Australian Law - Case Study Example

Case Study of the of the Case Study Malcom handed over his tropical fish and award winning rabbit to Georgia, a provider of home pet care service, as he would be away from his home for a week. Georgia sent Malcom a copy of a standard form contract by electronic mail. This contained an exclusion clause that excluded liability for any illness or death caused to tropical fish. Malcom, due to his being very busy planning for his trip, was unable to peruse the standard form and merely signed and returned it to Georgia. Georgia, during Malcom’s absence, fed the tropical fish with rabbit food and the rabbit with fish food. This gross blunder and negligence on the part of Georgia resulted in the death of the tropical fish. The rabbit lost all of its hair, which rendered it unfit to be entered into a pet show in Melbourne. In fact, Malcom had intended to obtain $10,000 as prize money for this rabbit at this show. Moreover, the cost of the tropical fish was of the order of thousands of dollars. These details had been informed to Georgia by Malcom, at the time of his handing over these pets to her. In Australian Consumer Law, exclusion clauses denote clauses that attempt to exclude the liability of one of the parties to the contract, with regard to the occurrence of certain events. Examples are provided by a car parking facility, which includes in its contract that it will not be responsible for any damage to the car, or theft of goods left behind in the car, during the time that the car is parked in the facility. Such clauses can be legally valid, provided they do not infringe the extant law or if they have been included in the contract in a proper manner (Exclusion Clauses). On occasion, a specific exclusion clause may be precluded by statute. For example, the common law provisions, which prohibit a party to a contract from evading liability for gross negligence or negligent misstatements, by incorporating an exclusion clause in the contract (Exclusion Clauses, Exemption Clauses and Disclaimers: Are they Enforceable?). However, in our case, Exclusion clauses will not come to the rescue of Georgia since the valuable tropical fish died due to her negligence in feeding them. Moreover, the rabbit also lost its hair and charm, becoming unfit for being displayed in shows. There are many instances, wherein an individual delivers possession of goods to another person, with the understanding that these goods will be returned. In such cases, there is no transfer of ownership, and this arrangement is termed a bailment. Some examples of bailment are lending some object to another person; handing over a car to a garage or leaving a watch with a watchmaker, in order to subject it to repair or overhauling; and offering documents to a bank for safekeeping. In all these instances, a transfer or delivery of possession is involved (Gillies, 2004, p. 628). A bailee can be sued for breach of bailment and in tort. On alleging negligence on the part of the bailee, the bailor has to either furnish or point to evidence that the bailee had behaved in a negligent manner, thereby departing from the standard of care expected from a reasonable person. In Pitt Son & Badgery Ltd v Proulefco SA, the bailee who was a wool broker stored the wool given to it for safekeeping by the bailor in a negligent manner. This negligence resulted in the loss of the entire stock of wool given to the bailor (Gillies, 2004, p. 632). The court held the bailor liable for the loss, as it had failed to take reasonable precautions. In Cowper and Cowper, a mare was handed over to the defendant for being transported. This invaluable mare lost its life on account of travel sickness, which developed during its carriage by the defendant. As the defendant had failed to take suitable and reasonable precautions to ensure the safety and well being of the mare, it was held liable for this enormous loss (Gillies, 2004, p. 632). Similarly in our case, Georgia had not taken proper care while feeding the tropical fish and rabbit, although Malcom specified their value and asked her to take the utmost care at the time of handing them over to her. With the ruling of the Victorian Court of Appeal in Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd and the decision of the Court of Appeal of New South Wales in Allianz v Waterbrook, a sea change has transpired in the manner in which the Australian courts interpret consequential loss (Caution! – Take care when using ‘consequential loss’ in exclusion clauses, 2008). With this change, a significant widening of the term has taken place. The consequence has been the inclusion of several categories of loss in the liability regime of a contract that incorporates an exclusion clause for the express purpose of excluding consequential loss (Caution! – Take care when using ‘consequential loss’ in exclusion clauses, 2008). The decision in Hadley v Baxendale was discarded by the Victorian Court of Appeal as being imperfect and deficient. As a result, the term ‘consequential loss’ was defined as anything that was over and above the normal measure of loss, wherein the term ‘normal loss’ was to be understood as the loss that every plaintiff in a similar situation would suffer (Caution! – Take care when using ‘consequential loss’ in exclusion clauses, 2008). This changed with the Victorian Court of Appeal ruling in Environmental Systems. In essence, the term consequential loss now includes damages resulting from anything that is beyond the normal measure. This includes profits lost or expenses incurred (Caution! – Take care when using ‘consequential loss’ in exclusion clauses, 2008). Some contracts include unusual and onerous terms. In such instances, it is to be determined whether these terms, which the promisee had not expected to be incorporated should constitute a part of the contractual terms. It has been established by the courts that such terms are not to be a part of the contractual terms, save for the exception of their having been properly intimated to the other party (Collins, 2003, p. 233). In our problem, the standard form was not properly checked up by Malcom as he was busy with his tour. As such, the exclusion clause was not noticed by Malcom. Hence, the exclusion term in the standard form is invalid. Thus, in the case of Iterfoto Picture Library Ltd v Stiletto Visual Programmes Ltd, the plaintiff included an unusual term in the contract with the defendant, which the latter failed to notice. The claim for an additional charge that was extremely exorbitant, by the plaintiff on the basis of this unusual clause, was rejected by the court as the plaintiff had adopted all the reasonable measures to bring this clause to the notice of the defendant (Collins, 2003, p. 234). Whether the court will permit an exclusion clause that restricts or excludes liability for a fundamental breach, it is to be determined by a rule of construction. For instance, in Council of the City of Sydney v West, West parked his car in the Council’s parking station. The parking ticket provided to him had a few clauses printied on the reverse of this ticket. These included a clause that excluded liability for any loss or damage to the vehicle or any injury to any person, irrespective of the manner in which such loss or injury took place (Monahan, 2001, p. 60). Subsequent to being parked, the car was stolen due to the negligence of the attendant of the car park, who was an employee of the council. The court discounted the council’s contention that its liability was excluded by the clause printed on the reverse of the ticket. It was opined by the court that the exclusion clause did not provide an excuse for negligence (Monahan, 2001, p. 60). Notwithstanding the fact that the sale of goods regime the late XIX century permitted a seller to limit or exclude liability, by the stratagem of exclusion clauses; the common law tends to discount and emasculate such clauses to the best of its ability. Thus, a court may declare a contract that includes an exclusion clause, as being invalid (Goldring, 1998, p. 51). After conducting considerable research and analysis, the Law Commissions of England and Scotland came to certain conclusions regarding exclusion clauses. In effect, these commissions recommended that in the context of supply of goods and services to individuals, who could be described as consumers, there should be no possibility to form a contract that included terms that were not in conformity with statute or common law (Goldring, 1998, p. 51). Malcom can sue Georgia for breach of contract under the provisions of the Competition and Consumer Act 2010. He can make a claim for damages for the losses suffered by him due to negligence of Georgia in rendering services to his pets. He can also claim special damages relying on the special circumstances underlying his contract. As such, he can claim $10,000 as special damages for his losses. Malcom can claim damages for fraudulent representation made by Geogia in respect of her high standard of maintenance in her pet care firm. He can make a claim under the provisions of the Competition and Consumer Act 2010, for fraudulent misrepresentation. Georgia can not have any claims against Malcom, in case he made a stop payment order with the bank, since the contract was already rescinded due to her failure to provide the promised services. References Allianz v Waterbrook, NSWCA 224 (New South Wales Court of Appeal 2009). Caution! – Take care when using ‘consequential loss’ in exclusion clauses. (2008, May 2). Retrieved August 31, 2012, from http://www.freehills.com.au/1984.aspx Collins, H. (2003). The Law of Contract. Cambridge University Press. Competition and Consumer Act 2010. Commonwealth of Australia. Council of the City of Sydney v West, 114 CLR 481 (1965). Cowper and Cowper v JG Goldner Pty Ltd, 40 SASR 457 (1986). Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd, VSCA 26 (Victoria Supreme Court of Appeal 2008). Exclusion Clauses. (n.d.). Retrieved August 31, 2012, from Legal Services Commission of South Australia: http://www.lawhandbook.sa.gov.au/ch08s02s06.php Exclusion Clauses, Exemption Clauses and Disclaimers: Are they Enforceable? (n.d.). Retrieved August 31, 2012, from http://www.bdlg.com.au/images/stories/Business__Commercial/Exclusion_Clauses_Exemption_Clauses_and_Disclaimers._Are_They_Enforceable.pdf Gillies, P. (2004). Business Law. Federation Press. Goldring, J. (1998). Consumer Protection Law. Federation Press. Hadley v Baxendale, 156 ER 145 (Court of Exchequer 1854). Iterfoto Picture Library Ltd v Stiletto Visual Programmes Ltd, 1 All ER 348 (1988). Monahan, G. (2001). Essential Contract Law. Routledge. Pitt Son & Badgery Ltd v Proulefco SA, 153 CLR 644 (1984). Read More