BUSI 2301 Business Law
Mar 11,22BUSI 2301 Business Law
Question:
Vincenzo Franco and his family had come from Italy to visit relatives in Australia, decided that they would like to book a trip to Mount Hotham (Ski Resort) in Victoria. They had done a lot of research online about the activities and services available at Mount Hotham. They found a resort called “Scenic Views”, it advertised (invitation to treat) that all their guest suites had open-fire places, TV’s and Cable, a spa bathroom and spectacular panoramic views from a private balcony looking out on the snowfields and the snow covered mountains. As Vincenzo Franco, did not speak very good English, he was having difficulty understanding the terms and conditions relating to booking at the resort. He decided that it was better if he went to see one of the marketing managers from Scenic Views at offices that they had in Melbourne rather than make the booking on the website. When Vincenzo arrived at the offices of Scenic Views, he spoke directly to Mr George Smith (Marketing Manager). Vincenzo with his broken English explained to George that he wanted to book one guest suite at Scenic Views. George provided Vincenzo with a lot of detail about the hotel booking process and his options but he was not sure whether Vincenzo actually understood what he was saying.
Vincenzo asked about the price for 7 nights all inclusive and George responded $350 per night. Vincenzo thought it sounded quite expensive but because it was all inclusive he decided to book for the 7 nights.Despite the information that George provided when Vincenzo and his family arrived they discovered that not all the rooms had private balconies or panoramic views. Vincenzo was very upset as this was not what he was expecting. Instead of the private balcony and panoramic views that he was expecting, his room was facing a grey wall from another building and had no balcony at all. Vincenzo called George to complain and asked for and upgrade to a suite with a private balcony and panoramic views. George advised him that because it was peak season everything was fully booked. Vincenzo was very unhappy and not satisfied with the level of service and did not want to stay there and get a refund for the 7 nights that he paid for. However George explained to Vincenzo that according to the terms and conditions from Scenic Views Hotel they could not refund the money and that there was normally a cancellation fee of 3 nights accommodation.Vincenzo was very angry but did not know what to do… He was becoming increasingly frustrated because of his English. He was convinced that George, the Marketing Manager was not acting in good faith.
Question
1. Required
Please advise Vincenzo Franco if he entered in a contract with Scenic Views and if this contract can be invalidated under the principles of Contract Law.
(a) Explain how the ELEMENTS to be satisfied in order to make a simple contract valid
- You will need to address all the essential elements of a contract including (Offer and acceptance, intention and consideration) as well as elements of a valid contract (Capacity, Legality, Genuine Consent Mistake,Misrepresentation, Durres, Undue Influence and Unconscionability.
- You will need to address and explain the methods by which a contract is ended.
- You will need to address and explain Remedies available for Vincenzo Franco
Note : You must identify relevant case studies in order to support your legal argument .
(b) Explain the construction of the contract .
- For the purposes of this part you should distinguish between representations and terms.
- Explain the importance of a collateral contract
- Distinguish between conditions and warranties
Note: You must address these questions according to the case scenario provided and do not forget to provide relevant cases studies to support your legal argument.
2. Required
Explain to Vincenzo what are his Australian Consumer Law Guarantees under the Competition and Consumer Act 2010 (Cth) .
- You need to justify your view as to whether these guarantees are available. You will also need to explain the meaning and significance of the implied consumer guarantees.
- Explain the consumer’s rights in the event of the supplier’s failure to comply with a consumer guarantee.
- In addition, Explain the remedies available to Vincenzo Franco and the penalties that can be imposed to Scenic Views under the Act against a trader in breach of the Australian Consumer Law.
Answer:
Introduction
Answer 1A
Issues
Franco has a deal with the property. The question is whether a genuine contract has been made between them.
The problem is also how a contract may be terminated and what legal recourse Franco has against the resort.
Law
For a contract to be valid in court, both parties must be of legal age and the consent must be free. A contract may be terminated in several ways if the consent is not free. There is also a method to express dissatisfaction. A party may sue for damages if the contract is broken. The court examined compensation for breach in Addis v Gramophone [1909] AC 488. The courts want to place the plaintiff in a good position. In event of a breach, the court may let the plaintiff walk out of the contract with no responsibilities. In the case of Partridge v Critenden (1968) 2 All ER 425, the court held that advertisement is only an invitation.
Application
The resort has advertised that it would give exclusive services to its guests. Because this is advertising, it is an invitation and hence not permissible under Partridge v Critenden. The manager of the resort made Franco an offer when he visited the office. This was an offer since it had sufficient facts, such as price and services, for a reasonable individual to accept it. Franco had accepted the $375 offer. An established business deal was made for a say in the resort and a $375 room. Thus, the parties have made a contract. Franco doesn’t speak English well and doesn’t grasp the resort booking terms and restrictions. The manager knew Franco didn’t comprehend the terms due to his poor English. In this case, the contract is void due to the manager’s unconscionable behaviour. The management exploited Franco’s disabilities and behaved dishonestly by not explaining the contract to him.
Franco was promised a panoramic view from the resort when the deal was signed. But he found no such vistas from the resort accommodations. The contract has been terminated due to a violation of its conditions. The no return policy was not clearly explained to Franco due to unconscionability. As this is a breach of contract, Franco is entitled to be compensated for the loss. He may sue for the money he paid and any loss of pleasure.
Conclusion
Franco might sue the ski resort for breach of contract.
Answer 1b
Issue
The challenge is distinguishing a contract term from a representation. Conditions and warranties are not always clearly defined. The problem is also to evaluate a collateral contract.
Law
Parties’ expertise and timing, the relevance of the term being notified, and the parole evidence rule are all present to different terms and representation.
In Oscar Chess v Williams [1957] 1 WLR 370, the court declared that if the representee has greater information than the represented, the statement is a term, and vice versa. It is a term of the contract, according to the justices in Ecay v Godfrey [1947] 80 Lloyds Rep 286. The less time occurred following the debate of the statement, the more probable it is a word. According to the parole evidence rule, a party cannot claim a statement is part of a contract term if the contract terms are written down in a document and the statement is not part of the document. Conditions and warranties are forms of contract provisions that are characterised by their contract relevance. Conditions are the fundamental conditions of the contract. Poussard v Spiers (1876) 1 QBD 410 dealt with circumstances. The court held that if a person breaks a contract, they must not only pay the other party but also let them out of any contractual responsibilities. A condition is a word that constitutes a contract’s foundation. Warranties are contract clauses. Although they constitute contract provisions, they do not entitle the injured party to a breach of contract. According to Bettini v Gye 1876 QBD 183, the breach merely permits them to demand damages.
A collateral contract is an addendum to the primary contract. In this instance, the party entering the primary contract is the consideration for the establishment of a collateral contract. Evans & Sons Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078, the aggrieved party is entitled to damages for violation of a collateral contract.
Application
The first step is to determine if a panoramic view is a contractual need or only a depiction. Apply the following methods to differentiate between a word and a representation. The resort manager and Franco signed a contract shortly after their conversation regarding the end of the panoramic view. This would make the panoramic vista of the resort a contract term. In comparison to Franco, the manager knew that during peak season, the allocation of the panoramic view to every customer is not possible. For the resort, the manager is represented, therefore, a panoramic perspective will be a provision for the contract which is also defined in the judgment of Oscar Chess v Williams.
Franco further stressed the value of the rooms’ panoramic views to the management. Using Ecay v Godfrey, a panoramic view of a room would become a term for the contract. But it is only a condition for the contract. Franco paid a sum he deemed excessive only to have the panoramic view. He would not have agreed to a higher price if the deal did not include the panoramic view from the rooms. In that instance, a panoramic view is a requirement of the contract. Franco may terminate the contract and sue for damages if the agreement is violated. If the conditions were not contained in the Franco-signed agreement, they would still be part of a collateral contract, which is an exemption to the parole evidence rule.
Conclusion
The panoramic view is a condition in the place of a guarantee.
Answer 2
Issue
Consumers in Australia have rights under the Australian Consumer Law. The problem, in this case, is available Franco’s legal rights.
Law
In Part 3-2 of ACL schedule 2 to Competition and Consumer Act 2010, the guarantee is described as a legal assurance right that is available to customers against sellers (AustLII, 2022).
A consumer is someone who buys products or services priced under $40000 for personal consumption and not for resale or commerce.
Contrary to what the parties may think, Consumer Guarantees imply a few stipulations in the sale of products or services. The seller cannot omit these provisions from the contract under s 64 (AustLII, 2022).
S56 requires that the items match the description used to sell them.
S.61 further states that services must be appropriate for the purpose for which they are purchased. This implies that if the customer expressly states that the services are required for a particular purpose, the services must meet the requirements of s 61 (AustLII, 2022). This promise is breached if the services are not suitable for the purpose.
The ACL also outlaws misrepresentation of services under Article 156. According to this article, consumers have the right to “refund, repair, or replacement” if rights are violated by the seller. The provisions for taking action against service providers are in ACL 267 (AustLII, 2022). Under the clause, the customer may sue the provider if they fail to satisfy their service obligations. Due to this, the consumer is at fault. Under article 268, a reasonable person would not have obtained the services if they were not guaranteed (AustLII, 2022). The contract of services may be cancelled under Article 269 of the ACL.
Application
Franco paid less than $40000 here. He also bought the resort’s services for his use. So, as per ACL 3, he is a consumer. In this case, he informed the management that he is in desire of hotel rooms with a view. This is why he paid more. In this instance, the management broke 61 by promising a panoramic view and a balcony, which were not available. But the services offered by the hotel are not suited for the purpose. The management denies Franco’s refund citing rules. According to § 64, no term may restrict a person’s ability to seek redress under the ACL. So the word is invalid. Franco may also sue the resort under § 267. It is because they have not satisfied the consumer’s assurances in connection to the services. Hence, Franco faced issues. Thus, § 269 would enable Franco to cancel his contract with the resort.
Conclusion
Franco may cancel the contract and sue for damages.
References
Case Laws
Addis v Gramophone (1909) AC 488
Bettini v Gye (1876) QBD 183
Ecay v Godfrey (1947) 80 Lloyds Rep 286
Evans & Sons Ltd v Andrea Merzario Ltd (1976) 1 WLR 1078
Oscar Chess v Williams (1957) 1 WLR 370
Partridge v Critenden (1968) 2 All ER 425
Partridge v Crittenden (1968) 1 WLR 1204
Poussard v Spiers (1876) 1 QBD 410
Websites
AustLII. (2022). COMPETITION AND CONSUMER ACT 2010 – SCHEDULE 2. Retrieved from http://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html
