PMI/ACA/14/ASC(14)/001

Rev. No.:0
MANTISSA
ASSIGNMENT COVER

SECTION A: PERSONAL PARTICULARS (PLEASE USE BLOCK LETTERS)

Programme Diploma in Business Administration (DiBA)

Module Subject: BUSINESS LAW
Module code: BM240
Name of Lecturer: MR. SAMUEL PHUA
Assignment title: BUSINESS LAW
Assignment Name of Student Extension date agreed Actual Late
Submission date NOOR AZNI (Written approval from submission date
SHAHIRA BT Mantissa office)
CHEMAN(DBA-
F1508-0264)
24th September
2016
Explanation for
Late submission (if
applicable)
Interim mark awarded

IMPORTANT:
1. All completed assignments must be accompanied by PGSM front cover sheet when
submitted.
2. Students are required to submit their work through MORE Portal to ensure the originality
of their work.
3. All references must be fully cited in Harvard/ APA notation.
4. Plagiarism in any form will result in severe penalties.
5. Work submitted within up to 7 calendar days late = 10 marks subtracted.
6. Work submitted up to 10 calendar days late = 20 marks subtracted.
7. Work submitted more than 10 calendar days late = 1 marks awarded.
Declaration: I declare that…

a) No part of this assignment has been copied from any other person’s work except
where due acknowledgement is made in the text.
b) No part of this assignment had been written for me by any other person except where
such collaboration has been authorized by lecturer concerned.
c) All grades obtained by students are final. Appeal can only be made (on FAIL case
only) to the Academic Borad along with a payment of RM 100.00 to formalise the
Process.
d) the University/ College uses plagiarism detection software.

Student Signature ___AZNISHAHIRA________ Date 18/11/17_

A)

Patricia best course of action would be under the Trade Practices Act (Cth) 1974 or the
Goods Act (Vic) . However as there is an exclusion clause in this contract the Goods Act will
not apply as under section 61 of the act exclusion clauses are permitted. The Trade Practices
Act however does not permit exclusion clauses under section 68. She would look toward
section 4 to see if the Trade Practices Act does apply in these circumstances. There are four
steps in testing whether the Trade Practices Act applies.

Step one is to check whether the seller is a corporation, Patricia purchased the
photocopier from Bob's Warehouse Pty Ltd who are clearly a corporation as they have
proprietorship limited attached after their name. Step two is whether the contract is a
consumer contract. A consumer contract is when the price of goods is less than $40,000 or
the goods are normally used in a domestic or household situation. As the photocopier was
$35,000 it is a consumer contract as it is less than the prescribed amount.

Step three is whether the sale was in the course of business. This means that the
sale was done by a licensed seller and bought by a consumer, not just a sale between two
people. Patricia bought the photocopier from Bob's Warehouse Pty Ltd so it is clearly in the
course of business. The final step is that the sale was not at an auction. As the photocopier
was bought from Bob's and not at an auction the Trade Practices Act obviously applies.

However Patricia must prove that the contract has been breached. The first way
to see if it has is by seeing if any of the express terms have been breached, as the contract was
a contract of purchase it would only contain terms relating to purchase, sale, warranties and
the exclusion clause. As none of the express terms have been breached the next step would be
to see if any of the implied terms have been breached. The first implied term that has been
breached is the term of merchantable quality under section 71(1) of the Trade Practices Act.
Merchantable quality is when a good is fit for the purpose it is reasonable to expect the good
will is used for. The photocopier that Patricia bought is not of merchantable quality as the
goods are not fit for the purpose that it is reasonable to expect having regard to price and
other.

Also Patricia was not aware of the defect prior to sale and any inspection made
by Patricia would not have revealed the defect. The term of merchantable quality has clearly
been breached. The next implied term that has been breached is fitness for purpose under
section 71(2) of the Trade Practices Act. Second-hand goods such as the photocopier are
generally expected to not be as fit as new goods. Also under this term the buyer must rely on
seller's skill and judgement.

Patricia described to the salesperson that she needed the photocopier for her
business of copying theses, and asked whether it could do a number of specialised tasks. The
salesperson said that it could do all this and more, Patricia relied on the salesperson
knowledge and therefore signed the contact. However the photocopier was not fit for the
purpose that Patricia described to the salesperson and she had to replace the lens and hire
photocopier for 14 days.

The final implied term that has been breached is the term of correspondence with
description under section 70 of the Trade Practices Act. This term is concerned with those
matters that serve to identify the goods sold. The salesperson identified the photocopier as
having only done 1000 copies and she thought it was last year's mode, she also said that they
had no complaints about that particular model. However the lens had to be replaced, and that
usually only occurs after 200,000 copies, also Joe from Joe's Office Rentals told her that the
photocopier was 5 years old and there had been numerous complaints about that. As Patricia
relied on what Shirley said and it convinced her to sign the contract to purchase the
photocopier, the term of correspondence with description has been breached.

The Trade Practices Act does not allow terms to be excluded under section 68. If
any term of the contract that purports to exclude, restrict or modify or has the effect of
excluding restricting or modifying sections of the Trade Practices Act is void. Patricia will
not be able to terminate the contract as the contact is already complete, she has the
photocopier and Bob's Warehouse Pty Ltd has the $35,000. Also if she terminated the
contract she would still have the decrepit photocopier and Bob's would still have the money.
However she may try to rescind the contract for misrepresentation, as Shirley misrepresented
the facts by stating that the photocopier had only done 1000 copies, she thought it was last
year model and that there had not been any complaints about that model. These
misrepresented statements induced Patricia into buying the photocopier; therefore she may
rescind the contract.

Rescinding a contract means that the parties involved are returned to the position
they were in before the contract was formed. So Patricia would return the photocopier to
Bob's Warehouse Pty Ltd and Bob would return Patricia's $35,000 as well as the $10,000 for
the new lens and the $1400 for the hire of the other photocopier from Joe's Office Supplies.
However since section 52 of the Trade Practices Act was enacted rescission has become less
important and the courts may be reluctant to grant it as a remedy. The other option that
Patricia has is to sue for damages, which is the most common remedy granted. The losses
must be caused by the breach of the contract and the plaintiff has a duty to mitigate losses.
Also the losses must not be too remote, which means that the losses must either flow from the
breach according to the usual course of things or be losses that D was aware of prior to the.

The damages that Patricia could sue for in this case is the $10,000 for the new lens
as the she bought the photocopier under the misconception that it had only done 1000 copies.
She should not have had to buy a new lens and therefore Bob's Warehouse should cover those
damages as they are caused by the breach of the contract and they flow from the breach in the
usual course of things. The hiring of the photocopier from Joe's Office Supplies for 14 days at
$100 a day amounted to $1400 worth of damages. Patricia could sue for these damages as the
hiring of the new photocopier was caused by the breach in the contract. Patricia told the
salesperson of her business in copying theses and the requirements that she needed in a
photocopier so Bob's Warehouse was aware of the losses that would be caused by the faulty
photocopier.

Finally Patricia may with extreme difficulty be able sue for damages for
disappointment and distress . Courts have generally been reluctant to grant damages for
disappointment and distress in commercial cases. Patricia may attempt to prove that she was
extremely distressed when she received a $50,000 contract from the university's business
faculty and had to find other means to be able to honour that contract. Also she may have
been distressed when she found out she had to pay $10,000 for the lens also that the
photocopier was actually only approximately worth $15,000. The most difficult thing in
granting damages for distress is the amount of damages to be awarded. In this case I would
believe that only $20,000 could be granted as that is the difference between the estimated
price of the photocopier and the price Patricia paid.

B)
 Under the second situation, where the photocopier was purchased for $45,000
the Trade Practices Act will not apply as the good was over $40,000 and is not of a type that
is normally used in household or domestic use. As this is a non-consumer contract Patricia
may try to use the Goods Act however section 61 states that exclusion clauses are permitted
in non-consumer contracts as businesses are normally on equal terms and do not need
protection.

The only legal rights available to Patricia under these circumstances are to attempt
to sue for misrepresentation. The first step would be to see which type of misrepresentation
she could sue for. The two areas are the torts of deceit and negligence. Fraudulent
misrepresentation is extremely difficult to prove. There are three steps involved; step one is
that a false representation of fact was made. Under the circumstances in this situation a false
representation was made as Shirley stated that the photocopier had only completed 1000
copies when it had more likely completed 200,000.

Step two is whether the representation was intended to and did induce the
represented to act. This is one of the harder steps to prove, as we do not know whether
Shirley actually used the false fact of the photocopier having only done 1000 copies to induce
Patricia into buying the good. However as Shirley is a salesperson in the store and more than
likely knew how many copies the photocopier had done she probably did use those false facts
to induce Patricia. The final step is whether the represented made the false representation
knowing it to be untrue, or was reckless as to whether it was true or not. Shirley may not
have known whether the number of copies it had done was true but she recklessly did not
know and she should have known. Therefore Shirley and Bob's Warehouse were fraudulent
in the sale of the Photocopier.

After that, Under the tort of deceit it is not possible to exclude liability as a
person is not entitled to take advantage of his or her own deceit. However due to the
difficulty in proving fraud Patricia may attempt to prove negligent misrepresentation. There
are also three steps in proving negligence, step one is whether the represented owed a duty of
care. A duty of care was originally only owed for the chance of the goods harming somebody
physically or mentally. However since Shaddock and associates Pty Ltd v Parramatta City
Council (1981) 55 ALJR 713, a purely economic loss can also be considered in the duty of
care.

Besides that, Under Patricia's circumstances a duty of care was owed as Bob's
Warehouse was told that she was in the business of copying theses and needed a photocopier
that could do specific jobs. However the photocopier was sold in a poor condition that caused
Patricia to buy a new lens for the photocopier and also to have to hire a new photocopier at a
cost of $1400 for 14 days. The second step is the standard of care owed. The standard of care
is what a reasonable person in the community would expect be owed knowing the
qualifications and means of the person or company. Under these circumstances Bob's
Warehouse Pty Ltd specialises in photocopiers. Therefore they should know how many
copies the photocopier had and its capabilities, also exactly what model it was.

The final step is the remoteness of the damage. Under the circumstances in this
situation Patricia could get damages for the lens and the hiring of the photocopier, so a total
of $11,400. However there is also a possibility that the exclusion clause at the end of the
contact could remove Bob's Warehouse Pty Ltd duty of care in this case.

Patricia's best course of action would be to attempt to sue for fraudulent misrepresentation, as
the exclusion clause will not be included. Also if the facts of the case point toward deceit
there is a much higher chance of winning the case and receiving damages. The problem with
negligent misrepresentation in this case is the exclusion clause.

The facts of the case point toward a fraudulent misrepresentation due to the false
representation of the number of copies that the photocopier had completed, this induced
Patricia into the contract so deceit was involved. If I was advising Patricia on the legal rights
that she had and what course of action to take I would use fraudulent misrepresentation. The
remedies that she would receive under this situation would be damages for the lens and the
hiring of the other photocopier, so a total of $11,400.