Assignment Facts
On 3 July 2011, Mario notices that retailer Wood Ovens Pty Ltd is having a sale of commercial grade pizza ovens. Mario explains to Lee, a salesperson for Wood Ovens Pty Ltd, that he wants an oven which will be the most suitable oven for his 24 hours a day, 7 days a week pizza shop. Lee replies that the ‘Deluxe A1' model pizza oven is the top of the range in terms of pizza ovens and will be the best pizza oven for Mario's business. Lee says that Mario can have this oven for $15 500. Mario replies that he will think about it and get back to Lee later.
Mario returns to Wood Ovens Pty Ltd on 4 July 2011 and says that he is prepared to buy the ‘Deluxe A1' model pizza oven for $15 000. Lee replies that she might be able to sell this model of oven to Mario for $15 000 if Mario pays cash on delivery. Mario says that he needs to decide whether he wants to pay cash on delivery and that he will call Lee the next day.
On 5 July 2011, Mario speaks to Lee on the phone and says that he will buy the ‘Deluxe A1' model pizza oven from Wood Ovens Pty Ltd for$15 000 cash on delivery if Wood Ovens Pty Ltd installs the oven at his business free of charge. Lee replies that her best price for the oven with installation included is $15 250, and that Mario has one week to make up his mind.
On 9 July 2011, Mario visits his friend Jim's pizza shop and, to his surprise, sees Lee installing a ‘Deluxe A1' model pizza oven at the shop. Mario feels pressured and tells Lee, ‘OK, I accept. I will pay you $15 250.' Lee replies, ‘I'm sorry, but I have just sold the last of our "Deluxe A1" model pizza ovens to Jim for $15 000.'
Assignment Questions
1. With reference to case law, analyse each communication between Mario and Lee and explain whether Mario has a contract with Wood Ovens Pty Ltd.
2. Assume now that Mario has a contract with Wood Ovens Pty Ltd for the purchase of a ‘Deluxe A1' model pizza oven, and one of the terms of the contract is that: ‘The liability of Wood Ovens Pty Ltd is limited to the cost of replacing a defective oven.' However, Lee promises Mario orally that this term ‘is just a formality' and that ‘you can get your money back' if anything goes wrong.
What are Mario's rights (if any) against Wood Ovens Pty Ltd under pt 3-2 of sch 2 to the Competition and Consumer Act 2010 (Cth) if it becomes clear that the ‘Deluxe A1' model pizza oven does not function properly once it is used for more than 15 hours a day? Can Mario enforce, under contract law, Lee's promise that Mario can get his money back?
3. Assume that Jim purchases a ‘Deluxe A1' model pizza oven from Wood Ovens Pty Ltd under a contract that is on relevantly similar terms to the contract between Mario and Wood Ovens Pty Ltd in question 2, above.
Two days later, the oven catches fire as the result of a design fault and causes substantial damage to Jim's shop. Jim is also injured in the process of trying to put the fire out.
Explain whether Jim has any rights in negligence against Wood Ovens Pty Ltd in relation to his injuries and for the damage to his shop.