MLC101 Tri 2 2016 - Assessment Two – Case Studies

PLEASE READ THE INSTRUCTIONS DOCUMENT CAREFULLY 

NOTE THERE ARE FOUR (4) MARKING CRITERIA TO OBSERVE BELOW 

Please answer TWO out of three questions (if you answer three only the first two will be marked) 

Each answer should be 750 words (leeway 15%) 

USE CASE LAW AND STATUTORY PROVISIONS TO SUPPORT YOUR ANSWERS 

1. Jin Ho is a keen collector of limited edition electronic devices. On Friday, November 2, he was casually browsing through the classified section of the Weekend Victorian Bulletin newspaper website when something caught his eye. Near the bottom of the page Jin Ho noticed an advertisement: ‘Offering for sale: New limited edition C-Phone Xi 2015. Still under 3 year warranty. Must sell this weekend. $1,500 o.n.o! Call or text 0453782955 or email [email protected]’. There were pictures and details about the specs of the phone. Jin Ho had seen the same model limited edition phone advertised for as much as $3,000, so he was interested why it was going so cheap. It looked to be in very good condition from the photos. He had been keen on this particular model for some time, and this looked like a good deal. He decides to text the number provided in the ad. The following conversation by text is had between them:

Jin Ho: Hi. Hey did you advertise a C-Phone Xi limited edition on the Vic Bulletin website?

Narvin: Yup, that’s me.

Jin Ho: Cool, is it in good condition?

Narvin: Sure, like new, man.

Jin Ho: How about $1,000, would you let it go for $1,000?

Narvin: Can you pay by cash?

Jin Ho: Yes, I can.

Narvin: I would consider $1,200 cash.

Jin Ho: I can pay $1,100 cash. So we have a deal?

Narvin: Maybe, but sorry I have some people coming to visit me now, gotta go.

Jin Ho: Please don’t sell the phone, I will give you $50 to not sell the phone in the next 3 days.

Narvin: Sorry, I’ve got to go. Can you transfer the money online, I don’t like to carry too much cash on me.

Jin Ho: Ok ok, no problems. But please don’t sell. I’ll see you tomorrow.

Narvin: Sure, drop by anytime. 15 Lowland Terrace, Springfield 3020.

Jin Ho: Thanks. Bye.

Later the same day, Jin Ho decides to email Narvin that he would pay $1,200 cash for the phone. In the email he says he will come to see the phone the next day and also pay the $50 for the option.

The next day (Nov 3), Jin Ho drives to Narvin’s place to view the phone. Upon arriving, it appears nobody is home. He tries to call him, but his phone says that the number no longer exists. His friend Dan texts him and says that the advertisement for the phone has been removed from the website. Jin Ho is desperate, so he writes the following note, ‘Narvin, I came to see the phone – happy to pay $1,500 cash, you have a deal!’, and puts it in Narvin’s mailbox.

Narvin receives Jin Ho’s email the next morning (Nov 4) and decides that the price is too low. He responds and says that he is not interested in selling at that price.

Very soon after, another buyer offers Narvin $1,700 for the phone. Narvin sells the phone to him. He later finds Jin Ho’s letter in his letterbox, and throws it in the bin.

Advise Jin Ho whether he has any rights against Narvin under the law of contract.

Use case law to support your answers. (500 words)

2. Mayuri owns her own small business consultancy firm (QTS Ltd.) in Burwood which she established and grew with her friend Shelley after they graduated from Commerce degrees at Deakin University. The company has many clients having attained valuable goodwill, and is regarded very highly by the small business sector in East Melbourne. Shelley has now moved to the US, starting a similar business in South

Chicago, which has also grown very quickly. After some serious soul searching, Mayuri decides to take the plunge and join Shelley, so she advertises the business for sale. One day, Jan, a business entrepreneur, calls and asks Mayuri about QTS Ltd.. Mayuri tells her that the business has an established foothold in the market, with many clients, and an excellent reputation. She also tells her that the company has always been profit making, and will continue to do so because of its reputation. Jan is very interested, so asks Mayuri to email her vital information about the company with details about its accounts. Mayuri sends an email to Jan containing all the relevant information and accounts of the company. Previously, Shelley was in charge of the accounts before she (Shelley) left for the US, and omitted some vital accounting information from the accounts (softcopy) to make it look like the company was in a better financial state than it actually was. The paper accounts in the office were however clear about the true financial state of QTS Ltd. Mayuri was not aware of Shelley’s tampering. Upon receiving the accounts from Mayuri, Jan decides to purchase the company and signs the contract with Mayuri, paying $800,000 for the business. After several months of running the business, Jan realizes that something was amiss with the accounts provided by Mayuri. Things were going well for Jan however, so she continues to run the business for another year when all of a sudden the business takes a serious downturn after a sudden dip in the economy. She remembers the accounts issue and decides that she would like to pursue legal action against Mayuri.

Advise Jan whether she can sue Mayuri under the common law of misrepresentation and the remedies available to her if she is successful.

(PLEASE DO NOT DISCUSS NEGLIGENT MISSTATEMENT)

Use case law to support you answers.

3. Taran visits her local hair salon, Fantastique, on a regular basis. She is tired of having the same old boring hair colour, so she and her friend from university, Monica, decide that it might be fun to put multi-coloured streaks in their hair. The lead stylist at Fantastique is Fabio, who originally trained with Shwarzkoza in Paris, a famous styling school in France. After explaining to Fabio that they want permanent streaks for their hair, Fabio advises Taran and Monica that they try a brand new hair colour product, called ‘Alive’. Fabian assures both the girls that due to its combination of natural ingredients, it is known to cause minimal hair damage and is very healthy for the scalp. He also says, “It’s not only healthy, the colour will remain for months!’. The treatment is not cheap, but both Taran and Monica decide to give it a go, and pay $150 each for a total of four different colours. Two days after they both applied the treatment at home, both Taran and Monica notice the colour fading. Taran also has a severe itch on her scalp since the colouring, and needs to get medical help and medication to treat it. Both girls return to Fantastique to complain to Fabian and ask for their money back. Fabian points to a sign at the front of the salon that says:

IMPORTANT NOTICE: LIMITATION OF LIABILITY

“Fantastique Ltd. will not be liable for any loss or damage caused by any defective product sold or used in our salon. Any liability will be the complete responsibility of the manufacturers.”

What rights (if any) do Taran and Monica have against Fantastique and/or Alive for breach of any of the consumer guarantees under the Australian Consumer Law?