Commercial Ovens Co and Beta Restaurant - Essay Example

EXAM QUESTION: Question 1. Whether Beta Restaurant can successfully sue Commercial Ovens Co. under the Trade Practices Act 1974 (Cth) (You shouldconsider the implied terms as well as the misleading and deceptive provisions of the TPA) (6 marks) Part V Div 1 is the core of this act, whereby it prohibits the use of false trade descriptions, because it deals with unfair practices; whereby there has been misrepresentation in some form or other. It states that any person in the course of a trade or business that applies a false trade description and/or supplies the goods will be guilty of an offence. The requirements of this offence are; there must be a false trade description; it must be applied; where the use is in the course of a trade/business; goods must be involved for an offence under Section 52 and for an offence under Section 52 there must be goods supplied. The case of Taco Co of Australia v Taco Bell P/l (1982) ATPR 40-303 sets forth the guidelines of what is deceptive and misleading. There must be a relevant section of the public that the statement is aimed; in this case as good as new are the purchasers of ovens; as is the information of serving in the last month. That there was a misled consumer/bystander who came to an erroneous conclusion, which is the belief that the oven was just serviced. Finally, the reason for the misconception needs to be discerned, which in this case is directly from the mouth of the representative. Therefore in the case of Commercial Ovens co there is a breach of s. 52, but there has also been a breach of s. 53, which is a specific false representation which is also a criminal offence. 2. If successful, what remedies will Beta Restaurant be likely to get. (2 marks) There are a variety of remedies for Beta Restaurant which are under s. 79 fines if there is a breach of a criminally sanctioning section, such as s. 53. Prosecutions have to be done by the ACCC. In addition there are injunctions, as s. 80, which can be made by any person. The applicant need not have suffered from the misrepresentation, as per World Series Cricket P/L v Parish (1977) ATPR 40-040. There can also be the disclosure of information or corrective advertising, which is also contained within s. 80, as per Janssen Pharmaceutical P/L v Pfizer P/L (1986) ATPR 50-654. There are also damages as covered under s. 82 that Beta may also receive. The applicant needs to establish three scenarios, which are; a loss or damage has occurred; the conduct contravenes; and the loss or damage was caused by the respondent's conduct. In this case there has been a loss due to the loss of business, because the deserts were not ready. The conduct has contravened Part V because there has been a misrepresentation. Finally, if Beta had known about the servicing and actual state of the oven then they would have bought or planned differently. The misrepresentation therefore has caused the loss. The damages would be the amount if the misleading conduct had not happened, in addition as per Steiner v Magic Carpet Tours P/L (1984) allows for mental anguish or loss of enjoyment damages also to be added to the actual damages. Beta is probably entitled to both sets of damages because the misleading information will have led to loss of reputation, which would cause mental anguish. The one fact that Beta has to remember is to sue within 6 years from when the damage is suffered. 3. Will the ACCC be interested in Commercial Ovens Co. (2 marks) The answer is yes because Commercial Ovens will have breached s. 53 for direct misrepresentation over the servicing of the ovens, which lends itself directly to the statement of as good as new. Therefore criminal sanctions should be taken by the ACCC. Question 2: Matt and Bill's partnership to be a legitimate partnership in business has to satisfy three categories, which are; carrying on a business; in common; with a view to a profit. Matt and Bill's partnership has satisfied these three factors. They are carrying on a business, which is a restaurant called Silver Spoons. They are both equal partners and aim to make a successful business. The intention of Matt and Bill is that this is a joint venture, where there is equal say. This is illustrated by there decision making over budgets and the choice of the furniture for the venue, as per DCT v TUZA (1997) 35 ATR 32. The problem in the above scenario is whether each partner has the sole power to bind the other or if every decision needs to be jointly approved. This is a very important question in whether both Matt and Bill are bound by Bill's decision to change the order and have the more expensive furnishings. If each partner has express actual authority then all partners will be bound, as per Construction Engineering (Aust) Pty Ltd v Hexyl Pty Ltd (1985) 155 CPL 541. This does not seem to be the case; therefore one has to ask whether there is implied actual authority, which means that both parties have the right to make decisions without the other. In this case the way that the initial decisions were made this would not seem to be the case. Apparent authority is not applicable here because Matt states that Bill does not have the authority to make the decision for the company. This results in the purchase not being on the company's behalf, therefore the purchase is Bill's sole responsibility. Question 4: A) 1. the tort of negligence, and remedies: There is no claim under contract law for a third party to the contract; however in respect to defective products there may be a claim under the tort of negligence, in the case personal injuries or damage to personal property that were a result of possible negligence, as long as it can be shown there was sufficient proximity between the parties1. Also that the damage was reasonable reasonably foreseeable and the damage was not too remote therefore the courts may imply a duty of care2. 2. Section 74D of the Trade Practices Act 1975 (Commonwealth) that says that goods must be of "merchantable quality". Merchantable quality refers to the goods being saleable and fit for their purposes. In this case these mushrooms have caused sickness and are not fit for eating therefore the omelette is not of merchantable quality and a breach of s. 74d. B) 1. Explain what is meant by a summary offence. A summary offence is a minor offence that goes in front of magistrates, therefore tried outside the major criminal offence courts. 2. Explain what the prosecutor needs to prove (and the burden of proof) in order to get a conviction: As this a criminal case the prosecutor has to prove beyond a reasonable doubt that the food that was sold was unsafe. As this is a strict liability offence there is no mens rea element, just the actus reus of the food being sold was unsafe for human consumption. This is highly likely as the illness was caused by the consumption of the mushrooms omelette. Read More