Revision of Unit 9: Consumer
protection
Problem questions
Here are some problem questions for you to attempt.
Before you proceed you may wish to refer to your textbook, in the
introductory chapter, and read the section on ‘answering problem
questions’.
Alternately, you can apply the format set out below to assist you in setting
out an answer to the problem questions that follow.
How to answer a legal problem question
A suggested short format suitable for use in examinations.
1. ISSUE: Identify the main legal issue.
(perhaps one sentence or a paragraph at most)
2. LAW: Briefly set out the relevant legal principle/s from either case law and/or
legislation.
3. APPLICATION: Apply the law to the facts given in the question and state your
conclusion or give your advice.
Commercial law revision questions unit 9: Consumer protection
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2.
Max purchased a telephone answering machine to answer his personal
telephone calls at home. The machine was on special for $60.00 and there
was a sign in the shop that said “choose carefully, no refunds”.
After installing and programming the machine, Max found that it was faulty
and could not record messages.
Max took the machine back to the shop to seek a refund. The shopkeeper
told Max that he could exchange the machine but that he was not entitled to
a refund.
Advise Max of his rights under the Sale of Goods Act 1923 (NSW).
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3.
Brian sold his car to Jeff and accepted Jeff’s personal cheque in payment.
The cheque was dishonoured by Jeff’s bank.
Jeff resold the car to Hilda. Brian now wants the car back.
Advise Brian.
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4.
In relation to the stories below, outline the main provisions of the Trade
Practices Act 1974 (Cth) that have been breached and identify which party
is in breach.
a.
Jodi purchased a 12 day “package holiday” from a Travel Agent which was
advertised by the Travel Agent on the Internet.
When she returned from the holiday she realized that the holiday had only
been for 11 days.
b.
Boris is a retailer of electrical goods. He advertises a special in the local
newspaper being “108cm flat screen plasma televisions” at the very low
price of $2,000.00. In fact he only has one in stock. The advertisement was
simply a trick to get potential customers to visit his shop.
c.
Bart and Lisa are the promoters of a new company. They issue a prospectus
inviting members of the public to buy shares in the company.
The prospectus document contains a statement that the company has
“acquired the formula for a wonder drug that will cure baldness”. In fact the
statement is untrue and is known to be untrue by Bart and Lisa.
d.
Delta advertises mobiles telephones and says they can be used anywhere in
Australia.
In fact, she knows that they can only operate in the metropolitan area of
Sydney.
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Commercial law revision questions unit 9: Consumer protection
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5.
Megan & Partners are a Solicitor Corporation who are carrying on business
in a large regional town in New South Wales.
The firm has a near monopoly on residential conveyancing in the town and
surrounding district.
Mai, who is a Licensed Conveyancer has recently started a firm in
competition with Megan & Partners.
Megan & Partners are not happy with a competitor in the market place and
decide that they will reduce their fees from $900.00 to $200.00.
They anticipate that Mai, who charges $500.00 per matter, will quickly go
out of business. Once Mai is removed as a competitor, Megan & Partners
intend to return to their former pricing policy.
Advise Megan & Partners in relation to the above.
In your answer, refer to the Trade Practices Act 1974 (Cth) and relevant
case law.
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6.
You are a Licensed Conveyancer carrying on practice in Sydney.
Lee and Fang instruct you to act on their behalf in a home purchase.
Your clients have arranged a loan through a finance broker called Arc
Finance.
Arc Finance have told your clients that a condition of the loan approval is
that they take out home insurance through Arc Insurance, a related company
to Arc Finance.
Your clients have complained to you that the cost of the insurance is very
expensive compared to other insurers.
Discuss with reference to the Trade Practices Act 1974 (Cth).
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Feedback for question 2
The shopkeeper would be in breach of the Implied Terms of Fitness for
Purpose and Merchantable Quality. Max may insist on a full refund.
To rely on Fitness for purpose Max will need to demonstrate that he:
1. He made known the purpose for which the goods were to be used.
2. That he relied on the seller’s skill or judgement
3. That the seller usually traded in those kind of goods.
To rely on Merchantable quality Max must prove:
1. The goods were bought by description.
2. The seller usually traded in those kind of goods.
Relevant cases are Grant v Aust. Knitting Mills and David Jones v Willis.
Feedback for question 3
This question concerns sale under a voidable title which is an exception to
the Nemo dat rule.
Provided Hilda was a bona fide purchaser for value who acted in good faith,
without notice of the seller’s defective title, she will retain the legal title to
the car.
The relevant case is Lewis v Avery.
Brian would have an action against Jeff and could sue on the cheque.
Feedback for question 4
a.
The travel Agent appears to be in breach of section 58 of the Act, selling
with no intention to supply as ordered. The relevant case is Dawson v World
Travel.
b.
Boris appears to have engaged in Bait Advertising and would be in breach
of section 56 of the Act.
c.
Bart and Lisa appear to have engaged in misleading and deceptive conduct
and have breached section 52 of the Act. The relevant case is Fraser v
NRMA.
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d.
Delta appears to have made a false or misleading representation and
appears to have breached section 53 of the Act. The relevant case is Hartnell
v Sharp Corporation.
Feedback for question 5
The intended conduct of Megan & Partners would amount to misuse of
market power and would be in breach of section 46 of the Act It states that
a corporation with a substantial degree of market power may not use such
power to eliminate a competitor.
Such activity is called “predatory pricing”. A relevant case is ACCC v
Boral.
Feedback for question 6
This question concerns a breach of section 47 (7) of the Act.
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