Australian Consumer Law - Case Study Example

Essay for Business Law [Name] [Professor Name] [Course] [Date] \ Part 1 In the first case scenario, the central legal issue is whether Bliss Island breached section 18 of the Australian Consumer Law by stating in its advertisement brochure that it provides the best reef diving in the world across the year as well as the finest cuisine made by some of Australia’s finest chefs. Second, whether Ann and Julian are entitled to damages. Section 18 of the Australian Consumer Law (found at schedule 2 of the Competition and Consumer Act 2010), forbids businesses from engaging in deceptive or misleading commerce (or aids to trade) such as deceptive advertisements. The objective of the doctrine is principally to protect consumers by preventing businesses from misleading them into entering a business contract1. To determine whether Bliss Island breached section 18 of the Australian Consumer Law, several aspects must be determined: the conduct of the business, the trade activity, and the misleading and deceptive conduct2. i) The trade or commercial activity. In the present case scenario, it is clear that the activity that brought together Anna and Julian and Bliss Island was indeed a trade activity. It is obvious that there are trade negotiations between Anna and Julian (as the customers or buyers) and Bliss Island (as the trader or seller). Anna and Julian bargain for first-rate diving experience and cuisine. On the other hand, Bliss Island has promised to offer what Ann and Julian has bargained for. Such a scenario was elaborated in the case law of Re Ku-ring-gai Co-operative Building Society3, which determined that in determining a breach of section 18 of the Australian Consumer Law, there has to be a trade activity. ii) The conduct of the business or person: Based on the evidence provide by the case, it is clear that Bliss Island engaged in a misdemeanour by using a pre-contractual statement that eventually induced Anna and Julian, who were enthusiastic divers and passionate about eating cake, to enter a contract that was unmistakably false. Such facts were determine din the case Henjo Investments Pty Ltd & Ors v Collins Marrickville Pty Ltd (1988) 79, where the court held that businesses that mislead customers into entering a false contract have conducted a misdemeanour. (iii) Misleading or deceptive conduct Section 18(1) of the Australian Consumer Law further specifies that a business must not engage in deceptive or misleading conducts. Section 4(2)(a) of the Competition and Consumer Act 2010 describes a ‘conduct’ as doing an act or refusing to do an act, giving impression of an effects of a contract…” There is obviously a deceptive and misleading conduct in the case. In particular, the pre-contractual statement that Bliss Island made in the brochure and on telephone through Sandra assured Anna and Julian that they would experience the best diving experience in the world as well as food experience from some of the best chefs in the country4. When Julian calls Sandra, who works for the hotel, he is misled and deceived that the diving experience is exclusive and that the food is exceptional. However, Julian and Anna are soon disappointed when they find out that the diving is bad and the food is not good. Such facts were discussed in the case law Taco Company of Australia Inc v Taco Bell Pty Ltd5, where the court held that misleading or deceptive conducts are tantamount of breach of consumer law. In particular, Bliss Island and Sandra’s statement led to a breach of false representation in compliance with s. 29 (g) of the ACL, which specifies that false claims, performance characteristics or approvals or benefits of services or goods is a violation of the law. Conclusion The three elements necessary for establishing a deceptive or misleading conduct are established: the false conduct was undertaken in commerce; the false conduct was in every ways deceptive and misleading and lastly, Anna and Julian relied on the Bliss Island’s conduct leading them to suffer financial loss. Hence, Bliss Island made false proclamations that it offer high quality diving and cuisine experience (Eva v Mazda Motors (Sales) Pty Ltd [1977] ATPR 40-020 13). Ultimately, as the three elements are satisfied, Bliss Island’s statement actually violated Section 18 and Section 29(g) of the ACL. Victims of deceptive of misleading conduct are entitled to monetary compensations (damage) when they sustain losses as a result of deceptive conducts. Hence, Ann and Julian should be advised that they are entitled to damages. Part 2 In the second scenario, the central legal issue is whether Julian and Ann can make successful claims for Bliss Island’s negligence of duty of care after Anna lost her jewellery and Julian his wallet due to theft at theft in their room. Hence, it should be established whether Bliss Island owes Julian and Ann a duty of care6. In consistency with the facts of the case, Julian and Ann will have to prove to the court that Bliss Island owed them a duty of care. Put differently, despite the notice that Bliss Hotel took ‘no responsibility for any items left in rooms by visitors,’ it is still clear that it is the housemaid’s negligence and not Julian and Ann’s, which led to the loss of the items. As indicated in the case, the housemaid failed to lock the door. Therefore, Bliss Island must determine duty of care based on: the reasonable foresee-ability test, the reasonable foresee-ability test, and entitlement to damages. (i) The reasonable foresee-ability test. Under the common law, or as established in the case law of Donoghue v Stevenson [1932]7, in determining a duty of care, the defendant has to take reasonable care so as to avoid omissions they can reasonably anticipate would warrant the injury of the other. In the case, Anna and Julian are directly affected by the Bliss Island’s omission through the housemaid (who never locked the door), leading to their economic loss. There is obviously a vulnerable relationship, since Bliss Island has the controlling position (other than Anna and Julian) of the knowledge of security standards and the resources (including staff’s capacity for duty of care). Similar assumptions were made in the case law Green v Country Rugby Football League of NSW Inc [2008]8. Additionally, Anna and Julian (Plaintiffs) were reliant on Bliss Island (defendant). They both assumed that as Bliss Island had not cautioned them that the housemaid may leave the door unlocked. This led them to leave the wallet and jewellery in the room. (ii) Breached of duty of care Anna and Julian should be advised that they must also prove that Bliss Island breached a duty of care. They need to prove that Bliss Island failed to implement the requisite standard of care (or security standards). Indeed, it is established in the case that there was a foreseeable risk as Bliss Island could have foreseen the risk of living doors unlocked as any “reasonable person” can. Next, the risk is significant since the loss of jewellery and wallet resulted to significant economic loss. Based on the evidence in the case, any reasonable person in the position of the defendant would have taken precautions in providing standards requiring housemaids to lock doors after house-cleaning9. In the same case as witnessed in the case law of Boulton v Stone [1951]10, Bliss Island may be sensible to pay no attention to the foreseeable injury since there was a small possibility that by leaving the doors unlocked, stealing the jewellery and wallet was likely. As a result, Bliss Island breached its duty of care towards Anna and Julian. iii) Damage Since a breach of duty has been established, Anna and Julian must as well prove that the damages they suffered are recognised for being recoverable by the law. Ann and Julian suffered actual financial loss and damage when they los jewellery and wallet of money, both quantifiable in monetary terms. In terms of causation, it is clear that the damage was caused by Bliss Island’s breach of duty. Indeed, if the housemaid had taken a precaution to lock the door, the wallet and jewellery would not have been stolen. Next, the risk was reasonably foreseeable rather than remote. This is since Bliss Island is liable to the damages Julian and Ann suffered due to negligence by Bliss Island’s staff (causation in law). Such facts were established in the case law Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd11. Therefore, Ann and Julian sustained damages due to Bliss Island’s negligence. Since the elements of duty of care, breach of duty and damages exist, it is clear that Ann and Julian can claim for damages due to loss of their property. Still, Bliss Island may have some defences, particularly the law of Voluntary Assumption of Risk, which bars claiming for damages when a plaintiff accepts risks of damages. In the case, Bliss Island has put a sign in the rooms warning that it takes no responsibility for any items visitor leave in the rooms. Hence, Anna and Julian have sufficient understanding of the risks involved of leaving items in the room. They, therefore, accepted the risks voluntarily: Morris v Murray [1991]12. Conclusion In concluding, while Bliss Island has satisfied the requisite elements of duty of care, breach of duty and damage, Anna and Julian may not be liable for any compensation from Bliss Hotel since they are also held accountable under the Voluntary Assumption of Risk. Hence, should be advised that while the Bliss Island is in breach of duty of care, they may not be liable for any compensation as they understood the risks when leaving the items in the room. References Books and Journals Chew, Charles, "The scope and limitations of the doctrine of misleading or deceptive conduct in the context of guarantees: some perspectives and uncertainties," (2006) 3 Macquarie Journal of Business Law 79-98 Hanks, Frances and Philip Williams, Trade Practices Act: A Twenty-five Year Stocktake, (Federation Press, 2001) 104 Lockhart, Colin, Misleading Or Deceptive Conduct: Issues and Trends, (Federation Press, 1996)6 Newnham, H, “When is a teacher or school liable in negligence?’ (2000) 25 Australian Journal of Teacher Education, 1-55 Yule, J ‘Negligent investigation by police : can a duty of care be found using the existing negligence principles in Australia?’ (2008) 1 Journal of Australasian Law Teachers Association, 379-389. Case Laws Boulton v Stone [1951] AC 850 22 Donoghue v Stevenson [1932] AC 562 Green v Country Rugby Football League of NSW Inc [2008] NSWSC 26. 20. Morris v Murray [1991] 2 WLR 195 27 Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd [1961] AC 388 Re Ku-ring-gai Co-operative Building Society (No 12) Ltd [1978] ATPR Taco Company of Australia Inc v Taco Bell Pty Ltd [1982] ATPR 40-303 11 Read More