose etc 55 Guarantee as to fitness for any disclosed purpose etc. (1) If: (a) a person (the supplier) supplies, in trade or commerce, goods to a consumer; and (b) the supply does not occur by way of sale by auction; there is a guarantee that the goods are reasonably fit for any disclosed purpose, and for any purpose for which the supplier represents that they are reasonably fit. (2) A disclosed purpose is a particular purpose (whether or not that purpose is a purpose for which the goods are commonly supplied) for which the goods are being acquired by the consumer and that: (a) the consumer makes known, expressly or by implication, to: (i) the supplier; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the goods were conducted or made; or (b) the consumer makes known to the manufacturer of the goods either directly or through the supplier or the person referred to in paragraph (a)(ii). (3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier, the person referred to in subsection (2)(a)(ii) or the manufacturer, as the case may be.

S55: elements Common elements Particular purpose made known by consumer Consumer relied on skill/judgement of supplier Reasonable to rely

Case Law Purpose made known? Reliance on seller’s judgement? Obvious purpose? Underpants – Grant v Australian Knitting Mills Reliance on seller’s judgement? Ashington Piggeries v Christopher Hill

S54: Guarantee as to acceptable quality              (1)  If:                      (a)  a person supplies, in trade or commerce, goods to a consumer; and                      (b)  the supply does not occur by way of sale by auction; there is a guarantee that the goods are of acceptable quality.              (2)  Goods are of acceptable quality if they are as:                      (a)  fit for all the purposes for which goods of that kind are commonly supplied; and                      (b)  acceptable in appearance and finish; and                      (c)  free from defects; and                      (d)  safe; and                      (e)  durable; as a reasonable consumer fully acquainted with the state and condition of the goods (including any hidden defects of the goods), would regard as acceptable having regard to the matters in subsection (3).             

(3) The matters for the purposes of subsection (2) are: (a) the nature of the goods; and (b) the price of the goods (if relevant); and (c) any statements made about the goods on any packaging or label on the goods; and (d) any representation made about the goods by the supplier or manufacturer of the goods; and (e) any other relevant circumstances relating to the supply of the goods.

Case Law Carpet Call Pty Ltd v Chan (1987) ATPR 41-025 ‘fit for all the purposes for which goods of that kind are commonly supplied’ Rasell v. Garden City Vinyl and Carpet Centre Pty Ltd (1991) ATPR 41-152 Carpet Call Pty Ltd v Chan (1987) ATPR 41-025

Remedies Breach of contract: Breach of term implied into the contract: Remedies on the contract e.g damages Breach of term implied into the contract: Sale of Goods Act Breach of statutory guarantee Australian Consumer Law Remedies provided by statute

Flooring: Mavis was particularly interested in flooring as she had difficulties keeping her slate tiles clean. She searched for low maintenance flooring and after extensive shopping decided on single sheet vinyl flooring. She saw just the thing at Discount Lino Barn, close to Kylie’s home. Kylie indicated that she didn’t share her mother’s preference for vinyl flooring as it was cold underfoot and had suggested kitchen carpet. Kylie and Mavis spoke to Mike at Discount Lino Barn who suggested under-floor heating could address Kylie’s temperature issues. Kylie provided details of the under floor heating options while her mother left the conference room to offer slices of her coffee cake to the other staff….

She is also angry about the flooring she has had installed She is also angry about the flooring she has had installed. Despite Kylie’s protests she went with the single sheet vinyl, and did not have under floor heating installed. The vinyl, while easier to clean than the slate, is marking and scuffing badly however. She has only had it down 6 months, and already there are a number of wear marks. Her cupcake classes – which she runs 5 times a week and more often in school holidays – are now so popular that she has at least 20 students per class. Because of her renovations she has room for them all around her lovely new island bench, but the vinyl around the island bench almost looks like a race track.

It is as if her students have worn a path around the bench – and in only 6 months. The vinyl was quite expensive – as she had heavy grade domestic installed – but Mavis is very unhappy. She hasn’t yet paid the bill for the vinyl as she has been arguing with the company. They are, according to Mavis, now getting nasty, and want their $45,000 immediately.

Fridge She also advised that her mother was having problems with Whitegoods World from which she had bought her fridge. Kylie advised that her mother required a “French door” fridge with freezer drawers underneath to accommodate the large baking trays she used for her cakes. She had ordered the fridge she needed from Whitegoods World but had experienced delivery problems.

Her oven purchase was much more successful than her fridge which, on the very day it was due to be delivered – not only did not arrive, but the shop called her to advise that delivery was delayed for one month. Mavis said to the shop keeper: “Well that’s no good to me. I ordered that fridge for today. I need that fridge today. I told you when I needed the fridge. The only reason I ordered from you was that you told me I could have it today. If you can’t give it to me today, you can just keep your fridge!! I don’t want it anymore.” Mavis then rang Quick Fridge and ordered and received another fridge that afternoon– suitable for her requirements.

However, one month later, Whitegoods World delivered the fridge originally ordered and demanded payment. Mavis refused to accept the fridge or to pay, and advised them that the order had been cancelled. They are threatening to sue Mavis for the price of the fridge - $5,500.

Oven Mavis returned to the conference room. She advised that she had had to make a large coffee cake that morning, even though her preference would have been to make cup-cakes. In fact, one of her legal problems was her cup-cake oven. Cake Cookers is a specialist retailer which sells products designed for those who like to cook cakes. It retails a number of specialist pans and other baking utensils – many imported from America and not readily available in Australia - as well as a special range of cake ovens.

They are located in Broome – and Mavis lives in NSW, but Cake Cookers sells throughout Australia by catalogue. Mavis wanted a special cake oven in her new kitchen. She saw an oven that looked perfect for her in their catalogue – the picture showed 8 slide out patty pan trays instead of oven trays – exactly what she wanted.

She rang the store and spoke to Cathy She rang the store and spoke to Cathy. She told Cathy all about her cupcakes, her favourite recipes, and her interest in the patty pan oven in their catalogue. Cathy told her that the patty pan oven had eight slide out patty pan holders – instead of oven racks – and that each patty pan holder would take one dozen patty pans. Even better, they came with self cleaning silicone inserts. Mavis was delighted about the self cleaning but concerned that each tray would only take one dozen patty pans. Although after discussion with Cathy, she was convinced that the overall capacity of the oven was appropriate, and so she placed an order….

Mavis advised that even if she had known about the cake order she would have had difficulty fulfilling it because of problems with her newly installed cake oven. When the oven arrived she saw that instead of Australian sized delicate patty pan holders, the cake trays were American size muffin holders – and two trays were even jumbo sized Texas muffin size holders. This is not what Mavis wanted at all. Mavis rang Cathy and told her the oven was not what she had wanted at all, and not suitable for the cakes in which she specialised. Cathy said she was sorry that Mavis was disappointed, but there is nothing that they can do about it now. Mavis wants to know if she still has to pay the $8,000 for the special cake oven.