Commercial Law

Commercial Law Property 4 Ownership/Possession: 4 ‘Finding’ Cases 5 Personal Property 6 Bailment 8 Nature And Classification Of Bailments 8 Duties Of Bailee 9 Duties Of Bailor 11 Termination Of Bailments 12 Special Types Of Bailee 13 Agency 15 Definition Of Agency 15 Creation Of Agency 15 Nature And Scope Of Agent Authority 16 Duties Of Agent 17 Rights Of Agents 18 Liabilities Of Agents 19 Termination Of Agency 21 Particular Types Of Agents 22 Statutory Regulation Of Agents 22 Sale Of Goods Act 1923 (Nsw) 59 Key Concepts 59 Contract For Sale Of Goods 59 Terms Of Contract 60 Transfer Of Property 63 Title Of Transferee 65 Performance Of Contract 66 Remedies For Breach Of Contract Of Sale 68 Auctioneers And Auction Sales 71 Australian Consumer Law 73 Legislative Framework Of Acl 73 1. Consumer Guarantees 73 Principles And Definitions 73 Acceptable Quality 75 Fitness For Disclosed Purpose 76 Correspondence With Description 77 Supply Of Goods By Sample/Demonstration Model 77 Guarantees 77 Guarantees And Supply Of Services 78 Manufacturer’s Liability For Defective Goods 79 Liability Of Manufacturer For Goods With Safety Defects 79 Liability Of Manufacturer To Consumer For Non-Compliance With Statutory Guarantees 82 Liability Of Manufacturer To Seller Of Defective Goods 83 Product Safety And Information 83 2. Acl – Unfair Contracts, Unconscionable Conduct, Remedies 84 Prohibition Of Unconscionable Conduct 84 Prohibition Of Unfair Contract Terms 85 Prohibition Of Other Unfair Practices 86 Provision 89 Meaning Of In “Trade And Commerce” 89 Prohibition Of Misleading And Deceptive Conduct 92 Promises, Predictions And Representations As To Future Matters 96 S18 And Contractual Terms 98 Disclaimers And Exclusion Clauses 98 Reliance And Causation 99 Damages Under S236 100 Limitation Issues 102 Ancillary Liability 103 Apportionment Of Loss – Cn And Concurrent Wrongdoers 104 Remedies Under S237 And S243 105 Injunctions – S232 107

Property
Meaning of property * Property: can either be object capable of being owned by a person (land, car) OR proprietary rights to that object or thing (rights of ownership). * A right enforceable against world * A contractual right is only enforceable against parties to the contract * Property may arise from possession as well as ownership * Property rights can arise out of a financial transaction (i.e. where property is used as security) * ‘Private property must at least involve the right of the owner to exclude others from doing something in respect of the object of ownership’ Felix Cohen ‘Dialogue on Private Property’ (1954) 9 Rutgers LR 357

* Real property

* Comprises of land and all things embedded in the land or attached to it such as minerals, trees and buildings.

* Personal property (personalty): * Is all property that is not real property; it includes tangible things that are movable such as a car, books which are generally referred to as chattels (physical possession) or: * choses in possession * Personal property also includes property of an intangible nature, property which does not exist in physical form but have economic value e.g. intellectual property rights, debts and shares in a company also known as: * choses in action

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Contractual versus proprietary:
Hello v OK [2005]
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Facts: Hello snuck spy into celebrity wedding and took photos. OK had exclusive right to publish wedding photos, but Hello pub their own during same week. Hello had ownership of photos taken but was in breach of OK right to exclusive publication. OK sued Hello and was awarded 1m pounds. Judgement was overturned.
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Held: OK rights were contractual, not proprietal. If OK cannot prove a proprietal interest, then it has no cause of action against Hello.

Ownership/Possession:
Possession: right to have exclusive control/dominion over item and intention to exclude all others, subject to the rights of the owner. Possession does not mean ownership: Pollock & Wright
Ownership: right to exclusive enjoyment.
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Pollock v Wright
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Possession is single and exclusive, defined by control or dominion.
De facto possession
Effective operation and control
The right to exclude
Presumed to have legal possession
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Legal possession
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Will coincide with de facto possession
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Have the legal rights and entitlements of possession – is a form of title
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Right to possession (constructive possession)
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May exist apart from legal and de facto possession
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Not necessarily exclusive
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May have all three at the same time as owner Armory v Delamirie (1722)*** | * Facts: chimney sweep boy found jewel; offered it to jeweller for sale who refused to pay acceptable price/return it. Jeweller was liable to boy for jewel value * Held: Finder of jewel, though he does not by such finding acquire absolute property/ownership yet he has such property as will enable him to keep it against all but rightful owner | Button v Cooper [1947] | * Held: Mayo J made distinction between actual and constructive possession and stated that possession in context of personal property law consists of: exercise of factual control over chattel AND concomitant intention to exclude others from exercise of control. | Costello v Chief Constable of Derbyshire Constabulary [2001] | * Held: … possession … is entitled to same legal protection whether or not it has been obtained lawfully or by theft or by other unlawful means. It vests in possessor possessory title which is good against the world save as against anyone setting up or claiming under better title. In case of theft title is frail, and of likely limited value … but none the less remains a title to which law affords protection. | The Winfield | * Held: against a wrongdoer, possession is title’. Chattel that has been converted/damaged is deemed to be chattel of possessor and no other. Its loss/deterioration is regarded as possessor’s own loss | Russell v Wilson (1923) | * Facts: cash and cheques were seized by police from illegal bookie. Bookie was convicted, but no order was made by magistrate for forfeiture of illegally obtained assets. Bookie sues for return of cash and cheques from police * Held: ‘Possession in relevant sense, is not merely evidence of absolute title: it confers a title of its own, which is sometimes called a ‘possessory title’. This ‘possessory title is as good as absolute title as against, it is usually said, every person except absolute owner’ at 546 per Isaacs, Rich JJ | Knapp v Knapp [1944] | * Facts: husband purports to give wife his car which continues to be registered in husband’s name to take advantage of war time petrol allowance. Wife retains custody of vehicle. * Held: no animus possidendi (i.e. no intention to exercise control—mere custody and not possession). Possession would have given wife more rights over car, but mere custody did not. | Moors v Burke (1919) | * Held: words “actual possession” while including circumstances where accused had object in his immediate possession extended to include circumstances where accused had right/power to place his hands upon object provided that such right was exercisable to exclusion of all others, except those acting in concert with him. |
‘FINDING’ CASES * Manifest intention to control: will overcome a finder’s proprietary interest.

Parker v British Airways Board [1982] | * Facts: passenger found gold bracelet in BA executive lounge at London airport. He gave it to employee of BAB (licensee of premises). Owner was never found and BAB sold bracelet. * Held: BA cannot assert rights as occupier; BA controlled entry of persons into departure lounge but did not manifest intention to assert custody or control over found items. * Rights and obligations of ‘finder’: (per Donaldson LJ) 1. Finder acquires no rights unless item is abandoned/lost and is taken into finder’s care and control 2. Finder has limited rights if took with dishonest intent or while trespassing R v MacDonald [1983] 3. Finder acquires rights against all but true owner 4. Servants/agents who find item in course of their employment take it into care and control on behalf of employer/principal. 5. Finder has obligation to take reasonable measures to inform true owner and take care of item * Rights and liabilities of Occupier: 1. Occupier of land/ building has rights superior to finder where item is in or attached to land 2. Occupier of building has rights superior to finder if occupier manifested intention to exercise control over building and things on or in it 3. Occupier who manifests such intention is under obligation to take measures reasonable in circumstances to find true owner and to care for chattels in the meantime. | Articles found in, or attached to the land
Owner/possessor of land has better title than finder of the article. Legal position of finder of an article under the surface of the land still does not confer better title to the property, even if owner of the land is unaware of its existence: Elwes v Brigg Gas Co (1886) 33 Ch D 562

Elwes v Brigg Gas Co (1886) | * Facts: Tenants under 99 year lease excavated land for particular purpose and found prehistoric boat 6 feet below surface; landlord had no knowledge of boat * Held: owner had the better claim as tenant had right to excavate for particular purpose; he had no right to take anything including waste for that purpose | Hannah v Peel (1945) | * Facts: D was owner of house he never occupied. House was requestioned during war. P lived in house and found a brooch. He gave it to police who gave it to owner who sold it. * Held: soldier had better claim to brooch as owner of the house didn’t know of its existence and true owner of brooch couldn’t be found | South Staffordshire Water v Sharman (1896) | * Facts: owner of land engaged D to clean the pool – D pool cleaner found rings in the mud in pool. D gave rings to police who didn’t find the owner and gave them back to D * Held: P as the owner of land containing the pool was entitled to rings | Waverley Borough Council v Fletcher (1996) | * Facts: medieval brooch was found with aid of metal detector, embedded in soil of public park. P was entitled to retain possession as it had better title than D finder. However, if D finder found lots of jewellery in park, then that would be a treasure trove, so state will have primary ownership * Held: owner or lawful possessor of land owned all that was in or attached to it [including by analogy] a local authority which owned a public open space. Owner or lawful possessor of land has better title to object found in or attached to land than finder. | Tamworth Industries Ltd v A-G [1993] | * Facts: on land at one time leased to TI, police find concealed beneath floorboards of disused and derelict buildings, $52,452 cash and cannabis. No charges were laid. Dodds (sole director of TI) had been convicted of drug trafficking but his conviction was overturned on appeal * Held: same principle was applied from Waverly v Fletcher. However, here, Occupier failed to discharge burden of proving manifest intention to exercise control over lost property. | Articles found on land * Owner/lawful possessor of land has better title than finder of article ONLY if he exercised such manifest control over the land as to indicate intention to control the land and anything that might be found on it. * Where there is no evidence of manifest intention of owner/occupier of premises to exercise control then finder will be entitled to possession as against occupier if true owner cannot be found

Bridges v Hawkesworth (1851) | * Facts: shop customer found roll of banknotes on shopfloor * Held: customer was entitled to them | Parker v British Airways Board (1982) | * Facts: passenger found gold bracelet in BA executive lounge at London airport. He gave it to employee of BAB (licensee of premises). Owner was never found and BAB sold bracelet. * Held: since there was no evidence BAB manifested intention to exercise control over all things that might be upon or in premises (checking lounge) finder (P) had better title to possession of the bracelet | National Crime Authority v Flack (1998) | * Facts: F son was held in remand for drug charges. House was searched for drugs and $433,000 cash was found in premises which was rented by F son. F had no knowledge of money. No person was charged for any offence. F sued for return of money from NCA. * Held: occupier of private home will ordinarily manifest necessary intention to control chattels therein (Heerey). Starting point for determination is premise that person with exclusive possession over private home, owner/lessee, is presumed to exercise control over each and every part of that home and everything in it (Tamberlin J) |

Articles found in course of employment * General rule: they belong to employer City of London Corp v Appleyard (1963) * Where finding was merely incidental to employment, it has been held that the employee is entitled to the goods as against the employer: Byrne v Hoare (1965)

Byrne v Hoare (1965) | * Facts: Policeman was working on ‘special duties’ outside his ordinary working hours under control of police force. His duties were incidental to employment. He found gold ingot in public place while walking along unfenced privately owned driveway where he had been instructed to direct traffic. * Held: P as finder was entitled to possession of ingot against the world – except the true owner who couldn’t be found |
PERSONAL PROPERTY
Acquisition of ownership

Acquisition by purchase
For sale of assignment/intangible personal property (debt, copyright in painting) statutory provisions may require compliance with certain formalities Copyright Act 1968 (Cth) s196(3)

Acquisition by gift: * Gratuitous transfer of title in property. Presumption is that all family dealings are not meant to attract legal consequences. * Donee is entitled to full beneficial ownership of gift provided donor was not placed under any undue influence/ unconscionable dealing when delivering gift to donee. * Nolan v Nolan [2003]: ‘donor must not only part with possession of property, but must relinquish all present and future dominion and control over it beyond any power on his part to reclaim it’

Elements: 1. Donative intention to make unconditional transfer of rights to property to donee. * Horsley v Phillips Fine Art Auctioneers: words of gift don’t need to be contemporaneous with delivery of subject matter of the gift * Nolan v Nolan [2003]: Although donative intention would normally be manifested, and its extent defined, by words, unusual circumstances may be imagined where other means fulfil those functions i.e. words are not always necessary. * Dewar v Dewar (1975): mother gave, intending to do so, her son sum of money to buy house. Transaction was nevertheless gift though son intended to treat it as loan and, in due course, to return money. The donor must be capable of forming proper intention.

2. Acceptance by donee * Knapp v Knapp [1944]: wife knew car was not gift, therefore, she could not have accepted it as one, and consequently, it could not be regarded as a gift at law

3. Delivery: where goods are physically handed over to donee * Symbolic delivery: constructive conveyance of subject matter of gift/sale, when it is either inaccessible/cumbersome, through offering of some substitute article that indicates donative intent of donor/seller and is accepted as representative of original item. * Re Stoneham [1919]: when chattels are already in possession of donee no further delivery/change of possession is necessary to complete gift. Even if delivery is made after words of gift, that may be sufficient to amount to a voluntary gift enforceable at law. * Re Cole: delivery doesn’t need to be simultaneous with words of intention to give. Gift of chattel is not complete unless accompanied by something which constitutes act of delivery/change of possession * Nolan v Nolan [2003]: donor must not only part with possession of property, but must relinquish all present and future dominion and control over it beyond any power on his part to reclaim it * Flinn v White [1950]: where purported subject matter of gift remains in common custody it may be difficult to demonstrate delivery has perfected gift. * Rawlinson v Mort (1905): where symbolic delivery is nearest to actual delivery, that may be enough to satisfy requirement of delivery. * Winter v Winter (1861): ‘on examination of evidence, it turns out there was change in possession of barge consequent upon gift… words indicating present gift and father’s/son subsequent conduct indicated transfer of possession, which constituted sufficient evidence of delivery contemporaneous with or subsequent to words indicating gift.

Acquisition by will or intestacy:
Personal property may pass to person acc to rules of intestacy where person died leaving property but without having made a will

Acquisition by taking possession of abandoned property * Owner of property must have intended to abandon/relinquish ownership permanently * Moorhouse v Angus & Robertson (No 1) (1981): P author of short stories pub by D publishers hadn’t abandoned his ownership in original typewritten manuscript of stories, although he did not request return of original manuscripts for some years after their publication. D were liable for loss of manuscripts * Munday v ACT (1998): ACT grants exclusive scavenging rights at tip to recycling business ‘Revolve’. M negotiates to take items from customers of the tip. Held: Revolve rights conferred by ACT arise only once goods are abandoned at Tip face. It is also apparent true owner does not lose control of abandoned goods at least until they are out of his actual or constructive possession. That would usually be after owner has thrown such goods away and departed Tipping face area.

Co ownership of personal property
Where this happens, property is held as joint tenants OR tenants in common
Calabrese v Miuccio (1984): husband and wife held savings bank account as joint tenants and on severance of joint tenancy held funds in account as tenants in common

Personal property as security * See PPSA/Notes on security
Bailments
May create legally enforceable proprietary interests.

Bailment
NATURE AND CLASSIFICATION OF BAILMENTS
To constitute bailment, there must be a transfer of possession of goods, without any intention on part of bailor to transfer ownership of goods to bailee. Bailee receives goods for purpose of fulfilling bailor instructions.

Relationship of bailor/bailee gives rise to certain duties/liabilities which don’t apply in relationship of licensor/licensee

Greenwood v Council of the Municipality of Waverley (1928) | * Facts: P hired locker at D bathing sheds in which to place his clothes and it was securely locked before he proceeded to bathe. Subsequently, on opening locker, it was found empty. P was not given key, but was supplied with numbered disc to identify locker. Key was kept by attendant. * Held: council was not responsible for goods lost (£150) as there was no evidence of giving over possession of clothes to council who merely let locker to P (no rise of duty of care in respect to locker contents) | Ultzen v Nichols (1894) | * Facts: Waiter took P coat when he came into restaurant and hung it up. It was later gone * Held: as waiter initiated taking of coat and selected where it should be hung, there was bailment and higher DOC than if it had been a mere licence | Distinction between bailments and licenses: * N.E. Palmer: " law has repeatedly drawn distinction between bailments and licenses; former requiring transfer of possession and voluntary acceptance of common law duty of safekeeping, latter amounting to no more than grant of permission to user of chattel to leave it upon licensor's land on understanding that neither possession shall be transferred nor responsibility for guarding chattel accepted."

Robertson v Stang (1997) | * Held: ‘...control over subject chattels is key to distinguishing between bailments and licenses. In present case, facts suggest that P surrendered control of her goods to D and a bailment relationship was created’ | Council of City of Sydney v West (1965) | * Held: transfer of possession re: control of vehicle esp. where some card/ticket must be presented before regaining vehicle | Ashby v Tolhurst (1937) | * Facts: Owner of car left his car on another’s land and paid 1 shilling. It was a bare block of land (not a car park), there was no attendant, no exchange of keys and no security * Held: not a bailment but mere license | Tinsley v Dudley (1951) | * Held: publican was not responsible for loss of a customer’s motorcycle in car-park. This case signifies importance of custody and control in characterising bailment |

Bailment: * If bailee is not obliged to return goods, then no bailment has been created – Chapman v Verco Bros (1933) * Bailee is only liable if failure to return goods could have been avoided by exercise of reasonable care * Goods may be returned in changed form: Pangallo Estate v Killara 10 [2007]

Hobbs v Petersham Transport Co Pty Ltd (1971) | * Held: bailment comes into existence upon delivery of goods of one person, bailor, into possession of another person, bailee, upon a promise, express or implied, that they will be re-delivered to bailor or dealt with in a stipulated way.’ | Winkfield (1902) | * Facts: there was a fog; W collided with Mexican, and latter sank; all people and some property were rescued * Posture: W was found negligent and people from M were trying to get damages. Amount was already fixed. Postmasters General whose mail was lost on M want to claim damages as well * Issue: to whom should $$ be awarded * Holding: PG get some money and W can’t do anything about it * Rule: D have no standing to inquire about nature or limits of rights of people whose property they destroyed * Reasoning: if you take someone else property you are a wrong doer. Just showing that property was owned by 3rd party doesn’t excuse you from liability * Principle: bailee in possession has right to recover for loss/damage to bailor goods even though he would of had good defence to action by bailor |

Classification of bailments: based on Lord Holt judgment in Coggs v Bernard (1703)

EXAMPLE OF BAILMENT | TYPE OF BAILMENT | Deposit of goods for gratuitous safekeeping by bailee | Gratuitous bailment | Delivery of goods to bailee for work to be done on goods for benefit of bailor without reward | | Delivery of goods by way of gratutious loan for use by bailee | | Deposit of goods for safekeeping for reward | Bailment for reward | Delivery of goods to have something done to them for reward | | Delivery of goods for use by bailee for reward | | Delivery of chattels to be held as security for loan | |

DUTIES OF BAILEE
Bailee obligations:
Same for all bailment relationships – though may be a question of degree – Houghland v RR Low (Luxury Coaches) * Take reasonable care of the goods – depending on: * Goods themselves (value, nature) * Parties relationship (gratuitous, commercial) * Not depart from the scope of the bailment as deviations entitles bailor to: * Retake possession * Sue for conversion for full value if goods are lost * Return the goods or deal with them as directed * Not dispute bailor’s title to the goods

Uncollected Goods Act 1995 (NSW):
Applies to: * Bailed goods being chattels personal * Object of the act is to provide bailees with a means of disposing of goods without being liable to the bailor by: * Obtaining a court order, or * Private disposal after giving notice * If goods are ready for delivery and are uncollected, bailee gives notice, unless bailor cannot be traced * Need to give notice of: * 28 days if goods worth less than $100 in any manner * 3 months if goods worth $100 - $500 by public auction of private sale * 6 months if goods worth $500-$5000 by public auction * Perishable goods – can be verbal notice with reasonable time to collect and can be disposed of in any manner

Onus of proof: * In circumstances of bailment if goods are lost/damaged P simply has to prove loss/damage and D must prove they took reasonable care Hobbs v Petersham Transport (1971)

Duties of bailee for reward * Duty to take such care of goods as is reasonable in circumstances * In event of loss/damage to goods during bailment, onus is on bailee to prove such loss/damage wasn’t result of their failure to take reasonable care * To pay the agreed rate for storage * Not to interfere with the bailee’s possession for the term of the bailment

Pitt Son v Proulefco SA (1984) | * Facts: P purchased bales of wool from D wool broker. They were stored in D old timber building, which had fencing around it which was inadequate to keep out intruders. Intruders broke into shed and purposely lit fire to burn wool. * Held: failure to adequately fence is breach of duty to take care of goods...having adequate fence is basic and D should have had one. | Tottenham Investments v Carburettor Services [1994] | * Facts: P left valuable car with D for repair. Overnight thieves entered D premises through skylight in roof, started car with keys left in ignition and drove off with car. To break in skylight, thieves had a drop of 2m, there hadn’t been break in for 15yrs and shed was near a busy bus stop. After break-in, security bars and $3000 alarm system and signs were erected outside warning of alarms * Held: D was liable as bailee for reward for loss of car since they failed to discharge onus of est. reasonable care. Security measures implemented subsequent to break in should have been implemented earlier; however leaving keys in ignition didn’t itself constitute failure to take reasonable care. * Kirby P set out factors that were relevant to whether reasonable care was exercised: Value/disposability of goods bailed; Location of place of bailment; Costs paid by bailor to bailee; Extent of bailor knowledge of circumstances of safekeeping; Extent of theft of goods in vicinity of place; Availability of simple/ inexpensive/easily adopted precautions |

Duties of gratuitous bailee * Bailee to take care of goods as was reasonable in circumstances * Breach of that duty depends on circumstances of the case. Bailee who negligently fails to return the goods within reasonable time of demand will be liable for loss to bailor Mitchell v Ealing London Borough Council (1979) * Where goods have been damaged, onus is on bailee to show he took reasonable care of them while in his possession McComb v Martin Box Marine Holdings (1992)

WGH Nominees v Tomblin (1985) | * Facts: P jeweller insisted D husband takes ring home to show his wife. On way home, D went to hotel where ring was stolen from his coat. * Held: gratuitous bailment. Standard of care was held to be the same as that of the ring owner. He wasn’t going to a place where he could keep ring safely and had done best in circumstances, so held not liable. | Mitchell v Ealing London Borough [1979] | * Facts: Squatter was evicted by local council. He asked to collect furniture but council official went to wrong meeting place. When met up to collect furniture, it was gone. * Held: although this was gratuitous bailment, fact that goods were stolen was enough to amount to breach of bailment obligations. chattel must be returned when requested | Graham v Voigt (1989) | * Held: landlady was liable for failing to return former boarder possessions which were left with her for 8 months as she couldn’t show they had been lost without negligence/default on her part. She was bound to take reasonable care of the goods and deliver them up on equivocal demand for their return. |

Liability of bailee for employees and agents * Bailee for reward is liable for their negligence and vicariously liable for their employees negligence Morris v CW Martin (1966) * Bailee whose employee/agent sells goods entrusted to bailee is liable in damages to goods owner unless exemption clause in contract precludes liability Rick Cobby Haulage v Simsmetal (1986)

Sub bailments * Bailee to whom goods have been entrusted will often transfer possession of goods to 3rd party creating sub-bailment of goods * In action by goods owner against sub bailee for loss of goods, sub bailee can rely as against owner on contract terms between bailee and sub bailee if owner has expressly/impliedly consented to bailee making sub bailment containing such terms

Morris v CW Martin [1966] | * Facts: P (bailor) delivered fur to furrier for cleaning who then subcontracted it (with P consent) to specialist fur cleaners. Employee whose duty was to clean it stole it. * Held: sub bailee was liable to bailor for unauthorised theft of fur by their employee notwithstanding absence of contractual relationship between original bailor and sub-bailee | The Pioneer Container (1994) | * Facts: owners of goods (bailors) arranged with freight carriers (bailees) for carriage of goods to foreign port and carriers subcontracted with shipowners (sub-bailees) for shipment of goods * Held: owners were bound by contract terms between freight carriers and shipowners since owners were regarded as having authorised freight carriers to entrust goods to shipowners on those terms | Exclusion of liability
Bailee may seek to limit/exempt their liability for negligence in contract of bailment

Thomas National Transport v May & Baker (1966) | * Facts: TNT regularly employed subcontractor to pick up goods and transport them to TNT central depot where it was sorted for interstate carriage. TNT depot closed at 5.30pm. Subcontractor collected MB goods, finished at 5.40pm and took his truck home, as he had been directed by TNT on number of previous occasions when he had been late in completing his collections. Fire broke out in the morning and damaged MB goods. * Held: it was explicit in contract between TNT and MB that goods would be taken to and received by TNT depot at conclusion of subcontractors pick up round. Subcontractor’s act in taking goods home for night constituted unauthorised deviation from contract terms. TNT was precluded from relying on liability exemption clause in contract. | Statutory obligations where services are provided to consumer: Aus Consumer Law (Sch 2 to Comp and Consumer Act 2010 (Cth)

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61 Guarantees as to fitness for a particular purpose etc.
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(1) If:
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(a) a person (the supplier ) supplies, in trade or commerce, services to a consumer; and
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(b) the consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired by the consumer;
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there is a guarantee that the services, and any product resulting from the services, will be reasonably fit for that purpose.
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(2) If:
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(a) a person (the supplier ) supplies, in trade or commerce, services to a consumer; and
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(b) the consumer makes known, expressly or by implication, to:
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(i) the supplier; or
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(ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the services were conducted or made;
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the result that the consumer wishes the services to achieve; there is a guarantee that the services, and any product resulting from the services, will be of such a nature, and quality, state or condition, that they might reasonably be expected to achieve that result.

* s60 Guarantee as to due care and skill: If a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill. * s63 This Subdivision does not apply to… a. a contract for or in relation to the transportation or storage of goods for the purposes of a business, trade, profession or occupation carried on or engaged in by the person for whom the goods are transported or stored… * 64 Guarantees not to be excluded etc. by contract

DUTIES OF BAILOR * If bailment for reward is for fixed term, bailor has duty not to interfere with bailee possession of goods until expiry of bailment. If bailor retakes possession of goods during bailment, he may be liable for trespass/conversion/breach of contract * Gratuitous bailment is revocable at bailor will Parastatidis v Kotaridis (1978) * Bailor must inform bailee of dangers in goods of which bailor is aware whether bailment is gratuitous/reward * Where bailee accepts possession of goods after being sufficiently warned of their dangerous qualities, bailor will not be liable for subsequent loss/damage suffered by bailee

Coughlin v Gillison (1899) | * Facts: Ship owners contracted with P employers to ballast ship; work had to be done by hand. Workers asked if they could use owner’s steam engine and owner agreed if they engaged competent operator (gratuitous bailment) During use, part of engine exploded and P was injured. Engine was used day before without any apparent defects. * Held: owner’s not liable; they didn’t know of defect and couldn’t reasonably have been expected to know – defect appeared on day of use * Principle: gratuitous bailor has duty to “communicate to borrower defects in article lent of which he is aware and if either deliberately or by gross negligence he doesn’t discharge this duty, he is liable for injury resulting to borrower” | Pivovaroff v Chernabaeff (1978) | * Facts: market gardener gratuitously lent onion sorting machine to fellow gardener. While giving directions to bailee on how to use the machine, bailor warned bailee not to allow children near it. Bailee operated machine assisted by 13 yr old whose hand became caught in machine and was mutilated * Held: bailor wasn’t liable since had sufficiently discharged his duty to warn of dangers that might arise from operation of machine. Bailee was liable in negligence for injuries to the boy |

Hire of goods for reward: * Goods must be reasonably fir for particular purpose made known to bailor/lessor for which they are being hired * Condition of fitness for purpose is implied at common law and can be excluded by app drafted exclusion clause

Derbyshire Building v Becker (1962) | * Facts: P was doing fencing work for D as independent contractor. Price was agreed on basis that D (bailor) was to supply electric saw (bailment for reward). Saw was defective (faulty maintenance) and P was injured * Held: there was implied condition that goods (saw) would be fit for purpose when user made purpose known. Duty of bailor was that goods had to be fit for purpose as far as bailor knew/ought to have known – here owner hadn’t bothered to maintain saw – so he ought to have known of potential defect * Principle: goods had to be fit for the purpose | Cottee v Franklins Self Serve (1997) | * Facts: P was injured when she attempted to prevent laden shopping trolley from toppling over when 1 of its wheels collapsed. Trolley was supplied to P by employee from D supermarket * Held: there was hire contract between P and D and an implied term that trolley would be reasonably fit for its contemplated purpose. P was awarded damages she suffered as result of breach of implied term |

Aus Consumer Law (hired/leased goods) * ss52, 54-56: Guarantees of undisturbed possession and conditions of correspondence with description, acceptable quality and fitness for purpose are also applied to contracts for hire * s3(2): terms cannot be excluded

TERMINATION OF BAILMENTS
1. Expiry of term: when period for which goods were bailed expires OR when purpose for which bailment was created is fulfilled
2. Demand of gratuitous bailor: bailment may be determined at any time by bailor Parastatidis v Kotaridis (1978)
3. Wrongful act of bailee: to jeopardise title of bailor to goods OR to amount to repudiation of transaction (sell goods) bailment may be terminated (not automatic; bailor has an option to continue/terminate) Anderson Group v Tynan Motors (2006)
4. Destruction of subject matter: subject matter is lost/destroyed OR some change in its nature becomes incapable of use for bailment purposes

Repossession of bailed goods * Owner of bailed chattel cannot use force to repossess chattel since bailee possession wasn’t wrongful from its inception * Toyota Finance Aus v Dennis (2002): lessor of car wasn’t entitled to use force in repossessing car from lessee who wrongfully refused to return the vehicle

Rights against 3rd parties * If 3rd party commits wrongful act against chattel bailed (wrongful possession) bailor has right to sue 3rd party in tort for damages for conversion if bailment is at will * Bailee can bring action against tortfeasor who negligently caused damage to bailed chattel while in bailee possession as bailee possession is good against any tortfeasor Goodwin v Ron Health Tyre Service (SA) (1999) * In bailment for reward, bailor rights to possession of goods is suspended and only bailee can sue 3rd party for wrongful interference with the goods. However, if interference adversely affects bailor reversionary interest (damaged goods), bailor can sue 3rd party Penfolds Wines v Elliott (1946) * If bailee wrongfully disposes of chattel, bailor can terminate bailment (immediate rights to possession and right to sue 3rd party/bailee in conversion)

Goodwin v Ron Heath Tyre Service (1999) | * Facts: owners delivered car to bailee for fitting tyres. Bailee did test run; another driver drove negligently and damaged vehicle. * Held: bailee could bring action for wrong done to car. If owner brought action against bailee it would have failed as it occurred without fault (bailee took due care). Bailee entitled to recover market value – but had to account to owner. * Principle: A bailee is entitled to bring an action against a party who has negligently caused damage to the bailed goods subject to the contract of bailment while they were in possession of the goods as the bailee |

SPECIAL TYPES OF BAILEE
Common carriers * Common carrier of goods: whose bus it is and holds themselves out as willing to carry goods from place to place for anyone who thinks fit to employ the carrier. Principles are: 1. person must carry on bus as carrier and must not simply be casual carrier 2. if carrier reserves right to accept/reject transport of goods irrespective of whether their vehicles are full/not they are not a common carrier James v Cth (1939) 3. it is always question of fact whether person is common carrier /not. Holding out of being common carrier may be express/implied by course of bus/other conduct

* Private carriers: * Don’t hold themselves out as willing to convey goods of any person who chooses to employ them and usually consider terms/nature of every offer before deciding whether to accept it * Not necessarily liable if goods are lost/damaged as they’re not insurers of goods; onus is on them to prove damage wasn’t caused by their neglect Hobbs v Petersham Transport (1971) * Liable for damages if loss is caused through their neglect unless specifically exempted from liability

Hobbs v Petersham Transport (1971) | * Facts: Carrier engaged 3rd party to deliver appliance. Axle in vehicle was broken, and generator was damaged. Held * Held: D was not bailee of goods. In action for breach of contract of carriage onus of est. breach rests on P; once D provides explanation of non-delivery which destroys inference of negligence, he is not required to est he could not have prevented occurrence causing non-delivery by any exercise of due care; and D est. precise cause of failure to deliver was fracture of axle which was not proved to have been caused by negligence of D/subcontractor | Cowper v JG Goldner (1986) | * Facts: contracted to carry P valuable mare by road from SA to NSW. On arrival mare was found seriously ill from travel sickness and died a few days later * Held: D was not common carrier of horses. However D had not discharged onus of proving death of mare had not resulted from failure to take reasonable care in inspecting mare during course of journey and was liable in negligence for its loss |

* Duties of common carrier 1. To carry class of goods they profess to handle for any person who offers to pay usual charge 2. to carry goods by usual route and not deviate unnecessarily 3. to deliver goods without unreasonable delay: carrier excused from loss resulting through delay caused by consignee 4. to carry out instructions of consignor for delivery to consignee (consignor must take reasonable precautions when sending dangerous articles and give notice of their dangerous nature to the carrier)

* Liability of common carrier * Liable for any loss/damage whether due to their negligence/not that may result to goods while in their control * Exceptions to this is loss/damage caused through “acts of God”, acts of Queen’s enemies, inherent fault, deterioration of goods, faulty/defective packaging Gould v SE (1920)

* Statutory limits on liability of common carrier: Common Carriers Act 1902 (NSW) * s4: common carrier by land isn’t liable for loss of valuable items (gold, silver...) if value > $20/package unless at time of delivery to carrier, value and nature of articles are declared by consignor and special rate specified in conspicuous notice on carrier premises is paid * s7: no public notice made by carrier is deemed to limit/affect their common law liability * s9(C): provisions don’t affect any special contract made between carrier and consignor for varying carrier common law liability provided such contract is signed by consignor

* Application of Aus Consumer Law * s60: there is a guarantee that services “will be rendered with due care and skill” (cannot be excluded where services are acquired for personal/domestic/household use) * s63: doesn’t apply in transport of goods for bus/profession carried on by person for whom goods are transported

* Rights of common carrier 1. to be paid their charges in advance before they carry goods 2. to claim lien on goods until their charges are paid 3. to refuse to carry goods in certain cases, where: a. goods are not of class carrier professes to carry Cowper v JG Goldner (1986) b. goods are improperly/insufficiently packed c. carrier vehicles have no available space d. destination is not within carrier usual route/radius

Agency
DEFINITION OF AGENCY * Agency: relationship existing between 2 parties where 1 (agent) is authorised by other (principal) to do on principal’s behalf certain acts which affect principal’s rights/duties in relation to 3rd parties * Mere use of the word agent is not conclusive of existence of agency relationship in law Int. Harvester co of Aus v Carrigan’s Hazeldene Pastoral Co (1958)

Capacity: * Only persons with full contractual capacity may employ agents * Any person can be employed as agent even if they don’t have contractual capacity to bind themselves in similar negotiations * Minors may employ agents in respect to contracts to which they’re able by law to bind themselves * Agent cannot have > powers than principal; their powers are limited to principal’s powers

Other relationships: * Employment: persons employed on such terms that they are subject to control re manner in which their work is carried out * Independent contractor: exercise their own discretion as to manner in which they carry out work they undertake to perform * Trustee: although trustee exercises their power on behalf of beneficiaries, they are not agents of beneficiaries (trustee doesn’t bring beneficiaries of trust into contractual r’ship with 3rd parties)

Classification:
Special: appointed for performance of some special act OR to represent principal in some particular transaction; such act not being in ordinary course of agent’s trade/profession/bus as agent
General: to act for principal in all matters (or concerning trade/bus/particular nature) OR to do some act in ordinary course of their trade /profession/bus as agent on behalf of principal
Universal: authority is limited to do such things which principal may do through instrumentality of another

CREATION OF AGENCY
Expressly
By deed: (instrument under seal) is necessary where agent is required to execute any instrument under seal of behalf of P in which case doc creating power is termed power of attorney Real Property (Amendment) Act 1970 (NSW) s13
By writing: in some cases app. is required by statute to be in writing
Word of mouth: verbal offer followed by acceptance in writing/verbally is sufficient to conclude contract of agency

Holding out or estoppel * This is where either the principle or the agent have acted as being in an agency relationship but then have denied the existence of that relationship. * If 3rd parties have relied on this relationship of agency then the law will estopp the parties from denying the existence of the agency relationship * Freeman Lockyer v Buckhurst Park Properties (Mangal) (1964) * Whether 1 person led 3rd parties to believe another was their agent is question of fact to be decided upon case circumstances

Crabtree Vickers v Aus Direct Mail Ad (1975) | * Facts: BOD were all family members. Peter had no title but worked full time for coy. He purported to accept quote to buy printing press on behalf of coy – signed order form and printed “signature of managing director per Peter” * Held: MD had no actual authority to sign, so Peter did not have any ostensible authority (he was presenting himself as someone who had no authority) + there had been no representation that Peter had authority * court spoke of representation that might flow from supplying particular person with ‘a blank order form, thus arming him with doc which, when signed, would bear hallmark of authenticity’ 80. | *
Ratification
* Where 1 person acts on behalf of another without authority to do particular act; person on whose behalf act is done may be ‘ratifying’ it render act valid an effectual as if it had been done by their duly authorised agent (e.g. where agent > authority) * Ratification operates retrospectively to validate previously unauthorised act if following are satisfied: 1. acts must have been done as agent for and on behalf of supposed P Howard Smith v Varawa (1907) 2. ratification may only be by P who was in existence at time of contract making 3. P must have capacity to make contract both at date of contract and at date of ratification 4. ratification must be of whole contract (P cannot ratify beneficial and reject remainder) Cox v Mosman (1909) 5. ratification must be with full knowledge of what has been done so that inference may properly be drawn that P intended to take upon themselves responsibility for such acts Marsh v Joseph (1897)

Agency by ratification is a complete adoption of the whole contract – it cannot be taken in part
EXAMPLE: agent was supposed to buy 2 tons of wheat but purchases 5 tons. The principle cannot take 2 tons of wheat under agency and leave the rest – the principle must take all or nothing
Operation of law a. Agency of necessity * Emergency situation arises which allows 1 person to bind another without authority of that person(for the benefit of the principle). It must be est: (no consensual relationship between the two parties) 1. Person must have been entrusted with another’s property 2. Immediate expense must be required for preservation of property OR there must be some commercial necessity for action (emergency) 3. Must be commercially impossible/ very difficult to comm. with owner of property Sachs v Miklos (1948) 4. Agent must act bona fide in interest of P

Great Northern Railway Co v Swaffield (1874) | * Facts: P agreed to deliver D horse to railway station. On arrival, there was no one to take possession of horse on D behalf. P sent horse to nearby livery stable. P paid charges. * Held: P acted reasonably in placing horse in livery stable and was entitled to recover expense from D it incurred doing so | Munro v WIllmott (1949) | * Held: fact that property may be causing person inconvenience doesn’t mean such emergency has arisen which compels its disposal | b. Agency arising by cohabitation: * Law presumes wife has authority to pledge husband credit for necessaries in all domestic matters entrusted to wife * Man can rebut such presumption Debenham v Mellon (1880) * ***Common law doctrine enabling wife to pledge husband credit has been abolished in NSW***

NATURE AND SCOPE OF AGENT AUTHORITY * P is only bound by those acts of agent which fall within scope of agent’s authority. * P is not affected by what agent does in excess of that authority * Agent may be liable to P for breach of contract of agency if he acts outside authority

Actual authority
Diplock LJ in Freeman Lockyer v Buckhurst Park Properties (Mangal) (1964): Actual authority is the authority that the agent actually has been granted. a. Actual express authority: P expressly (words/writing) gives A authority to contract on P behalf b. Actual implied authority: A may have implied authority to do what is incidental to carrying out P express instructions
Actual Implied authority may arise; 1. Because the act performed by the agent is necessarily or normally incidental to the acts expressly authorised (incidental authority) - such as buying a stamp in order to send a contract of sale to the 3rd party 2. Because the act is one which the agent of the type concerned would usually have authority to do (usual authority) 3. Because the act is in accordance with reasonable business practise applicable to the particular transaction (customary authority) i) Before a custom or usage may form the basis for the implication of terms into a contract, it must be shown that the usage or custom is notorious, certain and reasonable: Con-stan Industries of Australia Pty Ltd v. Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 4. Authority may also be implied from the conduct of the parties and the circumstances of the case. ii) EXAMPLE: board of directors of a company allows one of its directors to enter into contracts of a particular type over a period without seeking the sanction of the board, then that may result in a finding of actual implied authority to enter into a similar contract in the future: Hely-Hutchinsonv Brayhead Ltd [1968] 1 QB 549
Actual implied authority cannot exist where there are express directions from the principle to the agent to the contrary: Fray v Voules (1859) 1 El & El 839

Hely-Hutchinson v Brayhead (1968) | * Facts: R (co putative agent) frequently made decisions without having to go to BOD. They always let him go on as is. Claimed letters in this instance weren’t valid as R did not have authority. * Held: R had authority due to past dealings. Found that R acted as defacto managing director. * Lord Denning MR: [Roskill J] held Mr Richards had ostensible or apparent authority to make contract, but I think that his findings carry with them necessary inference that he had also actual authority, such authority being implied from circumstance that board by their conduct over many months had acquiesced in his acting as their chief executive and committing Brayhead to contracts without necessity of sanction from board. |

Apparent/ostensible authority * Hely-Hutchinson v Brayhead (1968): (Lord Denning MR): This is where an agent does not actually have this authority – it is authority that an agent appears to have but actually does not. If it is shown that there is apparent authority, the principle and the agent are bound by their agency relationship with 3rd parties.

* P may specifically represent to 3rd party that person has authority to act on P behalf; however rep which creates apparent/ ostensible authority is rep by conduct * Where person is appointed to particular position such person will have as part of their apparent authority all usual authority of person occupying that position Panorama Developments (Guildford) v Fidelis Furnishing Fabrics (1971) * P is bound by A acts which fall within scope of A apparent authority even though A acted outside terms of their actual authority * If actual and apparent authority coincide in same person, A ostensible authority is likely to be wider than their actual authority which may be limited by agreement terms Hely-Hutchinson v Brayhead (1968) * Employer may hold employee has authority if P permits employee to act in particular way Pacific Carriers v BNP Paribas 2004 * 3rd party generally relies on A apparent/ostensible authority when contending P is bound by A acts since: * 3rd party is unaware of agreement terms between P and A and extent of A authority * it is easier for 3rd party to est. A acted within scope of their apparent rather than actual authority

Freeman Lockyer v Buckhurst Park Properties (Mangal) (1964) | * Facts: Co director (K) acted as managing director to knowledge of board of directors, despite never being formally appointed to position. K individually engaged firm of architects to help apply for planning permission to develop estate owned by co and other related work. Architects did work, claimed fees, co refused to pay claiming director did not have authority to authorise such agreement. * Held: by board permitting K to act as managing director, they effectively represented he had authority to enter into contracts of kind which managing director would in normal course be authorised to enter into on behalf of co * Diplock LJ: It must be shown: * Representation made that agent had authority to enter transaction; * Representation made by person with actual authority; * Contractor induced by such rep to enter into the contract, ie, there is reliance on the representation by the third party; and * Company had capacity to enter into such an agreement pursuant to its articles. | Waugh v HB Clifford (1982) | * Held: client is generally bound by compromise entered into by solicitor with 3rd party notwithstanding that solicitor actual authority to compromise on behalf of client has been withdrawn | Buseska v Sergio (1990) | * Held: if solicitor mistakenly > client instructions as to amount of proposed settlement client will generally be bound unless it would be unconscionable for party seeking to enforce compromise to rely on it | Zhang v VP302 SPV (2009) | * Held: where P solicitor exchanged identical signed contracts that included terms to which P had not agreed at time of signature it was held that P solicitor possessed ostensible authority to bind P |

EXTRA NOTES FROM SIMPLER NOTES * test for establishing apparent authority There are 3 elements to establish apparent authority 1. Representation by the principal to the third party that the agent has the principal’s authority to do a certain act 2. Reliance upon that representation by the third party 3. Detriment suffered by the third party as a consequence of such reliance * * element one: representation by principle * * The manner in which the representation is made
Representation can be made by words or conduct.

The question to be addressed is: did the principal represent to the third party that the agent had authority to do what they did?
The representation does NOT need to be made by words to the third party. It is often by the actions of the Principal by allowing the agent to act in a certain manner, even though there was no actual authority
A representation of apparent authority will often flow from the principal equipping an agent with a certain title status and facilities necessary for third party to believe that the agent had actual authority. * * What conduct can constitute a representation of authority?
A representation made directly to the third party constitutes evidence of actual authority: International paper v Spicer (1906) 4 CLR 739 at 747
Possession of property for the purposes of sale: mere possession of property of another, without the authority to deal with the property in question otherwise than to keep it in safe custody, will not, in the event of a sale or pledge to a third party, divest the owner of his rights against the third party: Johnson v Credit Lyonnais Co (1877) 3 CPD 32
Occupancy of a particular position: if a person holds a position which would usually entitle a person holding that position to do certain acts on behalf of the principal, the third party is entitled to assume that the agent had that authority: Robinson v Tyson (1888) 9 LR (NSW) 297
Within the ordinary scope of business: if it can be shown that it is customary for an agent to do certain things within the ordinary course of his or her business then this will provide the foundation for the agents ostensible authority: Tobin v Broadbent (1947) 75 CLR 378 at 406-7
Previous course of dealings: it must be shown that what the agent did on previous occasions was done with the knowledge of the principal – essential for 3rd party to show when seeking to bind the principal, that they knew that the agent had been acting in the same way before and entered into the relevant contract on the strength of that conduct: Robinson v Tyson (1888) 9 LR (NSW) 297 * * who can make the representation
Representation must be made by the principal or by someone expressly authorised by the principal: Freeman & Lockyer
There is an exception where the agent does make a representation to the affect that they have necessary authority.
The representation is constituted by the words of the agent but by the conduct of the principal in putting the agent in a position from which it can be inferred that the actual representation of authority in the agent is correct – this was referred to as “assisted representation”: Tobin v Broadbent (1947) 75 CLR 378
If the principal has expressly or impliedly authorised the agent to hold himself out or represent himself as having authority when in fact there is no authority, then that representation will be binding on the principal: Armagas Ltd v Mundogas SA [1986] 1 AC 717

* to whom must the representation be made
The representation must be made either: a) Directly to the party who claims they relied on it and acted accordingly; or b) Publicly, provided it can be inferred to have reached the third party: international Paper v Spicer (1906) 4 CLR 739 * * Element two: reliance
There must be a causal connection between the representation to the third party and the dealing between the third party and agent. The third party must have relied on the representation made.
It is not relevant that the contracting party may have discovered the lack of authority, had they of taken certain steps: Klement v Pencoal Ltd [2000] QCA 152
If third party understands that the agent is acting outside the authority bestowed by their position then they cannot establish ostensible authority – the question should be asked “is it inconceivable that the 3rd party thought the agent had such authority”: Alliance Acceptance Company Ltd v Oakley (1987) 48 SASR 337 * * element three: detriment
Detriment must be established: the 3rd party entered into the contract, or altered their position as a result of relying on the representation
If all elements are established, the principal will be unable to resile from the consequences of the agent having authority

DUTIES OF AGENT
Duty to follow principal’s instructions * A must comply with provisions of agency contract before he’s entitled to remuneration. * Failure to comply with P instructions (unless illegal) will render A liable for loss suffered by P due to breach
Duty to act in person

* they are not allowed to delegate their duties to another person, unless there is authority to delegate authority to sub-agent * A authority to delegate their duties may be implied where: * by trade usage A acts through other agents; however where P forbids employment of sub-agent, A cannot delegate * duties to be performed by A are purely ministerial and don’t involve exercise of A skill/discretion * from transaction nature it is clear parties intended (presumed to know) it may be necessary to act through sub-agent * unforeseen circumstances arise which necessitate agent delegating (necessity must be urgent and sub-agent appointed with discretion)

Duty to act in good faith * Fiduciary position: A has duty to make full disclosure of any personal interest and not to make secret profits

Lintrose Nominees v King (1995) | * Facts: K bought property from LN (vendor) on advice of A to whom K paid for advice. Unknown to K, A was retained by LN to market property * Held: K was entitled to rescind the contract of sale with LN “vendor couldn’t properly sell its property through its A knowing that A was retained to advice purchaser on purchase without knowing also that dual allegiance of A was disclosed to purchaser |

Duty to make full disclosure of any personal interest * A must disclose to P all material circumstances that might influence P in entering negotiation * If A fails to make such disclosure he isn’t entitled to commission Dargusch v Sherley Instruments (1970) * Any profit received by A resulting from non disclosure is recoverable by P on learning true facts Walden Properties v Beaver Properties (1973) * If validity of transaction is questioned, onus lies on A to prove they acted bona fide and made disclosure of all facts * After termination of employment, A may not use info acquired in course of agency prejudicial to P interests Robb v Green 1895

Duty not to make secret profit * A must not use their position to make gain for themselves without knowledge and assent of P Parker v McKenna (1874) * Co directors are co A and are under duty not to make secret profit Regal (Hastings) v Gulliver (1967) * Corporations Act 2001 (Cth): * s191: co director with material personal interest in matter re: co affairs must give other directors notice of interest * s183: person who obtains info as director must not improperly use it to gain ad for themselves/someone else OR cause detriment to co * If A receives secret profit, P may recover it and dismiss A without notice * If A acts for vendor and purchaser and obtains commission from both, A must make full disclosure to each party of his intention to act for and receive payment from other and obtain assent from each party Fullwood v Hurley (1928) * Jones v Canavan (1972): firm of stock/sharebrokers were entitled to cross certain selling/buying orders for shares without express reference to respective clients. They were entitled to commission from both seller and buyer of shares

Duty to exercise reasonable care and skill * A employed for remuneration is presumed to have and bound to exercise skill/care/diligence in performing duties * If a fails to exercise such skill, he will be liable to P for sustained loss as result of the breach * Real estate agent owes vendor duty to inform that purchaser avoided contract of sale. If A fails to do so, he is liable to vendor for loss suffered as a result of delay Havas v Cornish (1985) * Gratuitous A isn’t presumed to have any special skill of subject matter but is bound to exercise skill he possesses in best interest of P. Performing such duties negligently may result in liability to P * Corporations Act 2001 (Cth): re: directors * s180: directors must exercise their powers with degree of care person in their position would * s181: co director must exercise their powers in good faith and for best interest of co * Mitor Investments v General Accidents Fire & Life Assurance Co (1984): A told to get unqualified insurance cover re storm and flood for client. Got insurance cover which included exclusion clause for flood caused by sea. P suffered damage Held: A was liable for loss – failed to exercise due care and skill expected of him

Further duties * to take such care in keeping property of P as reasonably prudent person would in caring for their own property * to keep all moneys and property of P separate from their own * to keep separate accounts of all dealings on P behalf and have such accounts ready for inspection and be prepared to hand over all papers/doc relating to P affairs * preserve confidentiality in all matters coming to their knowledge whilst acting as agent Weld Blundell v Stephens (1920)

* Liabilities of an agent
Failure to comply with duties to the principal may lead to: * Breach of contract * Breach of fiduciary duty * Negligence claim * Other tort claim
RIGHTS OF AGENTS
Right to remuneration(money paid for work): Depends on agreement/contract made between P and A (which specifies the amount).

If there is no specified amount in the contract, the law will deem that a reasonable amount is payable to the agent
Agents conduct must be within scope of authority and the effective cause of the transaction. (L J Hooker case showed that because the real estate agent was not the reason for the sale of property, they were not entitled to remuneration)

Right to indemnity and reimbursement: Agents are entitled to be indemnified in respect of losses, liabilities and expenses incurred in the performance of the functions as agents: Verge v Isabella Nominees Pty Ltd (1988) 14 ACLR 261

If an agent is not indemnified they are entitled to exercise a particular lien over the principal’s property in respect of obligation incurred in connection with that property

This right of indemnity extends to implied authority: Angelo Overseas Transport Ltd v Titan Industrial Corp Ltd [1959] 2 Lloyd’s Rep 152

If an agent is sued, while acting inside the scope of their authority, they are entitled to be indemnified for legal costs associated.
Agent can build an indemnity clause to recover expenses and costs which will hold principal liable under contract law to indemnify the agent Right of lien: A has particular lien on such property of P as comes into A hands for due payment of all expenses and remuneration lawfully incurred by A in transacting P affairs

LIABILITIES OF AGENTS
Liability of agent to principal * A incurs no liability to P re: contract unless A disobeys P instructions or is negligent in carrying out their duties

Liability of agent to 3rd parties * Name of principal disclosed: where A discloses name of P, contract is deemed to be of P, unless where: 1. A contracts outside scope of their actual/apparent authority (A liable to 3rd party in damages for breach) 2. A agrees to be liable 3. usage/custom makes A liable 4. A contracts by deed in their own name 5. P is in fact non existent * Where person professes to contract on P behalf (non-existent), he is presumed to have intended contract personally unless contrary intention is proved * Where contract is in writing, such contrary intention cannot be proved by oral evidence, but must appear from terms of contract or from surrounding circumstances * words “professes to contract on behalf of a principal” are critical; if person were to sign doc, not as A, but, as P, rule would have no operation * Fundamental question: * What parties intended, or must be fairly understood to have intended * Thus, where intention is that contract be made by co, and person who signs “For and on behalf of” co does not purport to contact as agent, he will not be personally liable Miller Associates v Bennington [1975]

Kelner v Baxter (1866) | * Facts: Co was in promotion phase and promoters signed on “behalf of proposed co”. P was disclosed but there was no contingency for co formation * Held: as contract wasn’t contingent upon co being formed only persons liable were the promoters | Black v Smallwood (1966) | * Facts: Contract for land sale signed as “Western Suburbs Holding, Smallwood, J Cooper, Directors”. Co existed but went broke. * Held: 2 people who purported to sign contract as directors put their signatures not as agents but as part of authenticating signature. They didn’t purport to act as agents and weren’t liable |

* Existence but not name of principal disclosed * Where A discloses fact that P exists but not name of P, agent’s liability, provided he contracts as A, is similar to cases where name of P is disclosed * If 3rd parties contract knowing there is P and yet does not ascertain P name, 3rd party cannot sue A : Marsh & McLennan v Stanyers Transport [1994]

* Existence of principal not disclosed * Where A contracts in his own name without expressly contracting as A and without disclosing existence of agency, A becomes personally liable on contract. a. Where 3rd party discovers reality of situation, 3rd party may elect to hold either A or P liable on contract. b. Unless contract between A and 3rd party expressly/impliedly excludes rights of persons other than A to be party to contract : Maynegrain v Compafina Bank [1982] c. Contract itself, or circumstances surrounding contract, may show that A is true and only P: Siu Yin Kwan * Once TP elects to hold liable either A/P, he is bound and cannot later charge other Clarkson, Booker v Andjel [1964] a. Where 3rd party sues and recovers judgment against A, cannot sue undisclosed P * Limitations if undisclosed P a. However, legal rights and obligations of undisclosed P only arise where A was in fact her agent at time of transaction, i.e., where A had actual authority from P to enter contract. b. undisclosed P cannot purport to ratify as act of their A transaction entered into without their authority by one who purports at time to be P and does not disclose that he is A: Keigley, Maxsted & Co v Durant [1901] c. While some contracts cannot be entered into by A for undisclosed P, rental agreement was able to be entered into by photocopier co as A on behalf of undisclosed P (finance co) : White v Baycorp Ad Bus Info Services (2006)

Corporations Act 2001 (Cth): * s119: Co comes into existence as body corporate at beginning of day on which it is registered * s131: Contracts before registration a. person is liable to pay damages to other party to pre-registration contract if co is not registered, or co is reg. but does not ratify contract w/in time agreed to by parties b. Or, if there is no agreed time, w/in a reasonable time after contract is entered into c. Amount of damages is amount co would be liable to pay to party if ratified contract and then did not perform it at all i. court may do anything it considers appropriate in circumstances, inc. ordering co to: 1. Pay all or part of the damages that the person is liable to pay; 2. Transfer property that the co received b/c of the k to a party to the k; or 3. Pay an amount to a party to contract

Breach of warranty of authority * If A rep. he has authority to enter into particular transaction and 3rd party relies on that rep of authority, A is taken to warrant that such rep is true. If it is untrue, A is liable in damages for breach of warranty of authority Yonge v Toynbee (1910) * Measure of damages is actual loss sustained by 3rd party * No defence that A acted innocently or in mistake * But A is not liable where other party knew of A lack of authority: Weigall v Runciman (1916)

Liability of principal and agent for misrepresentations * P may be liable for misrep. made by A in course of selling property Aliotta v Broadmeadows Bus Service (1988) * Both P and A may be liable for negligent rep. of A: Thompson v Henderson & Partners (1990) * Reps of A may also constitute, in appropriate case, misleading or deceptive conduct under s 18 Australian Consumer Law * Where A rep to 3rd party comprises info provided to A by their P, A will be entitled to indemnity from P in event of A being liable because rep is untrue

Thompson v Henderson & Partners (1990) | * Held: Vendor of building was held vicariously liable to purchaser for damages due to negligent misrep by their A as to “lettable” floor pace of building. A was also held liable to purchaser. Vendor was entitled to indemnity from A in respect of vendor’s liability to pay damages to purchaser |

Liability of principal and agent for wrongful acts * A and P will be liable in tort committed by A where A acted within scope of their authority OR fraudulent conduct within scope * P is not liable for acts committed by A that were outside his scope of duty * P is not liable for A negligence who acts without any authority and in their own interests and not on P behalf Kooragang Investments v Richardson & Wrench (1982)

Royal Globe Life Assurance v Kovacevic (1979) | * Held: A received money from K in course of his employment by insurance co which was accordingly liable to K for A fraud | Armstrong v Strain (1952) | * Held: purchaser was unable to recover damages against D for fraudulent misrep since no fraudulent intention was est. on anyone’s part | Deatons v Flew (1949) | * Held: whether or not B was provoked when working in bar as D (principal) alleged, B wasn’t acting within scope of her employment (threw glass in customer’s face) and D wasn’t liable to P in damages |

TERMINATION OF AGENCY
Performance/completion of agency: where A is appointed for performance of specific act/duration of definite period

Impossibility of performance: where its’ impossible for A to carry out their obligations e.g. subject matter is destroyed

Agreement: mutual agreement of termination

Revocation * Rights of 3rd parties: P may be liable to 3rd parties even after P validly revoked A authority where such parties had previous dealings with A and continue to deal with A without notice of withdrawal of A authority * Rights of agent: right of P to revoke A authority may be ltd to P obligation to indemnify A against any incurred loss/damage

By death: P death terminates A authority even if A is unaware of and had no means of ascertaining fact. A may become personally liable to 3rd parties for not having made any contract entered into by A after P death and on behalf of deceased P

By insanity: 3rd party is entitled to treat A authority as subsisting until they receive notice of insanity where P (before becoming insane) held out A as having authority

Bankruptcy * Of A: if A duties are merely formal, A bankruptcy doesn’t affect their authority * Of P: A (even after notice of P bankruptcy) may do acts necessary to complete transaction already binding P before bankruptcy

Renunciation by agent: A may renounce agency any time BUT must compensate P for any loss

PARTICULAR TYPES OF AGENTS
Classification of agents: * Special agents: specific role, a one off transaction * General agents: a class of transaction—involvement in a particular trade or business * Universal agent: unlimited authority to do all a principal may do—eg power of attorney

Factors and mercantile agents * Factor: agent employed to sell goods, possession or control of which has been entrusted to factors care by P * may sell goods in their own name as if they were P * purchaser + factor are in same position as purchaser and vendor (provided purchaser wasn’t aware factor wasn’t P) * Mercantile agent: agent having in customary course of his bus as such A authority either to sell goods or consign them for purpose of sale or to buy goods or to raise money on sec of goods Factors (Mercantile Agents) Act 1923 (NSW) * when mercantile A is entrusted with possession of goods, any sale/disposition of goods made by him in ordinary course of bus shall be valid as if he was expressly authorised by owner provided person taking goods acts in good faith

Del credere agents * Undertake to make good any loss incurred with respect to people with whom he contracts on P behalf * Often paid extra commission * P may sue buyer in his own name notwithstanding del credere commission so that latter amounts to no more than consideration for guarantee

Brokers: general agents who buy and sell goods for P without being entrusted with possession/control of goods or of their doc/title

Partners: general agent of other with re: partnership matters and bound by act of one another

Directors: agents for their co and co is liable in respect of all contracts made on its behalf by its directors

Estate agents: agents entrusted with duty of buying/selling land/bus on behalf of P

Auctioneers: agents for sale of property at public auctions

STATUTORY REGULATION OF AGENTS * Commercial Agents and Private Inquiry Agents Act 2004 (NSW): repossession and debt agents (commercial agents) are subject to licensing requirements * National Consumer Credit Protection Act 2009 (Cth): finance brokers are required to be licensed and are subject to certain obligations in conduct of their bus under new est national scheme * Travel Agents Act 1986 (NSW): licensing of travel agents and regulation of their operations

Sale of Goods Act 1923 (NSW)
KEY CONCEPTS
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There must be goods as defined in the Act
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There must be a contract SOG Act implies terms into the contract
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There must be a transfer of title
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Where goods are sold by description the goods must correspond with that description—this is an issue of identity
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Quality: Fitness for purpose and Merchantability—commercially saleable
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Remedies for breach
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Authority to sell

CONTRACT FOR SALE OF GOODS
Formation of contract * s6(1): SOG contract is where seller transfers or agrees to transfer property in goods to buyer for money consideration called price * What must be present: ordinary elements of contract, goods, money consideration, transfer of property

* Goods
Definition of goods s5(1).
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s5(1): Goods inc. all chattels personal other than things in action and money, emblements and things attached to it or forming part of land which are agreed to be severed before sale * Examples: * Clothes, food, cars, machinery, furniture, growing crops, combined sale of computer system/software goods Toby Constructions v Computa Bar Sales [1983] * NOT land, interest in land, shares, debentures, software St Albans City and District Council v Int. Computers [1996] or pay TV signals Telstra v Hurstville City Council (2000)

Symes v Laurie (1985) | * Held: contract for removal of house in its entirety from original site to another location was SOG | Toby v Computer Bar Sales [1983] | * Held: agreement for sale of computer system comprising 3 items of computer hardware and 2 items of software is SOG | Gammasonics v Comrad Medical Systems [2010] | * Held: software package delivered online doesn’t constitute goods and isn’t SOG with meaning of the Act |

* Money consideration: must exist; if goods are given away for free SOG Act doesn’t apply to transaction

* Transfer of property (ownership): Contracts of sale and for work and materials: * Each case must be decided on its own merits but generally, if main substance of agreement is transfer of title; contract is SOG * If main substance of agreement is skill and experience by 1 of parties and transfer of title to materials used in only ancillary contract is for work/labour/supply of materials

Deta Nominees v Viscount Plastic Products [1979] VIC | * Held: substance of contract test for determining whether contract is for SOG or work/labour is ‘illogical and unsatisfactory’ and better test is whether contract when carried out would result in sale of chattel; if so contract is for SOG |

Capacity to buy and sell * Governed by general law concerning capacity to contract * s7: if necessaries are sold and delivered to minors or people who by mental incapacity/drunkenness are incompetent to contract, they must pay reasonable price for them Sale and agreement to sell * Contract for SOG: inc. SOG (executed contract) AND agreement to sell goods (executory contract). Property passes when intended to pass (s22(1); intention matter of circumstances s22(2)). * Sale occurs where ownership of goods is transferred to buyer at time of contract * seller has right to sue buyer for price of goods * buyer has right to sue seller for damages if seller defaults AND for conversion if seller wrongfully disposes of goods * risk of loss to goods is with buyer as ownership passed to him * Agreement to sell: ownership of goods is to be transferred at future or subject to some condition. * It becomes a sale when time elapses or conditions are fulfilled * Seller has right to sue buyer for damages in case of default * If seller defaults, buyer can sue for damages as property hasn’t passed to buyer * Risk of loss to goods is with seller as ownership hasn’t passed * Example: Contract to sell unascertained goods. Some act must be added to it which completes sale (delivery or appropriation of specific goods to contract by assent of buyer/seller) Jansz v GMB Imports [1979] * s6(4) an agreement to sell become a sale when the time elapses or the conditions are fulfilled to which the transfer was subject.

Classification of goods * Existing goods: “goods identified and agreed upon at the time a contract of sale is made” (s 5) eg “Yellow Mazda Rego ABC 123” * Future goods: goods that come into existence after formation of contract. * Specific goods: * s5: goods identified and agreed upon at time contract for sale is made e.g. 2006 Holden Commodore * property passes to buyer as parties intend it to be transferred taking into account contract terms, parties conduct and circumstances of the case * s11: if goods perish without seller knowledge at time contract is made, contract is void * s12: if goods perish before risk passes to buyer without seller/buyer knowledge, agreement is avoided * Unascertained goods: * Goods which as at the time of contract have not been identified and agreed upon as the goods that property in which is to pass. E.g “a blue 2012 model Honda Jazz” “100 tonnes of the best quality wheat.” * Property doesn’t pass until goods become ascertained and in deliverable state either by seller with buyer assent (identified by seller as goods to be delivered) or by buyer with seller assent * No transfer until goods have been ascertained (s21)

Price * Price of goods may be fixed by contract or agreed upon by dealings between parties * Contract may be complete and binding even if no price is stated; in such circumstances buyer must pay reasonable price. This is a question of fact dependent upon circumstances of each case s13 * In agreement to sell goods on terms that price is to be fixed by 3rd party valuation and they fail to do so, agreement is avoided * If goods are taken by buyer he must pay reasonable price and where 3rd party is prevented from making evaluation due to buyer/seller default, innocent party may maintain action in damages s14 * Price of goods is to be paid upon delivery in legal tender * Delivery and payment are concurrent conditions s31

Formalities: Sale of Goods (Amendment) Act 1988 (NSW): no special formalities need to be observed before contract for sale becomes enforceable. Contract may be in writing, by word of mouth or implication from parties conduct

TERMS OF CONTRACT * Condition: vital to contract existence, breach of it gives innocent party right to rescind and claim damages. * Warranty: breach only gives right to claim in damages (s5 definitions)

------------------------------------------------- s4(5): nothing in Act is to be construed as excluding right to treat contract of sale as repudiated for sufficiently serious breach of stipulation that is neither condition nor warranty but intermediate stipulation

* Implied conditions and warranties are applicable to SOG but parties can also make specific conditions/warranties. Express stipulation prevails over implied condition in case of inconsistency

------------------------------------------------- s15: Stipulations as to time of payment are not conditions of sale. Stipulations as to time for delivery of goods are essential terms unless contrary intention is clearly shown

Conditions implied in contracts of sale * Implied undertakings as to title (Condition as to title)(s. 17 SOGA):
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s17: implied condition on seller’s part that he has right to sell goods and in case of agreement to sell he will have right to sell goods at time when property is to pass

Warranties to title: * Goods are free from any charge/encumbrance in favour of any 3rd party not declared or known to buyer before/at time when contract is made (s17(3)) * Buyer will have and enjoy quiet possession of goods amounting to indemnity against consequences of defective title and of any disturbance which might result (s17(2)).

Rowland v Divall [1923] | * Facts: Motor vehicle dealer purchased car from D who did not know car was stolen. Dealer used car for several months and sold it. Vehicle seized by police and returned to true owner. * Held: Should buyer title be avoided due to seller having no title to goods transferred, buyer is entitled to refund notwithstanding that buyer may have had temporary use of enjoyment of them as there has been a total failure of consideration | Healing (Sales) v Inglis Electrix (1968) | * Facts: Retail business stocks Inglis white goods on floor plan arrangement. Inglis wrongfully seizes goods breaching implied warranty of quiet possession * Held: ‘conversion complained of was deprivation of possession which P had and was entitled to retain as against all world, including D, whether paying price or not…in circumstances of this case there seems to be no sound reason for assessing P loss of possession at less than full value of the goods.’ | Patten v Thomas Motors [1965] | * Held: if seller who has no title to goods subsequently acquires good title before buyer rescinds contract, seller can hold buyer to contract |

* Sale by description (s. 18 SOGA):
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s18: In contracts for SOG by description there is implied condition that goods will correspond with description

If the goods do not conform to their description in the contract the buyer is entitled to reject them for breach of implied condition, or sue for damages since the buyer would not have received what he bargained for.
Must be sold by “description” – requirement satisfied in all cases where the buyer has not seen the goods but is relying on the description alone: Varley v Whipp [1900] 1 QB 513
Goods may be bought by description even if the buyer has seen and examined the goods, provided the buyer bought them corresponding to a description: Beale v Taylor [1967] 1 WLR 1193
Statements merely relating to the quality of the goods do not form part of the contractual description in determining whether there has been a breach of the implied condition of description: Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 * Fitness for purpose (s. 19(1) SOGA):
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s19(1): Where the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller’s skill or judgment, and the goods are of a description which it is in the course of the seller’s business to supply (whether the seller be the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose:
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Provided that in the case of a contract for the sale of a specified article under its patent or other trade name there is no implied condition as to its fitness for any particular purpose.

The seller need not be informed of the particular purpose when such a purpose is the ordinary use for which the goods are used
Where the proposed use is not the ordinary use of the good, the buyer must inform the seller of his intentions on how he will use the goods – this is so the seller can make a judgement on whether or not the goods are fit for the particular purpose, and they buyer can then rely on the seller’s judgement: Ashford Shire Council v Dependable Motors Pty Ltd (1960) 104 CLR 139
It is sufficient if the buyer relies only partially on the skill and judgement of the seller provided that the matter of which the buyer complains are matters in respect of which the buyer relied on the seller: Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 Ashford Shire Council v Dependable Motors (1960) | * Held: engineer having disclosed proposed purpose for which tractor was required acted on skill and judgment of co managing director. Council relied on co skill and judgment and consequently as tractor was unsuitable for roadwork, council was entitled to damages | Grant v Aus Knitting Mills [1936) | * Facts: G purchased woollen underwear from M whose business was to sell such goods and after wearing its garments, G developed acute skin disease * Held: Goods were not reasonably fit for their proper use and G was entitled to damages against retailer | McWilliams Wines v Liaweena (1988) | * Held: D was liable for breach of implied condition of fitness. Given background of number of transactions between parties in the past, P made known to D it was relying on its skill and judgment to deliver non-contaminated corks which would cause deleterious effect on wine. Corks weren’t of merchantable quality and provisions purporting to exclude D liability were not sufficiently brought to P attention | Expo Aluminium (NSW) v WR Pateman (1990) | * Held: If buyer relies on s19(1) (implied condition of fitness) must est. purpose AND reliance. Appellant made known to respondent purpose for which windows were required; reliance on respondent skill and judgment was est. as inference from appellant’s statement of purpose | Ashington Piggeries v Christopher Hill [1972] HL | * Held: P was liable for breach of implied condition of fitness for purpose because although D relied on his own judgment as to suitability of compound for mink food, he relied on P seller to select and acquire good quality ingredients of kind set out in formula. 3rd party supplier of herring meal was liable to P for breach of implied condition. Partial reliance sufficient. | Baldry v Marshall[1925] | * Held: trade name proviso only applies where buyer orders goods under their trade name as to show buyer doesn’t rely on seller skill and judgment. Exclusion clause not effective to oust condition s19(4). | David Jones v Willis (1934) HC | * McTiernan J at 129: statutory condition is not to be implied unless buyer has made known to seller particular purpose for which he requires goods. But, whenever that has been disclosed, presumption does not always follow that reliance by buyer on seller’s skill or judgment has become part of contractual relationship.…It follows that reliance in question must be such as to constitute a substantial and effective inducement which leads buyer to agree to purchase commodity | Cammell Laird v Manganese Bronze and Brass [1934] | * Held: more difficult question remains whether particular purpose for which goods were required was not merely made known…but was made known so as to show that appellants as buyers relied on sellers' skill and judgment. Such reliance must be affirmatively shown; buyer must bring home to mind of seller that he is relying on him in such a way that seller can be taken to have contracted on that footing. Reliance is to be basis of a contractual obligation |

* Merchantable quality:
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s19 (2): if goods are bought by description from seller who deals in goods of that description there is implied condition goods are of merchantable quality provided that if buyer examined goods there is no implied condition as re: defects which such examination ought to have revealed

“Merchantable quality” means that the goods are commercially saleable under the description they were sold
For the condition to be implied in the contract the goods must be bought by description but this requirement has been broadly interpreted by the courts;
Asking for a pair of comfortable shoes, will satisfy that the good was bought by description: David Jones Ltd v Willis (1934) 52 CLR 11

s64 (3): Without limiting meaning of merchantable quality, goods of any kind which are subject of contract for consumer sale are not of merchantable quality if they are not as fit for purpose for which goods of that kind are commonly bought as is reasonable to expect having regard to their price, to any description applied to them by seller and to all other circumstances.

s64 (5): Where, in any proceedings arising out of contract for consumer sale (not second-hand goods), it appears that goods, at time of their delivery, were not, by reason of any defect in them or for that and any other reason, of merchantable quality, court may add manufacturer of goods as a party to proceedings and, if of opinion that defect should be remedied by manufacturer, may make against manufacturer…

Henry Kendall v William Lillico [1969] | * Held: merchantable quality means that goods are commercially saleable under description they were sold (fit for purpose for which goods of that description are normally used having regard to price paid for goods and other circumstances of sale) | Aus Knitting Mills v Grant (1933) | * Held: condition that goods are of merchantable quality requires that they should be in such actual state that buyer fully acquainted with facts and knowing what hidden defects exist and not being limited to their apparent condition would buy them without abatement of price obtainable for such goods if in reasonably sound order and condition and without special terms | David Jones v Willis (1934) HC | * Held: jury was entitled to find that shoes (heel not properly fasted and W broke her leg) were bought by description and there was a breach of implied condition of merchantable quality...whenever description of goods enters transaction, so that buyer must be taken to rely upon it to substantial degree as well as upon identity of goods, it is a sale by description. (The woman asked about the comfort of the shoes). | Thornett v Beers [1919] | * Held: if buyer examines goods before making contract; condition is not implied re: defects which such examination ought to have revealed | Cammell Laird v Manganese Bronze and Brass [1934] | * Held: [Goods are not of merchantable quality if they]…in form in which they were tendered were of no use for any purpose for which such goods would normally be used and hence were not saleable under that description… question is whether defective propeller could be used…on any vessel |

* Sale by sample:
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s20: If sale is by sample only, there is an implied condition that a) -------------------------------------------------
Bulk will correspond with sample in quality b) -------------------------------------------------
Buyer will have reasonable opportunity of comparing bulk with sample c) -------------------------------------------------
Goods will be free from defect rendering them unmerchantable which wouldn’t be apparent on reasonable examination of the sample

s17 where sale by sample is also sale by description, the bulk AND sample must be correspond with description. (i.e. not sufficient that bulk corresponds with sample if the sample itself does not fit description).

Drummond v Van Ingren (1887) | * Held: goods must be free from any defect rendering them unmerchantable which isn’t apparent from reasonable examination of sample |

Exclusion of terms implied by SOG Act * Implied conditions/warranties may be excluded/varied by express/implied agreement between parties

------------------------------------------------- s57: where any right/duty/liability would arise under contract of sale by implication of law, it may be negatived/varied by express agreement or by course of dealing between parties or by usage if it to bind both parties

Andrews Bros v Singer [1924]: clause may be included in contract excluding liability BUT it doesn’t protect seller against any express warranty which may be included in contract

When condition is to be treated as warranty
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s16: where contract of sale is subject to any condition to be fulfilled by seller, buyer may waive condition or elect to treat breach of such condition as breach of warranty and not as ground for treating contract as repudiated

Wallis v Haynes [1911]: where goods sold by description are of different description

Caveat emptor: No implied warranties at common law as to quality of fitness. ‘Caveat emptor’ or ‘let the buyer be aware’ maxim applies

TRANSFER OF PROPERTY(PASSING OF TITLE)
Property and possession * Distinction: property relates to ownership/title AND possession relates to custody/control of goods

Transfer of ownership or property in goods
Primary rules for ascertaining when ownership passes to buyer is: * s21: in case of specific or ascertained goods, property passes when parties intend it to pass taking into account contract terms, parties conduct and case circumstances * s22: in case of unascertained goods, no property can pass unless and until goods become ascertained

Rules for ascertaining intention (s23)
Rule 1:
If unconditional contract for specific goods in deliverable state, when the contract is made Bodilingo v Webb Projects (1990) NSWCA | * Held: since there was no contrary intention in contract property passed to buyer when contract was made. Seller wasn’t entitled to recover goods when buyer became insolvent after payment of 5th installment and unable to pay purchase price in full |

Rule 2:
If there is contract for sale of specific goods and seller is bound to do something to goods for purpose of putting them in deliverable state, property doesn’t pass until that is done and buyer has notice of it – there is no immediate passing of property

Rule 3:
If there is contract for sale of specific goods in deliverable state but seller is bound to weigh/measure/test thing with ref. to goods with purpose of ascertaining price, property doesn’t pass until such thing is done and buyer has notice of it Rule 4:
If goods are delivered to buyer on approval/sale or return/similar terms, property passes to buyer: a) When buyer signifies their approval/acceptance to seller b) If buyer doesn’t signify their approval/acceptance, but retains goods without giving notice of rejection then if time has been fixed for return of goods on expiration of such time OR if no time was fixed on expiration of reasonable time (i.e. acceptance by acquiescence(silence))

Rule 5: unascertained goods or future goods, when goods are appropriated to the contract with the assent of the other
(1) Where there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made.

(2) Where in pursuance of the contract the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer and does not reserve the right of disposal, the seller is deemed to have unconditionally appropriated the goods to the contract.

------------------------------------------------- s25: applies to contract for sale of specified quantity of unascertained goods of which some/all form part of single bulk quantity of goods. Bulk must be identified by contract and buyer must have paid for some/all of goods forming part of bulk. Unless parties agree otherwise, property in undivided share in bulk is transferred to buyer who becomes owner in common of bulk

Warder v Norwood [1968] CA | * Held: property in cartons of kidneys and risk of their deterioration passed to P buyer on carrier handing over delivery note at cold store – kidneys were in good condition at that time and their deterioration occurred subsequently. P failed and was liable to price of kidneys |
TITLE OF TRANSFEREE (NEMO DAT AND EXCEPTIONS)
General rule: transferee of goods cannot obtain better title than transferor (nemo dat rule)

Rule that the seller without title cannot transfer title (s26 SOGA)
Exceptions:
1. Where owner is estopped from denying the authority of the seller (s26 SOGA) 2.1. This is shown by the owners conduct, which expressly or impliedly, constitutes an unambiguous representation to the buyer that the seller has his authority to make the sale. 2. Sale by person having voidable title (s27 SOGA) 3.2. Title gained through fraud 3. Sale by seller or buyer in possession after sale (s28 SOGA)

Estoppel
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s26: where owner of goods is by their conduct precluded from denying seller authority to sell, buyer obtains good title

To permit goods to go to possession of person in circumstances which make it appear such person has authority to sell goods may estop (prevent) owner from upsetting purchaser in good faith and for value

Big Rock v Esanda Finance (1992) | * Held: respondent financier was precluded (estopped) from denying borrower authority to sell vehicle. Appellant motor dealers acquired good title to the vehicle | Thomas Aus Wholesale Vehicle Trading v Marac Finance Aus (1985) | * Held: inaction, silence or even gross carelessness in protection of property is not enough to preclude owner from asserting his title | Eastern Distributors v Goldring [1957] | * Facts: M supplies van ownership doc to C who sells van to finance co to facilitate re-purchase of van from C. Total deal falls through however van is successfully sold. Owner of van remains in possession and sells it to G. Finance co claims vehicle from G. * Held: C was armed by M with documents which enabled him to represent to P that he was owner…M is precluded from denying C authority to sell, and consequently P acquired title to goods which M himself had and M had no title left to pass to G |

Sale under voidable title
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s27: where seller of goods has voiable title (gained through fraud/misrepresentation/duress but not avoided at time of sale) buyer acquires good title provided he buys thing in good faith and w/out notice of seller’s defect of title * Title can be avoided by retaking possession of goods/doc of title OR giving notice of intention to rescind contract * If seller title is void buyer gains no title unless other exceptions apply

Phillips v Brooks [1919] | * Held: property passed to swindler to enable him to give a good title to any person who gave value and acted bona fide without notice as his title was obtained by fraud was voidable, NOT void |

Sale by seller or buyer in possession after sale * Sale by seller in possession:
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s28: where seller having sold goods continues in possession of goods or doc of title to goods, delivery/transfer by seller to person receiving them in good faith and without notice of previous sale has same effect as if transaction was authorised by owner (original purchaser)

Pacific Motor Auctions v Motor Credits [1965] | Held: if s28 applies, bona fide purchaser of goods from seller who has continued in possession of goods after sale to original purchaser will acquire good title as against original purchaser |

* Sale by buyer in possession:
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s28: if person who bought goods obtains possession with seller consent, delivery/transfer by buyer has same effect as if buyer was mercantile agent entrusted by owner of goods or doc of title

* Bona fide purchaser of goods who obtained possession with original seller consent has good title to them * Purchaser from buyer in possession only acquires good title under statutory provision where purchaser receives goods in good faith and without notice of original seller of goods. Onus of proof is with purchaser * Registration of Int. in Goods Act 1986 (NSW): if good sold is motor vehicle subject to security interest, legal position of bona fide purchaser will depend on whether sec. int. was reg. under legislation providing for reg. of such int.

Gamer’s Motor Centre v Natwest Wholesale Aus (1987) | * Held: N (3rd party finance co) acquired good title to vehicles as when E (retail dealer) sold them to N under floor plan agreement terms there was a constructive delivery of vehicles to N. E agreed to buy vehicles from G (motor vehicle wholesaler), obtained possession of them with G consent and their delivery under sale to N had effect of vesting good title in N. | Ford Credit Aus v Auto Trade Auction [1982] | * Held: statutory provision only applied where original seller was lawfully entitled to sell goods; since this wasn’t the case, D didn’t acquire good title and was liable for conversion of truck to P finance co. Subsequent purchaser was also held liable to finance co | Robinson Motors v Fowler [1982] | * Held: notice must be actual; it is not sufficient for original seller to contend that by making further enquiries, purchaser could have discovered that buyer in possession of goods who purported to sell them had no right to do so unless there was something obviously suspicious such as to put purchaser on inquiry |

REMEDIES FOR BREACH OF CONTRACT OF SALE

SELLERS REMEDIES

- Unpaid seller (s 41) s41: seller of goods is deemed to be unpaid where: a) Whole of price hasn’t been paid/tendered b) When Bill of exchange or other negotiable instrument was received as conditional payment and condition hasn’t been fulfilled by reason of dishonour of instrument or otherwise

Rights of unpaid seller against goods
Lien (ownership passed to buyer but possession is with seller) s 43 * Seller lien: right to retain possession of goods until price is paid/tendered and attaches when default is made by buyer (s43) * Seller has no lien unless he has actual possession (due to wording of s43). * When seller loses possession, he has right to stop goods while in transit (s46) OR sue buyer for price if he gained possession (s51) * Unpaid seller can exercise lien when (s43): a) goods are sold without stipulation to credit b) goods are sold on credit but term of contract expired c) buyer becomes insolvent * Seller will lose their lien (s45): a) when goods are delivered to carrier for purpose of transmission to buyer without reserving right of disposal b) when buyer or his agent lawfully obtains possession of goods c) by waiver (handing buyer doc of title OR assenting to resale by buyer)

Withholding delivery (ownership and possession are with seller) s. 42 * If buyer defaults and neither ownership/possession passed to him, unpaid seller can sue buyer for breach of contract AND withhold delivery of goods

Stoppage of goods in transit (ownership passed to buyer but possession is not with either party) * Unpaid seller can stop goods in transit when (s46): a) they parted with possession of goods b) they are still in transit and c) buyer becomes insolvent * s46: unpaid seller may resume possession of goods as long as they’re in course of transit and retain them until payment * s47: duration of transit: 1. Goods are deemed in course of transit from time they are delivered to carrier until buyer or their takes delivery of them 2. If buyer or their agent obtains delivery of goods before their arrival at appointed destination, transit is at an end. 3. If after arrival of goods at appointed destination carrier acknowledges to buyer or their agent that carrier holds the goods on buyer’s behalf and continues in possession of them for buyer transit is at an end, and it is immaterial that a further destination for goods may have been indicated by buyer. 4. If goods are rejected by buyer, and carrier continues in possession of them, transit is not deemed to be at an end, even if seller has refused to receive them back. 5. When goods are delivered to a ship chartered by buyer, it is a question depending on circumstances of particular case whether they are in the possession of master as a carrier or as agent to buyer. 6. Where carrier wrongfully refuses to deliver goods to buyer transit is deemed to be at an end. 7. Where part delivery of goods has been made to buyer remainder of goods may be stopped in transit, unless part delivery has been made under such circumstances as to show an agreement to give up possession of whole of goods.

* How stoppage in transit is effected * Unpaid seller can stop transit by taking actual possession of goods OR giving notice of their claim to carrier * Notice can be given to person in actual possession OR to their principal * s48: when notice of stoppage in transit is given by seller to carrier, carrier must redeliver goods according to seller directions. Expenses of redelivery are borne by seller * s49: unpaid seller right of lien in transit isn’t affected by sale/other disposition of goods which buyer may have made without seller assent

* Defeat of stoppage in transit * s49: if doc of title to goods was lawfully transferred to any person as buyer/owner of goods and that person transfers by way of sale doc to person who takes it in good faith and for valuable consideration then unpaid seller right of lien or stoppage in transit is defeated

Right of Resale (ownership may be with either party but possession is with seller) * s50: Unpaid seller has right of resale to goods where: 1. goods are of perishable nature 2. seller exercises right of lien or stoppage in transit and gives notice to buyer of their intention to resell and price is not paid or tendered within reasonable time 3. seller has expressly reserved right of resale in case buyer defaults * Unpaid seller is entitled at common law to terminate contract which was repudiated by purchaser and resell goods without giving notice of intention to do so to original purchaser

RV Ward v Bignall [1967] | * Held: seller exercise of right of resale under (a) and (b) has effect of rescinding contract of sale and seller is entitled to recover damages from original buyer for any loss occasioned by latter’s breach of contract | Wherry v Watson (1991) | * Held: due payment of deposit by 1st P cheque being met was an essential part of contract. Dishonor of cheque entitled D to terminate contract and sell vehicle to 2nd P |

Rights of unpaid seller against buyer
Action for price
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s51: if property in goods passed to buyer and buyer wrongfully neglected/refused to pay for goods, seller may sue buyer for price
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Where price is payable on certain day irrespective of delivery and buyer wrongfully neglects/refuses to pay, seller may sue for price even if property in goods hasn’t passed and goods themselves haven’t been appropriated to contract * Colley v Overseas Exporters [1921]: where there’s no special agreement as to payment of price and property in goods hasn’t passed to buyer seller couldn’t sue for price of goods

Damages for non acceptance * S52: Damages for non acceptance: 1. Where buyer wrongfully neglects/refuses to accept and pay for goods, seller may maintain action against buyer for damages for non-acceptance. 2. The measure of damages is estimated loss directly and naturally resulting in ordinary course of events from buyer’s breach of contract. 3. Where there is an available market for goods in question, measure of damages is prima facie to be ascertained by difference between contract price and market or current price at the time or times when the goods ought to have been accepted, or if no time was fixed for acceptance, then at the time of the refusal to accept. * s62: on buyer non acceptance of goods measure of damages recoverable by seller is estimated loss directly and naturally resulting in ordinary course of events from buyer breach of contract * where seller didn’t have replacement for goods sold on buyer refusing to take delivery, seller is entitled to recover for loss they suffer on resale of goods (difference between price agreed to be paid AND price of resale)

WL Thompson v Robinson (Gunmakers) [1955] | * Facts: R contracted to buy car from T (car dealer). R refused to accept delivery and T returned car to supplier. * Held: T were entitled to damages for loss of their bargain (profit they would have made as they sold one car less than they otherwise would have sold) | Lazenby Garages v Wright [1976] | * Held: measure of damages is estimated loss directly and naturally resulting in ordinary course of events from the buyer's breach of contract...where buyer agreed to buy unique item but refuses to accept goods, seller is only entitled to recover loss they suffered; if seller resells goods at > price than agreed by original buyer, seller suffered no loss and cannot recover damages from original buyer | Kargotich v Mustica [1973] | * Held: K was entitled to recover $90 (loss of resale due to refusal to take delivery) since he didn’t show he could have obtained 2nd hay baler and made a 2nd sale |

Remedies of buyer
Repudiation of contract * Buyer is entitled to rescind contract and reject goods where there has been breach of condition. Buyer can recover purchase price if there has been a total failure of consideration

Rowland v Divall [1923] | * Held: buyer was entitled to refund of full price paid; there was total failure of consideration even though buyer had some use of the car |

Damages for breach of warranty of quality
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S54: If there is breach of warranty of quality by seller, buyer is entitled to reject the goods and: a) -------------------------------------------------
Set up against seller breach of warranty in diminution or extinction of price b) -------------------------------------------------
Maintain action in damages against seller

* Measure of damages for breach of warranty is estimated loss directly and naturally resulting in ordinary course of events from breach of warranty. Loss is prima facie difference between value of goods at time of delivery and value they would of had if they answered to warranty * If buyer is claiming damages to person caused by defective goods, measure of damages is determined acc. to estimated loss directly and naturally resulting in ordinary course of events from breach of warranty

Joseph & Co v Harvest Grain (1996) | * Facts: Chick peas bought for re-sale. Non-delivery exposed purchaser to liability to its own customer. * Held: it may well be that buyer’s contract of re-sale may give rise to damages on breach of initial contract of sale. Here, re-sale was one thing both buyer and seller had in mind when initial contract was made. When P buyer is required to compensate sub-buyer… that is a loss “directly and naturally resulting in ordinary course of events from buyer's breach of contract”, to employ words of s 53(2). It is also a loss which, “on information available to seller when contract was made, was sufficiently likely to result from breach, to make it proper to hold that it flowed naturally from the breach | Bostock v Nicholson [1904] | * Facts: D contracted to sell P sulphuric acid commercially free from arsenic. Brewers who purchased this from P poisoned large number of people as acid contained arsenic and P were liable in damages. * Held: P were entitled to recover: price paid for acid AND value of goods rendered useless by being mixed with poisonous acid. P were not entitled to recover: loss of goodwill (wasn’t a direct loss naturally arising in ordinary course of events from breach of warranty) AND damages which had to be paid to brewers | Kasler & Cohen v Slavouski [1928] | * Facts: there was a chain of supply from A–F * Held: B was entitled to recover from A damages awarded in original action to F, costs of both sides of that action; sum in respect of costs incurred by B, C and D in connection with claims against them |

Damages for non delivery
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S53: if seller wrongfully neglects/refuses to deliver goods to buyer, buyer may maintain action for damages for non delivery * Measure of damages is estimated los directly and naturally arising in ordinary course of events from seller breach of contract * Where there is available market, measure of damages is prima facie difference between contract price and market/current price of goods at time when they were delivered OR at time of refusal to deliver * Buyer should mitigate their loss as failure to do so reduces claim than if he acted as reasonable and prudent person would * Whether buyer can claim special damages for non delivery where goods are required for particular purpose depends on: a) Whether seller knew at time of contract of particular circumstances relating to contract b) Whether buyer actually suffered damages through seller default c) There was no available market for goods in question

Hadley v Baxendale (1854) | * Held: if special circumstances under which contract was actually made were communicated and known to both parties damages resulting from breach of such contract would be amount of injury which would ordinarily flow from breach of contract under those special circumstances so known and communicated | Hydraulic Engineering v McHaffie (1879) | * Facts: buyer notified seller he needed particular gun for pile driver to be delivered to 3rd party within specified period. 3rd party refuses to take delivery due to unreasonable delay * Held: Manufacturers’ liability was expenses incurred and profit which would have been made – any amount obtained on sale of rejected machine |

Specific performance * If seller fails to deliver specific goods, court can direct specific performance as it thinks fit * Generally, courts will not enforce specific performance on agreement to sell/deliver chattels unless goods are unique/special and where award of damages wouldn’t be adequate compensation to buyer

Dougan v Ley (1946) | * Held: where taxicab was subject of agreement to sale, specific performance was ordered as contract was for sale of chattel with valuable privilege (taxicab license) annexed to it |

Australian Consumer Law
Competition and Consumer Act 2010 (Cth): concerned with: a. Providing protection to consumers against misleading/deceptive conduct, unconscionable conduct, unfair contractual terms, false reps and other unfair practices in connection with supply of goods, services and land, and providing adequate remedies in event of defective goods or inadequate services being supplied to consumers b. Regulating restrictive trading practices with aim of preventing monopolistic and anti-competitive activities among traders and thereby achieving greater competition and efficiency in marketplace

Australian Consumer Law (ACL) = schedule #2 of the CCA replaces consumer protection provisions of former TPA 1974 * Cth usually applies to corporations (s131 CCA; ≠ apply to financial services s131A CCA) * Applies to individuals by state enactment = FTA 1987 (NSW) s28(1)(c), defines ‘ACL text’ in s27. Cth interpretation act applies s31 FTA. * ACCC = Cth enforcer; Department of Fair Trading = NSW enforcer

LEGISLATIVE FRAMEWORK OF ACL * General protections: provisions prohibiting: * misleading/deceptive conduct (Ch 2, Pt 2-1) * unconscionable conduct (Pt 2-2) * unfair contract terms (Pt 2-3) * Specific protections: provisions prohibiting: * Prohibiting more specific false/misleading reps and unfair practices (Ch 3, Pt 3-1) * Prohibiting consumer guarantees to title, quality and fitness for purpose relating to supply of goods (Pt 3-2, Div 1) * Regulating unsolicited consumer agreements (door-door sales. telemarketing) + lay-by agreements (Pt 3-2, Div 2, 3) * Safety of consumer goods and product related services (Pt 3-3) * Liability of manufacturers for defective goods (Pt 3-5) * Offences for contravention of statutory provisions (Ch 4) * Enforcement of statutory provisions and remedies for their contravention (Ch 5)
1. Consumer Guarantees
PRINCIPLES AND DEFINITIONS
Goods:
* S2 "goods" includes: a) ships, aircraft and other vehicles; and b) animals, including fish; and c) minerals, trees and crops, whether on, under or attached to land or not; and d) gas and electricity; and e) computer software; and f) second-hand goods; and g) any component part of, or accessory to, goods.

* S 2 "acquire" includes: a) In relation to goods—acquire by way of purchase, exchange or taking on lease, on hire or on hire purchase; and b) In relation to services—accept
Supply:
* s2(1) guarantees apply to contracts for sale of goods AND contracts for supply of goods (exchange, lease, hire, hire-purchase) * s2: supply includes: a) In relation to goods—supply (including resupply) by way of sale, exchange, lease, hire or hire purchase; and b) In relation to services—provide, grant or confer; and, when used as a noun, has a corresponding meaning, and supplied and supplier have corresponding meanings.

Distinction between goods and services

Seeley Int. v Cintro [2001] | * Facts: Seeley contracts with Cintro to manufacture remote controls for their roof mounted air conditioners. Contract value $31k. 3 air conditioners catch fire. * Held: design agreement (as distinct from supply agreement) was not just a contract for supply of ‘‘goods’’; it was contract that included design of ‘‘goods’’...work that was involved in designing remote control was clearly a contract for supply by corp., in course of its bus, of services to consumer. As such, design agreement clearly came within purview of both subs (1) and (2) of s 74. * (status as consumer not effectively challenged) * O’Loughlin J: evidence that was elicited during course of trial... made it clear services that were provided were of non−personal nature, but they were below prescribed limit of $40,000. Seeley has asserted that it was a consumer in its pleadings, and there is no evidence to contrary. Applicant is...entitled to rely on statutory warranties that are contained in s 74 of TPA with respect to the provisions of design agreement. * Principle: sale of specific good may not be covered because it’s incorporated in another product but there may still be a liability for fault if it’s supplied as part of service |

Consumer * s3(1): Person acquires goods as consumer only if: a. Amount payable for goods doesn’t exceed $40,000 OR b. Goods are of kind ordinarily acquired for personal/domestic/household use/consumption OR c. Goods consisted of vehicle/trailer acquired for use principally in transport of goods on public roads * s3(2): Person doesn’t acquire goods as consumer if it’s for resupply, part of production or repair of goods/fixtures on land * s3(3): Person acquires services as consumer only if amount payable doesn’t exceed $40,000 or services were acquired for personal, domestic or household use/consumption * s3(10): Presumption that persons are consumers; * If it is alleged in any proceeding under this Schedule, or in any other proceeding in respect of a matter arising under this Schedule, that a person was a consumer in relation to particular goods or services, it is presumed, unless the contrary is established, that the person was a consumer in relation to those goods or services. * Up to D to show consumers aren’t consumers

Laws v GWS Machinery (2007): farm worker who acquired tyre for purpose of using it on tractor was held to be consumer as goods weren’t used as part of production/manufacturing process or repair

In trade or commerce:
See notes below

As to title * In every contract for supply of goods by person to consumer there’s: a. s51(1): guarantee that supplier has right to dispose of property in goods b. s52: guarantee that consumer has right to undisturbed possession of goods except so far as it may lawfully be disturbed by supplier/another person who is entitled to benefit of any sec, charge or encumbrance disclosed to consumer before contract is made c. s53(1): in case of contract for supply of goods under which property is to pass to consumer – guarantee that goods are free from any sec, charge or encumbrance not disclosed before contract is made * s53(2): supplier not in breach of s53(1) by existence of floating charge over supplier assets unless charge becomes fixed * s35(3): if supplier supplies limited title to goods, there’s guarantee that all encumbrances on title known to supplier have been disclosed to consumer

Defining ‘ordinarily acquired for personal, domestic or household use or consumption’

Crago v Multiquip Pty Ltd (1998)importance of leading evidence | * Facts: There was lack of evidence whether incubators could be used for household use and consumption. Outcome may not have changed but advice is that you need evidence. * Onus on party relying on provision to adduce evidence * Held: ‘Certainly it cannot be regarded as a matter of common knowledge that an ostrich egg incubator is, like a carpet, a washing machine or TV set, ordinarily acquired for personal, household or domestic use. There was no evidence that anyone in fact acquired such incubators for such use.’ | Bunnings v Laminex [2006] | * Facts: bought roofing for warehouse was it goods acquired for personal household use and consumption * Held: …a uniform approach should be adopted when construing definitional phrase found in s 74A(2)(a) and in other provisions of TPA… statutory phrase should be construed broadly, wherever it appears in TPA, so as to give fullest relief which the fair meaning of its language will allow*… * First, word ‘ordinarily’ means ‘commonly’; ‘regularly’, not ‘principally’, ‘exclusively’ or ‘predominately’… Per Young J * Secondly, it is preferable to pose statutory question (i.e. question whether goods in issue in particular case are goods of kind ordinarily acquired for personal, domestic or household use or consumption) as a single composite question…This can be contrasted with two-stage inquiry as to, first, genus of goods in question, and secondly, whether that kind of goods is ordinarily acquired for personal, domestic or household use or consumption. * [The reasoning process] While the products were, at all relevant times, marketed as being ideally suited for use in commercial and industrial applications, their use in residential applications was left open… * Principle: commercial enterprise can acquire goods for commercial purpose but they can still be characterised as goods ordinarily acquired for personal/domestic/household use and consumption | Four Square Stores (Qld) v ABE Copiers (1981)importance of evidence; circumstances may change over time | * Facts: FSS leased reduction photocopier and then sued ABE under TPA claiming goods were not fit for purpose * Held: Photocopier not ‘ordinarily acquired for personal, domestic or household use or consumption’ however lease payments <$15k; replacement value of photocopier >$15k ($15k prescribed amount in 1981) * Prescribed amount determined by total of lease payments * NB consider characterization of photocopiers today (adoption of office technology in domestic settings over time) but also apply Bunnings approach |

ACCEPTABLE QUALITY s54(1): where person supplies goods to consumer in T/C there’s guarantee goods are of acceptable quality

Meaning of acceptable quality: * s54: Goods are of acceptable quality if they’re as: a. fit for all purposes for which goods of that kind are commonly supplied b. acceptable in appearance and finish c. free from defects d. safe e. durable as reasonable consumer would regard as acceptable having regard to: a. nature of goods b. price of goods c. any statements made about goods on any packaging or label on goods d. any rep made about goods by supplier/manufacturer e. any other relevant circumstances relating to supply of goods

E v Aus Red Cross Society (1992) | * Facts: appellant was given blood transfusion infected with AIDS which patient contracted * Held: s71 of TPA was inapplicable as there was no relevant contract for supply of goods (contract was for services) | Graham Barclay Oysters v Ryan (2000) | * Held: It is not unreasonable for legislature to adopt policy of requiring manufacturer to meet reasonable expectations of consumers as to fitness of manufacturer’s goods for their purpose. Consistently with that policy, if manufacturer knows that it cannot be sure to meet those expectations, it must cease manufacturing, or, if possible, ensure that consumer has agreed to bear risk (perhaps by appropriate warning with result that consumer’s otherwise reasonable expectations are made unreasonable) |

NB s54 Acceptable Quality qualifications * ss(3) The matters for the purposes of subsection (2) are: a) nature of the goods; and b) price of the goods (if relevant); and c) any statements made about the goods on any packaging or label on the goods; and d) any representation made about the goods by the supplier or manufacturer of the goods; and e) any other relevant circumstances relating to the supply of the goods. * ss(4) Goods are of acceptable quality if: a) goods supplied to a consumer are not of acceptable quality; and b) the only reason or reasons why they are not of acceptable quality were specifically drawn to the consumer's attention before the consumer agreed to the supply; * ss (5) If: a) goods are displayed for sale or hire; and b) goods would not be of acceptable quality if they were supplied to a consumer; reason or reasons why they are not of acceptable quality are taken, for the purposes of subsection (4), to have been specifically drawn to a consumer's attention if those reasons were disclosed on a written notice that was displayed with the goods and that was transparent.

NB s 54 Acceptable Quality Exceptions * ss(6) Goods do not fail to be of acceptable quality if: a) consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and b) they are damaged by abnormal use. * ss(7) Goods do not fail to be of acceptable quality if: a) consumer acquiring the goods examines them before the consumer agrees to the supply of the goods; and b) examination ought reasonably to have revealed that the goods were not of acceptable quality.
FITNESS FOR DISCLOSED PURPOSE
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s55(1): if person supplies goods to consumer in T/C there’s guarantee goods are reasonably fit for any disclosed purpose for which supplier rep that they are reasonably fit

Meaning of disclosed purpose:
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s55 (2): Disclosed purpose is particular purpose for which goods are being acquired by consumer and that: a. ------------------------------------------------- consumer makes known to supplier/person with whom prior neg. for acquisition of goods were conducted b. ------------------------------------------------- consumer makes known to manufacturer directly, through supplier/other person with whom prior neg. were conducted

Fitness for purpose and reliance
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s55(3) This section does not apply if circumstances show he consumer did not rely on, or that it was unreasonable for consumer to rely on, skill or judgment of supplier, person referred to in subsection (2)(a)(ii) or manufacturer, as case may be.

Corporation may define purposes * … [where] terms of contract of supply..require that particular normal purpose be excluded… First, it addresses reasonable expectations of consumer at time of acquisition of goods that they will be fit for all their normal purposes, subject to terms of contract of supply to which consumer has agreed. * Secondly, it addresses reasonable expectations of corporation as to purpose to which the goods will be put. * Thus, corporation may by description, if any, it attaches to goods, price it receives and any other relevant circumstances, place goods in circulation in such manner that corporation may delineate relevant purpose itself. Alternatively, it may provide information as to purpose with goods which information is sufficient to enable consumer to make informed choice. If consumer has information as to purpose contemplated by corporation as being those for which goods are fit, any expectation on part of consumer as to another, although normal, purpose would be unreasonable Cavalier Marketing v Rasell [1991]
Cases
Cavalier Marketing v Rasell [1991]merchantability and fitness for purpose | * Facts: B burnt orange patterned carpet purchased to complement exposed brick walls of house. Carpet subject to ‘watermarking’ * S 74B [similar to ACL s 54], in its reference to ‘particular purpose’, introduces a subjective element…confirmed by ‘whether or not that is a purpose for which such goods are commonly supplied’” Per Shepherdson J * s 74D [similar to ACL s 55] “The first matter for determination is identification of ‘purpose for which goods of that kind are commonly bought’. The second…is whether goods are as fit for purpose so identified, as is reasonable to expect having regard to listed criteria. This is an objective test… * Definition of merchantable quality requires a determination of two matters. 1. Identification of “purpose/purposes for which goods of that kind are commonly bought” 2. Whether goods are as fit for purpose so identified, as is reasonable to expect having regard to listed criteria. This is objective test... requires that all normal purposes for which goods are commonly bought be brought into consideration. Fitness is to be tested against each of those purposes and none are to be exc. * Cooper J: If consumer has information as to purpose contemplated by corporation as being those for which goods are fit, any expectation on part of consumer as to another, although normal, purpose, would be unreasonable. * Note also: Reasonable expectation: ‘those of a reasonable consumer placed in the position of the actual consumer’ (applying Graham Barclay Oysters v Ryan (2000) per Lindgren J) | Carpet Call Pty Ltd v Chan (1987)commercially rated goods for bus purposes | * Application of s 71(2) [ACL equivalent s 55] * Facts: Carpet purchased for nightclub, total cost $68,000. It was a solid colour with no pattern. Within weeks carpet wore visible stains and cigarette burns. Patterned carpet was more suitable for nightclub. D refused to make further payments. Defence was carpet not fit for purpose. * Held: Carpet cost more than $40,000. However carpet goods ordinarily acquired for domestic consumption and did not lose that character despite commercial rating (heavy domestic). * Thomas J: In my view ‘carpet’ is a commodity or goods ordinarily acquired for domestic consumption and it does not lose that description by reason of a commercial rating or some quality which makes it last longer than other carpet normally supplied for use in a domestic setting. * Principle: commercial enterprise can acquire commercially rated goods but still be a consumer as defined by TPA | Cinema Center Services v Eastaway Air Conditioning [1999] | * Facts: Domestic rated air conditioners were bought for a 3 star hotel. There was an understanding between parties supplementary heating was to be used in a Canberra winter. * Held: implied term does not guarantee that goods fulfill all consumers’ expectations, only that goods be reasonably fit for purpose. … Insofar as units failed to provide comfort heating in conditions which were not extreme, they were not reasonably fit for purpose. It becomes necessary then to establish what were extreme conditions in circumstances of relationship between parties and whether, and to what extent, units failed in conditions which were not extreme * Note: must be able to distinguish between fit for purpose (i.e. merchantable) and fit for a particular purpose | Bethune v Qconn [2002]knowledge of defect and inspection | * O’Loughlin J: Person severely injured themselves because there was an absence of side screens. Even upon the premise that absence of side screens was a ‘defect’, s 71(1) still cannot be used by Mr Bethune. On his own case, he was aware of the defect; he had asked about it before he signed order form. In addition, he examined machine before he decided to purchase it and his examination revealed defect. * Principle: P could not successfully rely on merchantable quality because he was aware of defect in goods s71(1). * See also Bunnings v Laminex—don’t fall into the genus trap*** (apply Bunnings Test) |

Onus in disproving reliance: Seller has onus of disproving reliance on balance of probabilities

Graham Barclay Oysters v Ryan (2000) | * Facts: there was reference to s 74B with parallel wording to s 71(2). The consumers who purchased Oysters were later found to have contracted Hepatitis. * Held: ‘Reliance was not referred to in s 74B(1): it is not expressed as an element that Mr Ryan had to prove in order to establish the Barclay Oysters was liable’ |

CORRESPONDENCE WITH DESCRIPTION * s56(1): if person supplies goods by description to consumer in T/C there’s guarantee goods correspond with description * s56(2): supply of goods isn’t prevented from being supply by description because having been exposed for sale/hire they are selected by consumer * s56(3), 57: if goods are supplied by description and ref to sample/demo model, guarantees re correspondence with description and supply by sample/demo will both apply

SUPPLY OF GOODS BY SAMPLE/DEMONSTRATION MODEL s57 (1) then following guarantees apply: a. goods correspond with sample/demo model in quality, state, condition b. if goods are supplied by ref to sample, consumer will have reasonable opp to compare goods with sample c. goods are free from defects that wouldn’t be apparent on reasonable examination of sample/demo model and that would cause goods not to be of acceptable quality

GUARANTEES
Repairs and spare parts * s58(1): if person supplies goods to consumer in T/C there’s guarantee that manufacturer would take reasonable action to ensure repair facilities and spare parts are reasonably available for reasonable period after goods are supplied * s58(2): there is no such guarantee where manufacturer gave consumer written notification that repair facilities or spare parts wouldn’t be available after specified period

Express warranties * s59(1): if person supplies goods to consumer in T/C there’s guarantee that manufacturer will comply with any express warranty made in relation to goods * s59(2): if person supplies in T/C goods to consumer and supply doesn’t occur by way of sale by auction; there is a guarantee supplier will comply with any express warranty given or made by supplier in relation to goods

Exemption of auction sales ***with exception of guarantee as to title, other guarantees don’t apply in sales by auction***

GUARANTEES AND SUPPLY OF SERVICES * s60: if person supplies services to consumer in T/C there’s guarantee that services will be rendered with due care and skill * s61(1): if person supplies services to consumer in T/C there’s guarantee that services will be reasonably fit for purpose * s61(2): if person supplies services to consumer in T/C there’s guarantee that services will be of such nature and quality, state or condition that they might be reasonably expected to achieve that result * s61(3): no guarantees if circumstances show customer didn’t rely on supplier skill/judgment * s62: if person supplies services to consumer in T/C there’s guarantee that services will be supplied within reasonable time * s63: these guarantees apply in contracts for provisions of services with exception of: a. contract for transportation/storage of goods for bus/trade/profession carried on by person to whom goods are stored b. contract of insurance

Transportation exclusion: * Wallis v Downard−Pickford (1994): It was at least arguable Commissioner entered contract with respondent ‘‘as ordinary incident’’ of his occupation as Commissioner of Police. Nonetheless, it could not properly be said that actual transportation itself answered description of being ‘‘for purposes of’’ occupation of police officer ‘‘carried on or engaged in’’ by either appellant or Commissioner. Transportation was of appellant’s furniture and personal effects and the purpose of the transportation remained a private or domestic one. [Ref to TPA equivalent s 74].

Limitation of liability

------------------------------------------------- s64 General rule: guarantees imposed cannot be excluded

64A (1-2) Where goods are not of a kind, contract term won’t be void because it limits supplier liability for failure to comply to: a. goods: replacement/repair of goods OR payment of cost of such replacement/repair b. services: supplying services again OR payment of cost of having them supplied again * In determining whether reliance on term limiting supplier liability is fair/reasonably court should regard all circumstances inc: a. relative strength of bargaining positions, inc. availability of goods/services/alternatives b. whether buyer received inducement to agree on term c. whether buyer knew of existence of term d. in case of supply of goods, whether goods were manufactured, processed or adapted to special order of buyers

Purpose of limited exclusion from liability: enable suppliers to exclude liability for consequential losses which may result from defect in goods supplied to another co

Remedies for non-compliance with consumer guarantees * s236: Actions for damages: If: a person (claimant) suffers loss or damage because of conduct of another person; and conduct contravened a provision of Chapter 2 or 3; claimant may recover amount of loss or damage by action against that other person, or against any person involved in the contravention. 2. Action under ss (1) may be commenced at any time within 6 years after day on which cause of action accrued. * s259 (1), (2)If non compliance is small, customer may require supplier to remedy failure within reasonable time OR reject goods and recover all reasonable costs incurred in remedying failure * s260: Major failure situations inc where: a. Goods wouldn’t have been acquired by reasonable customer who was fully acquainted with nature/extent of failure b. In case of supply by description or ref to sample/demo model, goods depart in significant respects from their description, sample/demo model c. Goods are substantially unfit for purpose for which goods of same kind are supplied and they cannot be easily and within reasonable time be remedied to make them fit for such purpose d. Goods are unfit for disclosed purpose and cannot be easily remedied to fit that purpose e. Goods are not of acceptable quality as they’re unsafe * s261: How suppliers may remedy a failure to comply with a guarantee a) If the failure relates to title--by curing any defect in title; or b) If the failure does not relate to title--by repairing the goods; or c) By replacing the goods with goods of an identical type; or d) By refunding:
(i) Any money paid by the consumer for the goods; and
(ii) Amount that is equal to the value of any other consideration provided by the consumer for the goods. * s259(3): if failure is major, consumer may reject goods (return them to supplier who must refund money or replace goods) or recover compensation for reduction in their value below paid price * s259(4): consumer may recover damages for unreasonable loss/damage caused by failure to comply UNLESS that failure occurred due to cause independent of human control after goods left supplier control s262(2) * s262: consumer not entitled to reject goods if: a) rejection period for the goods has ended; or b) goods have been lost, destroyed or disposed of by the consumer; or c) goods were damaged after being delivered to the consumer for reasons not related to their state or condition at the time of supply; or d) goods have been attached to, or incorporated in, any real or personal property and they cannot be detached or isolated without damaging them. * S 266: if consumer acquires goods from supplier and gives them to another as gift then that person may (subject to any defence) exercise any rights/remedies which would be available to other person if he acquired goods from supplier
Manufacturer’s liability for defective goods * Where goods supplied to consumer are defective then generally speaking, immediate supplier of goods will be liable to consumer for non compliance with statutory guarantees of fitness for purpose or acceptable quality

Distinction between product safety and product liability: * Product safety: sets standards of safety * Product liability covers liability of manufacturers where defective goods have caused an injury

LIABILITY OF MANUFACTURER FOR GOODS WITH SAFETY DEFECTS * Circumstances in which liability arises * s138(1): Manufacturer is liable to compensate individual if: a. Manufacturer supplies goods in T/C b. Goods have safety defect c. Individual suffers injury due to defect * s138(2) When above conditions are satisfied individual may recover from manufacturer amount of loss/damage * s139: Liability for loss/damage suffered by person other than injured individual 1. A manufacturer of goods is liable to compensate a person if: a) manufacturer supplies goods in T/C b) goods have safety defect; and c) individual (other than person) suffers injuries because of safety defect; and d) person suffers loss or damage because of: i injuries or ii if individual dies because of injuries and e) loss/damage does not come about because of business/professional relationship between person and individual 2. Person may recover, by action against manufacturer, amount of loss or damage suffered by person. * s140: liability for loss/damage suffered by person if other goods are damaged/destroyed 1. Manufacturer must compensate person if: a) manufacturer supplies goods in T/C b) goods have safety defect c) other goods of kind ordinarily acquired for personal, domestic or household use or consumption are destroyed or damaged because of safety defect d) person used or consumed, or intended to use or consume, destroyed or damaged goods for personal, domestic or household use or consumption 2. Person may recover, by action against manufacturer, amount of loss or damage suffered * s141: Liability for loss or damage suffered by a person if land, buildings or fixtures are destroyed or damaged 1. Manufacturer of goods is liable to compensate a person if: a) manufacturer supplies goods in T/C and b) goods have safety defect; and c) land, buildings or fixtures are destroyed or damaged because of safety defect; and d) land, buildings or fixtures are ordinarily acquired for private use; and e) person used, or intended to use, land, buildings or fixtures for private use; and f) person suffers loss or damage as a result of destruction or damage.

* Meaning of safety defect * s9(1): if their safety isn’t such as persons generally are entitled to expect (objective standard) * s9(2): In determining safety of goods, following should be considered a. manner in which and purposes for which they have been marketed b. packaging c. use of any mark in relation to them d. any instructions for or warnings with respect to doing anything with goods e. what might reasonably be expected to be done with relation to them f. time when they were supplied by their manufacturer * s9(4): Inference that goods have safety defect is not made only because: a. there was compliance with Cth mandatory standard for them b. standard wasn’t safest possible having regard to latest state when they were supplied by manufacturer

Glendale v ACCC (1998) | * Held: lack of…a warning was ‘defect’ in product, within meaning of s75AC of Act * Emmett J: standard to be adopted in respect of definition of ‘defect’ in s 75AC is an objective one based upon what public at large, rather than any particular individual, is entitled to expect. On other hand, one cannot foresee all possible uses to which consumers will put goods (at 629) * There is, of course, no suggestion that, as caustic soda, product as used by Mr Barnes was defective. However, s 75AC deals with different question. Goods will not be safe even if, having regard to the goods, they operate as intended. s75AC(2) makes it clear that s applies even if there is no inherent defect in the goods in question. Thus, it is clear that substance which is, for example, marketed as being suitable for particular purpose without warnings as to particular way in which that purpose should be achieved may have a defect because use in some ways would not be safe (at 631) | Carey Hazell v Getz Bros [2004] | * Facts: mechanical heart valve was implanted and serious complications ensued * Held: in addition to factors specified in ss75AC(2), court must take all relevant circumstances into account in determining safety of goods. Safety expectations may also depend on nature of product and community knowledge of that product. For example, there are number of known negative side effects associated with certain pharmaceuticals and vaccines which cannot be avoided. Small chance of injury associated with them does not of itself mean that they are “defective”. Role which intermediaries may play in supply of goods may also need to be taken into account. For example, prescription pharmaceuticals are supplied to consumer by qualified pharmacists on prescription of qualified medical practitioner. Due to complex nature and effects of these products, complete instructions and warnings may not be provided to consumer by manufacturer. * Defect and warning: person bringing claim under s 75AD is to establish existence of defect in goods and fact of their injury. Additionally they must prove causation, which is to say that injury came about ‘because of’ defect…. If manufacturer has no statutory defense, scheme of Part VA is that liability is est. | Morris v Alcon Laboratories(Aus) [2003] | * Facts: Implantation of intraocular lenses lead to side effects. Evidence did not est. defect and link between defect and injury. * Held: In applying s75AC court in determining extent of safety of goods is obliged to have regard to all relevant circumstances...If evidence was that goods had been causative of injury, court would be required to move to finding of extent of safety....Then court would be required to determine whether that safety was not such as persons generally are entitled to expect....If that was established, court would move to finding that goods had a defect before moving to application of provisions of s 75AD. [23] |

* Meaning of goods: not limited to goods acquired for personal/domestic/household use/consumption

* Meaning of manufacturer: * s7(1): person who: a) extracts, grows, produces, processes or assembles goods b) hold themselves out to public as manufacturer of goods c) causes/permits their name to be applied to goods d) causes/permits another person to hold them out to public as manufacturer of goods e) imports goods and actual manufacturer doesn’t have place of bus in AUS

Glendale v ACCC (1998) | * FC at 45-6: ‘label on product supplied by co stating expressly that product was not manufactured by co would have no effect. Of course Glendale did not go as far as that. Nevertheless, I consider that is just what s is intended to do. Co which is not manufacturer is deemed to be manufacturer for purposes of Pt VA even if it is clearly not. One can understand policy reasons for Parliament imposing such obligation. That is to say if co is prepared to lend its name to product by having its name or its logo affixed to product, individual injured by defect in that product need look no further than that co.’ |

* Unidentified manufacturer

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147 Unidentified manufacturer
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(1) A person who:
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(a) wishes to institute defective goods action; but
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(b) does not know who is manufacturer of goods to which action would relate;
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may, by written notice given to supplier, or each supplier, of goods who is known to person, request supplier to give person particulars identifying manufacturer of goods, or supplier of goods to supplier requested.
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(2) If, 30 days after person made request, person still does not know who is manufacturer of goods, then each supplier:
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(a) to whom request was made; and
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(b) who did not comply with request;
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is taken, for purposes of defective goods liability action (but not for purposes of section 142(c)), to be manufacturer of goods.

* Action for damages against manufacturers: * s271: If guarantees under s 54 (acceptable quality or s 55 (fitness for purpose) not complied with: affected person in relation to goods may, by action against manufacturer of goods, recover damages from manufacturer.’

* Manufacturers’ concurrent liability;

Leeks v FXC Corp [2002] | * Facts: Parachuting accident caused by FXC product. Product imported in Aus where FXC had no rep. * Held: rationale behind Div 2A is that manufacturers rather than retailers should bear liability for defects in goods… construction of s 74A that would relieve actual manufacturer of liability under Div 2A because, in circumstances there was as well deemed manufacturer, is one not lightly to be arrived at in absence of express indication (which there is not) that such was legislative intent. Deeming provisions are onerous in their extension of manufacturer’s liability to persons who may have no responsibility for any defect in goods |

* Defences * s142: It is defence to action for compensation for loss suffered as result of supply of defective goods to est that: a. safety defect alleged to caused damage didn’t exist at time they were supplied by actual manufacturer b. goods had safety defect only because there was compliance with mandatory standard c. state of scientific knowledge at time goods were supplied wasn’t such as to enable safety defect to be discovered d. if goods were component parts, defect is attributable to design of finished goods * s148: If court finds goods had safety defect only due to compliance with mandatory standard, Cth is liable to pay P amount of loss/damage caused by safety defect

* s271: Defences of manufacturer: a) act, default or omission of, or any representation made by, any person other than the manufacturer or an employee or agent of the manufacturer; or b) cause independent of human control that occurred after the goods left the control of the manufacturer; or c) fact that the price charged by the supplier was higher than the manufacturer's recommended retail price, or the average retail price, for the goods.

Carey-Hazell v Getz Bros [2004] | * Defence: S7AK(1)(a) defect in action goods that is alleged to have caused loss did not exist at supply time * Held: To succeed in this defence, manufacturer must show, on BOP, that (admittedly) defective goods were defect free when they left manufacturer’s control. Factors such as nature of goods, level of use, and length of time between goods leaving manufacturer control and damage will be important. Depending on nature of defect, manufacturer may also need to provide detailed evidence on manufacturing process and quality control to which alleged defective good (not just goods of that type generally) was subjected, in order to show that this particular good was not defective when it left manufacturer’s control. | Graham Barclay Oysters v Ryan (2000) | * Defence: S 75AK(1)(c) state of scientific or technical knowledge at time when they were supplied by their actual manufacturer was not such as to enable that defect to be discovered * Facts: contaminated oysters—only test available needed to be applied to each oyster and each oyster would be have to be destroyed. * Held: only test that would reveal defect would destroy goods, assumes 2 other findings…that it is legitimate to extrapolate from result of sample test only where there is relevant homogeneity between total population from which sample is taken and that this cannot be assumed to be so in relation to HAV (hepatitis A virus) and oysters; Polymerise Chain Reaction test (PCR) gives false negatives; i.e. while it is appropriate to rely on positive test result, negative one does not establish absence of HAV virus and est. no more than that test did not est. its presence in oyster actually tested * Note: plaintiffs succeeded under ss 74B, 74D |

* Communicating to manufacturer: Most likely to be implied

Carey-Hazell v Getz Bros [2004] | * Held: Given that only purpose of valve is to replace damaged natural mitral valves it would not seem to be necessary that there be communication. In such a case manufacturer’s knowledge may be assumed… | Courtney v Medtel [2003] | * Held: For sake of completeness… I would have found that applicant … acquired his … Pacemaker for a particular purpose made known to Medtel by implication. That purpose was same as that already identified, namely to enable Pacemaker to be implanted, on advice of doctors, into the individual patient experiencing heart-related problems in order to restore and maintain regular heart beat by means of electrical impulses sent to heart. |

* Contributory negligence: s137A: damages rec are to be reduced to extent of individual share in responsibility for loss/damage * Limitation period: s143: within 3 yrs of person becoming aware of loss/damage, safety defect * Non exclusion: s150(1): any term which purports to exclude is void * Work related injuries: s146: work related injuries loss is excluded * Representative action: s149: ACCC + consumer protection agencies can commence action as long as written consent is provided

LIABILITY OF MANUFACTURER TO CONSUMER FOR NON-COMPLIANCE WITH STATUTORY GUARANTEES * s271: manufacturer incurs liability to consumer for non compliance with certain guarantees * Effect is to enable consumer to recover damages from manufacturer as: a. ss54, 271(1): goods are not of acceptable quality b. ss56, 271(3): goods don’t correspond with description which manufacturer applied or allowed to be applied to goods c. ss58, 271(5): there is failure to ensure facilities for goods repair are available d. ss59, 271(5): there is breach of express warranties * s272: Affected person is entitled to recover damages for: a. Reduction in value in goods below i Price paid for goods ii Average retail price at time of supply b. Loss/damage reasonably foreseeable as result of failure to comply with particular guarantee * s2(1): Affected person means: a. consumer who acquires goods b. person who acquires goods from consumer c. person who derives title to goods through consumer
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s273: action for damages must be brought within 3 yrs of person becoming aware that guarantee wasn’t complied with

LIABILITY OF MANUFACTURER TO SELLER OF DEFECTIVE GOODS * Consumer has choice to sue immediate supplier OR manufacturer directly * s274: Immediate supplier: manufacturer must indemnify supplier in respect of costs incurred due to their failure to comply * Supplier may commence action against manufacturer any time within 3 yrs after earliest of: a. day on which supplier made payment in respect to supplier liability to consumer OR b. day on which consumer commenced legal proceedings against supplier

Limitation of liability: * s276: contract term is void if it attempts to exclude/restrict/modify supplier rights against manufacturers * s276A(1): if goods are not of kind ordinarily acquired for personal/domestic/household use/consumption , manufacturer liability to supplier is limited to cost of: a. replacing goods b. obtaining equivalent goods c. having goods repaired; whichever is the lowest amount * s276A(2): limitation on manufacturer liability doesn’t apply if supplier est it isn’t fair/reasonable * s276A(3): In determining fair/reasonable, court considers all circumstances inc. a. availability of suitable alt sources of goods supply b. availability of equivalent goods c. whether goods were manufactured, processed or adapted to special order of supplier

PRODUCT SAFETY AND INFORMATION * s104: Cth Minister may by written notice pub. on internet make a safety standard for consumer goods of particular kind OR product related services of particular kind * s105: Cth Minister may by written notice pub. on internet declare following is safety standard for consumer goods or product related services of kind specified in the instrument * s106(1): person must not supply consumer goods that don’t comply with prescribed safety standard * s106(7): Liability: If a) person supplies consumer goods in contravention of this s; and b) another person suffers loss or damage: i because of defect in, or a dangerous characteristic of, the goods; or ii because of a reasonably foreseeable use (including a misuse) of the goods; or iii because, contrary to safety standard, he was not provided with particular information in relation to goods; c) other person would not have suffered loss or damage if goods complied with safety standard; other person is taken to have suffered loss or damage because of that supply * s107: Person must not, in T/C, supply product related services of particular kind if safety standard for services of that kind is in force AND those services do not comply with the standard. * s194(1): doing so is offence subject to $1,100,000 penalty for corp. and $220,000 for person * s109(2), 114(1): Minister may impose interim/permanent ban on consumer goods that may cause injury * s122(1): Minister may take action to recall goods where they may cause injury to person; don’t comply with prescribed safety standard or are subject to interim/permanent ban * s199(1): Failure to comply with a recall notice is an offence * s129: minister can pub notice on Internet warning of possible risks to using goods * s131(1): Suppliers are required to report deaths, serious injuries or illnesses associated with misuse of goods * s194: Supplying consumer goods that do not comply with safety standards 1) A person commits an offence if: a) person, in T/C, supplies consumer goods of a particular kind; and b) safety standard for consumer goods of that kind is in force; and c) those goods do not comply with standard
Penalty:
a) if person is body corporate—$1,100,000; or b) if person is not a body corporate—$220,000 * s202(1): Non compliance is punishable by $16,500 for corp. and $3,300 for other parties * s136(1): Person must not supply goods that don’t comply with required standards * s203(1), 204(1): supply of goods that don’t comply with info standard is subject to $1.100,000 for corp. + $220,000 for others * ss210(1), 252: Defence is provided if D est: a. goods were acquired by D for resupply and were acquired from person who carried on bus in Aus b. D didn’t know and couldn’t with reasonable diligence have ascertained goods didn’t comply with standard
2. ACL – Unfair contracts, unconscionable conduct, remedies
PROHIBITION OF UNCONSCIONABLE CONDUCT
Unconscionable conduct within meaning of unwritten law * s20(1): person must not in trade/commerce engage in conduct that is unconscionable within meaning of unwritten law (common law and equity) from time to time * General effect of this provision is to extend remedies available under ACL to conduct regarded as unconscionable by courts in acc with common law/equitable principles

ACCC v CG Berbatis Holdings (2003): shopping centre tenant was engaged in litigation with centre owners. He wished to assign lease as part of bus sale. Buyer was willing to buy bus provided new lease could be neg by tenant (lease was due to expire and didn’t contain option to renew). Owners were willing to agree to new lease provided tenant withdrew from litigation (agreed). Held HC: centre owner’s conduct didn’t constitute unconscionable conduct as there was no taking of unconscionable advantage of party with special disadvantage
ACCC v Radio Rentals (2005): doctrine involves knowing exploitation by 1 party of special disad of another in dealing b/w them
Spira v CBA (2003): where both parties are labouring under same mistake in good faith, unconscionable conduct hasn’t been est.

Unconscionable conduct in supply of goods/services to consumers
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s21(1): person must not in trade/commerce in connection with supply or possible supply of goods/services to another person engage in conduct that is in all circumstances unconscionable.

* Provision is aimed at consumer transactions (‘person’ anyone excepting a public listed company) * In determining whether person engaged in unconscionable conduct court may consider (s22): * relative strength of bargaining positions of supplier/consumer * whether as result of conduct engaged by person, consumer was required to comply with conditions that weren’t reasonably necessary for protection of legitimate interests of supplier * whether consumer was able to understand any docs relating to supply...of goods/services * whether any undue influence/pressure was exerted on or any unfair tactics were used against consumer...by supplier...in relation to supply of goods/services * amount/circumstances for which customer could have acquired identical goods from person other than supplier * ACCC v Lux (2004): vacuum cleaner salesman was held to have acted unreasonably in selling vacuum cleaner on credit terms to housewife who was alone in house and to his knowledge was illiterate and unable to understand comm. matters on any depth

* Note the exceptions: 5) A reference in this section to goods or services is a reference to goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption 6) A reference in this section to the supply or possible supply of goods does not include a reference to the supply or possible supply of goods for the purpose of resupply or for the purpose of using them up or transforming them in trade or commerce.

Cameron v Qantas Airways Ltd [1995] | * Held: For conduct to be regarded as unconscionable, serious misconduct or something clearly unfair or unreasonable, must be demonstrated | Qantas Airways Ltd v Cameron [1996] | * Held: Actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable...Various synonyms used in relation to term "unconscionable" import a pejorative moral judgment | AG of NSW v World’s Best Holdings [2005] | * Spigelman CJ at 121: Unconscionability is requires high level of moral obloquy. If it were to be applied as if it were equivalent to what was ‘fair’ or ‘just’, it could transform commercial relationships in a manner which Minister expressly stated was not intention of legislation. ‘Unconscionability’ would not be doctrine of occasional application, when circumstances are highly unethical, it would be transformed into first and easiest port of call when any dispute about a retail lease arises. |

Remedies for contravention * Contravention of unconscionable conduct provision doesn’t give rise to criminal offence * Pecuniary penalty may be imposed * Civil remedies (injunction, damages) may be sought for contravention of unconscionable conduct provisions

PROHIBITION OF UNFAIR CONTRACT TERMS * s23: Unfair terms of consumer contracts: 1) Term of consumer contract is void if term is unfair AND contract is in standard form 2) Contract continues to bind parties if it is capable of operating without the unfair term. 3) Consumer contract is one for supply of goods/services/sale of land to individual who acquires them wholly/ predominantly for household, personal, domestic use/consumption * Note: departure from standard wording—compare ‘predominantly’ with Bunnings test. Test is subjective—determined by the purpose of the acquisition and not the essential nature of the goods themselves.

Meaning of unfair * ACL s24 (1): Term is unfair if it: a) would cause significant imbalance in parties rights/obligations b) is not reasonably necessary to protect legitimate interests of ad party c) would cause detriment to party if it was applied * s24(4): term is presumed to be not reasonably necessary to protect ad party legitimate int. unless that party proves contrary * s24(2): court must take into account transparency (plain language, presented clearly of term and contract as a whole * In determining unfairness court may consider any matters it thinks relevant

Examples of unfair terms: ACL s25(1): term that: a. permits only 1 party to avoid performing contract b. permits only 1 party to terminate contract c. penalises only 1 party for breach of termination of contract d. permits only 1 party to vary contract terms e. permits only 1 party to renew contract f. permits 1 party to vary upfront price payable without allowing other party to terminate contract g. permits 1 party to unilaterally vary characteristics of goods/services to be supplied h. permits 1 party to unilaterally determine if contract has been breached or to interpret contract i. limits 1 party vicarious liability for its agents j. permits 1 party to assign contract to detriment of another party without consent k. limits 1 party right to sue another l. limits evidence 1 party can bring in proceedings re: contract m. imposes evidential burden on 1 party in proceedings re: contract n. is of kind prescribed by regulations

Meaning of standard form contract * For provisions to apply contract must be standard form ACL s23(1)(b) * s27(2): In determining whether contract is standard form contract, a court may take into account such matters as it thinks relevant, but must take into account: a. 1 of parties has all/most of bargaining power b. contract was prepared by 1 party before any discussion relation to transaction occurred c. another party was required to accept/reject contract terms in presented form d. another party was given effective opportunity to negotiate contract terms e. contract terms take into account specific characteristics of another party or particular transaction f. any other matter prescribed by regulations

* s26(1): D, E and F don’t apply to term that defines main subject matter of contract; sets upfront price payable OR is required / permitted by federal, state or territory law
PROHIBITION OF OTHER UNFAIR PRACTICES
Misleading conduct as to employment * s31: person must not engage in conduct that is liable to mislead persons as to availability, nature, terms, conditions or any other matter relating to employment offered by person * s153(1): penalty for making misleading conduct relating to employment is $1,100,000 for corp. and $220,000 for other parties

Offering rebates, gifts, prizes or other free items with intention of not providing them as offered * s32(1): person must not in trade/commerce in connection with supply of goods/services or int. in land or in connection with promotion by any means of such activities offer rebates, gifts, prizes or other free items with intention of not providing them or not providing them as offered * s154(1): penalty for offering gifts etc with intention of not providing them is $1,100,000 for corp. and $220,000 for other parties * Example: to offer free gift and increase price of good to cover cost of gift is contravention of the provision

Misleading conduct as to nature/manufacturing process of goods * s33: person must not in trade/commerce engage in conduct that is liable to mislead public as to nature, manufacturing process, characteristics, suitability for purpose or quantity of goods * s155(1): penalty for misleading conduct as to nature/manufacturing of goods is $1,100,000 for corp. & $220,000 for other parties

Misleading conduct in relation to services * s34: person must not in trade/commerce engage in conduct that is liable to mislead public as to nature, characteristics, suitability for purpose or quantity of any services * s156(1): penalty for misleading conduct in relation to services is $1,100,000 for corp. & $220,000 for other parties

Dawson v World Travel Headquarters (1981) | * Facts: D pub brochure which ad holiday as being for 16 days (infact 15). In earlier proceedings, D was convicted of accepting payment without intending to supply services. Brochure was then reprinted with correct info; however brochures containing incorrect info were on display at D premises * Held: D was guilty of considerable carelessness in permitting brochures to remain on public display |

Bait advertising: attracting customers by offer of goods at ‘special prices’ only for customer to be told on following up ad that ‘special price’ were sold but another product at higher price is available for sale * s35: attempts to proscribe this practice by providing that: 1. person must not in trade/commerce ad goods/services for supply at specified price if: a. there are reasonable grounds for believing person will not be able to offer for supply those goods/services at that price for period that is and in quantities that are reasonable having regard to: i nature of market in which person carries on bus ii nature of ad b. person is aware or ought reasonably to be aware of those grounds 2. person who in T/C ad goods/services for supply at specified price must offer such goods/services for supply at that price for period and in quantities that are reasonable having regard to: a. nature of market in which person carries on bus b. nature of ad * s157(1-2): penalty for bait advertising is $1,100,000 for corp. & $220,000 for other parties

Walplan v Wallace (1985) | * Facts: D (Ford dealer) ad for sale in newspaper ads Ford model for special price of $6,600 + on road costs and delivery fees. P visited and was informed only 1 vehicle was available but has already been sold * Held: D breached s56(1) and (2) of TPA (now 35 of ACL) as D managing director didn’t intend to offer particular model for sale in acc with ad |

Accepting payment without intending or being able to supply as ordered * s158(1): penalty for wrongly accepting payment is $1,100,000 for corp. & $220,000 for other parties * s36: person must not accept payment/other consideration for goods/services where 1. person intends a. not to supply goods/services b. to supply goods/services materially diff from goods/services in respect of which payment/other consideration is accepted; OR 2. there are reasonable grounds of which person is aware for believing it will not be able to supply goods/services within specified period or if no period is specified, within reasonable time

Sending unsolicited credit/debit cards * s161(1): penalty for sending unsolicited credit/debit cards is $1,100,000 for corp. & $220,000 for other parties * s39 (1): person must not send credit/debit card to person except either: 1. at his written request; OR 2. in renewal/replacement of car of same kind previously sent to and used by him

Assertion of right to payment for unsolicited goods/services * s158(1): penalty for asserting right to payment for unsolicited goods is $1,100,000 for corp. & $220,000 for other parties * s40(1-2), (4): person must not in T/C assert right to payment from person for unsolicited goods/services unless person has reasonable cause to believe there’s a right to payment, burden of proof of which lies on person. * s10 (1): Person is taken to have asserted right to payment if he: a. makes demand for payment/asserts present/prospective right to payment b. threatens to bring legal proceedings with view to obtaining payment c. places/causes to be placed name of person on list of defaulters/debtors, or threatens to do so to obtain payment d. invokes/causes to be invoked any other collection procedure with view of obtaining payment e. send invoice/other doc stating amount of payment or setting out price and not stating no claim is made to payment that complies with any requirement prescribed by regulations

Recipient not able to pay for unsolicited goods/services * s162(2): penalty for asserting right to payment for unsolicited services is $1,100,000 for corp. & $220,000 for other parties * s41(1): recipient of unsolicited goods isn’t liable to pay for them or for loss/damage caused unless it is wilful/unlawful * s41(2), (4): recipient of unsolicited goods become owner: a. 1 month after notifying sender in writing of receipt of goods OR b. in absence of such notice, after 3 months of receiving goods subject to s41(3): i recipient unreasonably refusing to permit sender/owner to take possession of goods ii sender/owner taking possession of goods during relevant period iii goods were received in circumstances in which recipient knew goods weren’t intended for him

Assertion of right to payment for unauthorised entries/ads * s43(1): offence for person to assert right to payment from any person of charge for making entry or ad in pub relating to person or their profession, bus, trade, occupation unless person knows or has reasonable cause to believe that other person authorised making of entry/ad * s43(4) in absence of authorisation, person isn’t liable to make payment for & is entitled to recover any payment made for entry/ad * s163(1-2): penalty for asserting right to payment for unauthorised entry/ad is $1,100,000 for corp. & $220,000 for other parties

Pyramid selling * Pyramid selling: participants are offered right to sell particular co product AND to receive payment/other benefit for introducing other persons into scheme. Prohibited by s44-46 * Problems: although those at top of pyramid may receive considerable benefit from contributions of new participants, those at the base who rely on product sales find that market becomes saturated and product impossible to sell * s164(1-2): penalty for participating in pyramid selling scheme OR inducing another to participate is $1,100,000 for corp. & $220,000 for other parties

Aus Comm. Network v ACCC (2005) | * Held: real vice inherent in pyramid selling schemes appears to be that rewards held out are substantially for recruiting others who in turn get their rewards substantially for recruiting still more members.... If there’s no underlying genuine economic activity scheme must collapse and many people will have been induced to pay money for nothing. |

Pricing * s47(1): person must not supply goods if (a) goods have more than 1 displayed price and (b) supply takes place for price that isn’t the lowest of displayed prices * s48(1): person must not in connection with (a) supply of goods/services of kind ordinarily acquired for personal/domestic or household use/consumption OR (b) promotion of supply of goods/services of that kind make rep re: amount that would constitute part of consideration unless they also prominently specify single price for goods/services * s165(1): penalty for multiple pricing is $5,000 for corp. & $1,000 for other parties * s166(1): penalty for single pricing offence is $1,100,000 for corp. & $220,000 for other persons

Referral selling * Referral selling: person persuades consumer to buy its goods/services by rep that after consumer has paid over money he will receive rebate/commission/some benefit in return for giving person names of other customers * Prohibited as consumers who paid in expectation that they would receive some future benefit and recoup what they paid received nothing either as they found it impossible to obtain referrals OR co didn’t honour their promises to pay * s49: person must not in T/C induce customer to acquire goods/services by rep that customer will after contract for acquisition of goods/services is made, receive rebate, comm. or other benefit in return for giving person names of prospective rebate etc is contingent on event occurring after contract is made * s167(1): penalty for referral selling is $1,100,000 for corp. & $220,000 for other parties

Harassment and coercion * s50(1): person must not use physical force or undue harassment or coercion in connection with supply/possible supply of goods/ services to consumer or payment for goods/services by consumer * s168(1): penalty for harassment/coercion is $1,100,000 for corp. & $220,000 for other parties

ACCC v McCaskey (2000) | * Held: if creditor makes repeated demands for payment and points out that legal proceedings may be brought to recover debt such conduct will not constitute harassment. However, creditor will engage in undue harassment where “frequency, nature and content” of creditor demands is such that they are calc to intimidate/demoralize/tire out or exhaust debtor | ACCC v Maritime Union of Aus (2001) | * Hill J defines undue harassment: person is harassed by another if former is troubled repeatedly by latter. Undue adds element of unreasonableness. Coercion is force/compulsion negating freedom to act. Union set up picket line to block ship departure that refused to employ shore labor for onboard cleaning. Held: this amounted to coercion |

Misleading and Deceptive Conduct
PROVISION
s18 (1): person must not in trade/commerce engage in conduct that is misleading/deceptive or is likely to mislead/deceive

s18 may be used by those who have been induced to enter contract due to misrep made during negotiation leading up to contract, to obtain damages or other relief on ground that rep constitutes misleading/deceptive conduct

MEANING OF IN “TRADE AND COMMERCE”

Nelson v Concrete Constructions (1990) | * Facts: N alleged against his employer’s foreman instructed him to remove grates from entry point of air conditioning shafts and informed him each grate was secured by certain bolts. He claimed this statement was untrue and N was injured as a result of it by falling off shaft and sustaining injuries. * Held: * There was no misleading/deceptive conduct through foreman as conduct was not in T/C * Alleged misleading/deceptive conduct of foreman consisted of internal communication by 1 employee to another in ordinary course of their ordinary activities in and about construction of building which wasn’t in T/C * words ‘’trade and commerce’’ are “not terms of art but terms of common knowledge of widest import”...s52 of TPA (now s18 ACL) wasn’t intended to encompass all conduct of corp. in course of its overall bus. It is rather concerned with “conduct of corp. towards persons...with whom it...has or may have dealings in course of those activities which of their nature bear trading/comm. character * Phrase in T/C should be construed more narrowly because: * Words TC are not terms of art but terms of common knowledge and widest import * Conduct must be in T/C * In T/C has restrictive operation. It qualifies prohibition against engaging in conduct of specified kind * Mason, CJ, Deane, Dawson and Gaudron JJ: distinguished between conduct in TC and held: person driving truck for delivery of goods to consumer is TC while mere driving of truck isn’t * Minority: if CC is co that acts in T/C and engages in comm. activities, then it can be said they are corp. in T/C. * Note: contrary solution would have led to s52 being used as vehicle for recovery of personal injury damages in large number of industrial and motor accidents cases; even cases where respondent wasn’t negligent but only if it happened to be corporation as defined in s4 of TPA |

“In Trade or Commerce” * Not used in constitutional way in s52 of TPA. However, in definitional section, it is used in constitutional way. * Cth cannot say person engaged in TC is not allowed to engage in misleading or deceptive practices. It must say ‘a corporation’. * Under s 42 FTA, state law passed similar section regulating persons. Cth can only do this to extent that it is not inconsistent with state law and for good government of Aus community. * From enactment of TPA in 1974 there were 2 schools of thought as to meaning of in TC: 1. Conduct engaged in by person in connection with or in relation to TC; or 2. Conduct engaged in by person as part of TC

Earlier construction of phrase in T/C:

Re-Kuringai Co-op Building Society (No 12) | * Bowen CJ: TC encompasses all mutual communings, negotiations verbal and by correspondence, bargain, transport and delivery which compromises commercial arrangements * Deane J: TC are not terms of art…not restricted to dealings or communications which can properly be described as… between strangers or have dominant object of profit making | Glorie v WA Chip & Pulp | * Held: in T/C should not be confined to ordinary trading or commercial transactions in marketplace | Advance Hair Studio v TVW Enterprise (1990) | * Facts: alleged s52 was breached by TV broadcast of comments by unhappy customer * Held: it was not necessary for statement to be related to some commercial transaction in order to constitute conduct in T/C even though such statement did no more than contribute to sum of information…made available to public… as prospective customers of goods and services | In trade/commerce and dealings with employees or subcontractors: * Principles: distinction appears to be drawn between: * negotiation of employment agreement (conduct in T/C) * implementation of employment agreement (not conduct in T/C)

Barto v GPR Management Services (1991) | * Held: conduct which would plainly be conduct in T/C if carried out vis a vis a stranger ought not to lose that characteristic simply because party with whom corp. is dealing with happens to be an employee * Wilcox J: Negotiations for initial employment contract with person who isn’t presently employee and negotiations for variation of that contract with person who is employee do not differ in intrinsic character * Principle: when corp. engages with independent contractor, it is in fact engaged in T/C | Nagy v Masters Dairy | * Held: conduct I course of making of employment contract was done in TC even where contract was made with existing employee and could be described as of internal character with employer | Mulcahy v Hydroelectric Commission (1998) | * Facts: allegation that employer mislead its employees by failing to inform them of their rights re: superannuation * Held: there was no commercial dealing between employer and employee; conduct wasn’t done in TC | Chaplin v Birdogen (1998) | * Held: representations made by employer in course of taking loan from employee were capable of being in TC | McCormick v Riverwood (1999) | * Held: statement about employee status after employee sold its bus was capable of being made in TC | Stoelwinder v Southern Health Care Network (2000) | * Held: comm. re: employment contract making/variation were prima facie TC | Argy Blunts & Lane Cove Real Estate (1990) | * Held: actions of some parties in comm. transaction may have been in TC while actions of others were not (real estate agent conduct re: private sale was in TC but conduct of vendor wasn’t) |

In trade/commerce and property transactions: * Principle: where sale of property is private, conduct of private vendor isn’t in T/C. This only applies to sale of residential property in which vendor ordinarily resides

Obrien v Smolonogov (1983) | * Facts: Owner of land in Snowy Mountains wanted to subdivide land. He places Ads in newspaper. Purchaser calls vendor and asks whether land was reasonably accessible to public. Vendor says that it is. Purchaser buys property, and sends someone to inspect it. He discovers that land was on cliff edge, and not easily accessible. Misrepresentation was made to him by vendor. * Held: mere use by person not acting in course of carrying on bus or facilities commonly employed in comm. transactions cannot transform dealing which lacks any bus character into something done in T/C * Due to ad in newspapers, activity was held NOT in T/C. subdivision was not in T/C. Buying houses is not activity of T/C. | Argy v Blunts (1990) | * Facts: A bought residential property for 3 million having acted upon rep that there was unlimited potential to redevelop that property. However, purchaser was not permitted to build within 30 m of border. * Held: vendor didn’t act in T/C even though he engaged estate agent and incurred significant ad expenditure. However, real estate agent and solicitors engaged in T/C. Both were liable for deceptive and misleading conduct because they made out a zoning certificate which was not complete. | Franich v Swannell | * Facts: there was sale of residential property by vendor who knew there were structural defects in house foundations * Held: although vendor engaged in misleading/deceptive conduct it wasn’t in T/C as transaction remained sale of private house without any bus character |

In trade/commerce and sale of business: sale of bus or sale of capital items used in bus is conduct in T/C

Bevanere v Lubidineuse (1985) | * Facts: There was sale of a beauty salon. Vendor argued if sale of real estate was not in T/C then sale of small bus was much like a house, therefore it was not in T/C. Court rejected this argument * Held: conduct of vendor when selling beauty salon was in T/C even though bus sale was 1 off transaction | JS McMillan v Cth (1997) | * Facts: concerned data flow computer services * Held: Cth can deal with telephonic/telegraphic services |

In trade/commerce and health related cases

E v Aus Red Cross (1991) | * Facts: E received blood transfusion which unbeknown to everyone was infected with HIV virus. * Red Cross: receipt of payment by Aus Red Cross for blood it supplied wasn’t in T/C as payment was a way of reimbursement for cost of providing blood. Red Cross acted gratuitously * RPA: although RPA didn’t charge for blood it charged for hospital fees (nursing services). Mere fact that co was est. for non commercial purpose doesn’t automatically lead to conclusion it never acts in T/C. If any rep was made by RPA it would have been in T/C however RPA was not found to engage in misleading/deceptive conduct * Held: DOC wasn’t breached by Red Cross or RPA because at date of transfusion introduction of screening blood for HIV was matter of controversy between world experts | In trade/commerce and religious/charitable organisations AG (ex rel Elisha) v Holy Apostolic Church (1989) | * Facts: A was disgruntled member of church suing church under s52 of TPA * Held: where body is formed predominantly for holding of land so religious services can be conducted in church and adopts a name associated with church, it doesn’t trade in T/C | Ramage v Sharp (1993) | * Held: trustees of lodge were held to have conducted themselves in TC when selling property owned by them which was leased as dance studio and wasn’t used for lodge purposes for more than 40 yrs. * If charitable co deals with assets in comm. manner its conduct in course of dealings may be in T/C | In trade/commerce and philosophical debate

Fasold v Roberts (1997) | * Facts: Dr R was proponent of creation science. P was geologist who believed in evolution. R stated they were discovering Noah’s ark at top of Mt Arafat and asked for donations to support his findings and research. P alleged R engaged in deceptive and misleading conduct because he was rep idea that creation science was true. * Issue: whether public presentations by R constituted conduct which bears trading/comm. character * Sackville J: * person undertaking public presentations engages in conduct in TC if presentations are designed to advance or protect comm. interests of exhibitor or of trading entities rep by exhibitor * person can make public statements designed to influence trading patterns and not make them in TC * public statements by person not engaged in TC himself may be made in TC if designed to encourage others to invest or continue investments in particular trading co * Held: R conduct was not in TC * lectures weren’t given for purpose of financial gain but for achievement of other objectives * people involved in arranging lectures were volunteers * audience attended due to historical and religious findings of R * R wasn’t a professional speaker * lectures were subject of sales but sales themselves weren’t misleading/deceptive * consumers obtained what they paid for |

In trade/commerce and public commentators: Glorie v WA Chip and Pulp (1981) | * Facts: Involved action under s52 against wood chip industry. G was environmentalist who took action against wood chip industry for making itself out to be environmentally friendly. He alleged that it was misleading and deceptive conduct. Wood Chip Co argued that it was merely advertising. * Held: when corporate entity is engaged in advertising, it is engaged in TC. Here, film was produced as part of activities of trade association and film was seen as public relations exercise | Tobacco Institute v Aus Fed of Consumer Organisations (1992) | * Facts: TI ran expensive advertising campaign alleging smoking tobacco was not as dangerous as people were making it out to be. Those that opposed tobacco industry successfully ran claim under TPA s52. Tobacco industry argued that they were merely advertising, and expressing their views * Held: advertisements by TI were in T/C as it was highly unlikely co would go to expense of pub ad in various newspapers merely to influence public opinion on debate of health policy. Further, ad was prominent, persuasive in tone, eye catching, described itself as an ad and was directed at public at large (smokers and non smokers) | Robin v Canberra Int. Airport (1999) | * Facts: Gov privatizes airport in Canberra. Developer applies to council to subdivide blocks. CIA did not want land subdivided and sold to potential developers of residential areas. CIA had comm. interest in making sure airport would not close. CIA made submission to local council to stop subdivisions of land. * Held: conduct not in TC as it wasn’t directed to TC associated with CIA but with potential land subdivision | In trade/commerce and politicians Durant v Greiner (1990) | * Facts: G was premier, and just before state election, he made promise that local school would not be closed. He was elected, but school was still closed down after election. * Held: statement not in TC as it was made in professional activity and he was merely conveying idea | Yates v William (1999) | * Facts: public comments made in course of election campaign for election to NRMA board * Held: statements directly to electors by election candidates are not made in T/C even though they might bear upon comm. activities of body to be governed | In trade/commerce and giving of advice by semi government body Finucane v NSW Egg Co (1998) | * Facts: NSW Gov was selling egg quotas. They failed to reveal they were going to wipe out egg quotas and what purchaser was paying for would become worthless. Purchaser asked egg co ‘is there anything I need to know about egg quotas?’ and co said ‘no’. They knew that they were wiping out egg quotas. * Held: co engaged in T/C in circumstances that it gave purchaser advice, even where they were gov body | In trade/commerce and professions

Holman v Deal (1979) | * Held: professions such as law, medicine and dentistry have traditionally been regarded as occupying field separate and apart from T/C | Chapman v Luminis (2001) | * Held: professional who performed work in discharge of statutory function of reporting to gov minister on matter of public policy wasn’t engaging in conduct in TC even if remunerated as professional for work | Little v Law Institute of VIC (1990) | * Held: statement made to court by legal practitioner in f litigation on client behalf wasn’t in T/C | W J Green v Wilden (1997) | * Held: comments by legal practitioner in court mediation aren’t in T/C as it involves non comm. processes | Franklin House v ANI Co (1998) | * Held: correspondence b/w solicitors prior to commencement of legal proceedings is arguable in TC | Quad Consulting v David Associates (1990) | * Held: without prejudice correspondence passing bw legal practitioners was arguably in TC | PROHIBITION OF MISLEADING AND DECEPTIVE CONDUCT

What constitutes conduct?
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s4(2): reference to doing or refusing to do an act including making of or giving effect to provision of contract/arrangement, arriving at or giving effect to provision of understanding or requiring of giving of covenant

Equity Access v Westpac (1989) | * Held: * For conduct to be MDC must convey (in all circumstances) a rep * There will be no contravention unless error or misconception results from the conduct of the corporation and not from other circumstances for which the corporation is not responsible * Conduct will be likely to mislead or deceive if there a “real or not remote chance or possibility” of misleading or deceptive conduct * Question of whether conduct is MD or likely to mislead or deceive is an objective question * Conduct of a corporation which causes mere confusion or uncertainty in the mind of the public in the minds of the public is not the same as the conduct being misleading or deceptive |

Meaning of misleading/deceptive conduct

World Series Cricket v Parish (1977) | * Brennan J: before statement can be misleading/deceptive or falsely rep fact, it must convey meaning inconsistent with truth. Statement which conveys no meaning but truth cannot mislead/deceive or falsely rep; although statement which is literally true may nevertheless convey another meaning which is untrue and be proscribed accordingly |

Examples of misleading/deceptive conduct: * Cases against competitor (rival/political) * Cases against another party to contractual relationship OR against agent of that party to contractual relationship

Principles: * Erroneous assumption: No general proposition that erroneous assumption will result in conduct being found misleading/deceptive. Fanciful assumptions will be disregarded by the court * Campomar Sociedad v Nike Int. (2000) and Taco Co v Taco Bell: what is the likely reaction to rep by ordinary and reasonable member of class to whom rep is directed * Court must objectively determine whether conduct is likely to mislead public and evidence that public members have actually been mislead isn’t conclusive McWilliams Wines v McDonalds System of Aus (1980) * Party may rely on any meaning reasonably open to significant number of newspaper relationship is it argues s18 was infringed by newspaper ad to general public Talmax v Telstra (1997)

Talmax v Telstra (1997) | * Held: Telstra ad infringed s52 of TPA (s18 ACL) as it misrep Telstra sponsored well known athlete, that athlete consented to use of his name, photo and reputation to ad Telstra and that athlete supported Telstra’s campaign for customers | E-Bay Int. AG v Creative Festival Entertainment (2006) | * Facts: concert promoter tickets provided all tickets resold for profit would be cancelled and holder would be refused entry to concert; tickets were then resold for profit on e-bay * Held: promoter engaged in MDC as it didn’t have reasonable grounds for rep that ticket sold for profit would be discovered/cancelled | Knight v Beyond Properties (2007) | * Held: no MDC if 2 products have same name but any impression of connection between them will be immediately averted by comparisons between 2 products. | Minister for Health and Aged Care v Harrington Associates (2000) | * Held: statement “no fine print” in ad constituted misleading/deceptive conduct where important contractual terms weren’t disclosed in ad |

Trade competitors

McWilliams Wines v McDonalds System of Aus (1980) | * Facts: McDonalds extensively ad their Big Mac hamburgers. McWilliams also started to ad wines using words Big Mac. McDonalds sought injunction to restrain this alleging it constituted MDC * Held: conduct which merely tends to cause confusion will not be sufficient to constitute MDC | Parkdale Custom Built Furniture v Puxu (1982) | * Facts: P manufactured and sold furniture. D also manufactured and sold almost identical items although on close inspection differences could be observed. * Held HC: D hadn’t contravened s52 (1) of TPA (now s18(1) ACL) as it labelled its furniture stating it was manufacturer | Apand v The Kettle Chip (1994) | * Facts: In 1990, responded began to market chips by batch cooking method. In 1992, appellant began marketing new line of chips to counter loss of market share due to product success * Held FFC: appellants contravened s51(1) of TPA (now s18(1) of ACL) as at time appellant chips came onto market, term obtained 2nd meaning distinctive of respondent product |

Silence as misleading and deceptive conduct

Rhone Poulenc Agrochimie SA v UIM Chemical Services (1986) | * Facts: vendor was selling pesticide in NSW, and QLD, when it is unlawful to use it. It argued that vendor was not engaging in MDC when they sell pesticide in state where it was unlawful to use it. This argument was rejected because when you sell product in state, you are making implied representation that it is legal to use it. * Held: silence may constitute MDC if there’s omission to mention qualification to statement which makes it MD/omission to mention subsequent change if result of change is to make previous statement incorrect | Collins Marrickville v Henjo Investments (1987) | * Facts: Vendor sells to purchaser not disclosing that there was an unlawful bar trade, that seating was limited to 84. * Held: silence may constitute misleading/deceptive conduct where some qualification to statement is necessary to avoid party being actively misled * MDC generally consists of misrep (express or by silence), but it is erroneous to approach s52 (s18) on assumption that its application is confined exclusively to circumstances which constitute some form of rep * |

Non disclosure by person who engaged in positive conduct requiring qualification

Dermagogue v Ramensky (1992) | * Held: in order to have silence as misleading/deceptive conduct, you must give statute its effect, not common law. One must look at all the facts and circumstances not whether there was duty to disclose. * Test: whether in light of all relevant circumstances constituted by acts, omissions, statements or silence there has been conduct which is or is likely to mislead/deceive. This is a question of fact. * Black J: Silence is to be assessed as a circumstance like any other |

Non disclosure by person who had prior dealings with representee

Westpac v Chirabaglio (1990) | * Facts: Illiterate Italian man was given foreign currency loan at < interest rate * Held: He incurred liability for silence (MDC) because C relied on rep made by bank. | Mehta v CBA (1991) | * Facts: Educated man who wanted foreign currency loan at < interest rate. He did not rely on rep made by Bank manager to get the loan. * Held: No liability for silence was incurred under s52 MDC. |

Non disclosure and co extensive duties under general law

Fraser v NRMA (1995) | * Held: where there is relationship between parties which gives rise to fiduciary or other duties of full disclosure under general law; and there has been failure to give full and fair disclosure of all facts which are material to make a properly informed decision by representee, THEN existence of such relationship will assist in determining whether, in circumstances of case, s18 has been contravened |

Non disclosure and commercial dealings at arm’s length

Lam v Ausintel Investments (1990) | * Facts: case involved hotel Investment. L was minority shareholder. He was persuaded to make deal where M2 was pushed back by other people. Other people’s mortgage security came first. Co was in financial difficulty. Was not told that they could sell property later, therefore he may not get security for mortgage. He found out later. Sued for misleading/deceptive conduct. * Held: There was no reliance if there is dealing at arm’s length no obligation to disclose something which weakens your comm. position. L was given much advice from solicitors. It was 1 thing not to be told something as in this case, and it’s another when previous rep is not corrected once it becomes false. * Principle: Not induced as there was comm. pressure to act in way he did despite knowledge of true risks. | Leda Holdings v Oraka (1998) | * Held: there is silence as MDC where there is a reasonable expectation to disclose information, having regard to the facts and circumstances | Elders Trustee v Reeves (1987) | * Held: Sometimes 1 is so careless in protecting their interests that it ceases to be MDC that was relied upon |

Non disclosure of information that is likely to confuse rather than assist

Fraser v NRMA (1995) | * Held: * fundamental issue is whether by reason of what was said and left unsaid in prospectus, there was, in all circumstances, a contravention of s. 52 * members of Association and Insurance were entitled, in relation to such significant proposal, reasonably to expect what was put before them involved no "half truths" and contained a full and fair disclosure of matters to enable them to make properly informed judgment on proposal * more unusual nature of proposal and > diversity and numbers of members, > their reasonable expectations as to adequacy of explanations and material laid before them |

Non disclosure by person who is subject to obligation of confidentiality

Kabwand v NAB (1989) | * Facts: banker acted as banker for both vendor and purchaser of bus. Bank manager told purchaser that bus had ‘excellent cash flow situation'. Bus was unprofitable, and bank manager knew that it was so. * Held: 'cash flow' statement was not assertion that bus was profitable. While it might have been misleading as a 'half truth', this was not pleaded. There could not be a 'reasonable expectation' of disclosure since banker was under contractual duty of secrecy. | Brophy v NIAA (1995) | * Held: Mere silence by itself does not constitute MDC. Although confidential information may be material to applicant, characterization of information as confidential indicates that there can be no reasonable expectation of disclosure between experienced commercial parties |

Misleading/deceptive conduct need not be intentional

Building Information Centre Case (1978) | * Facts: Sydney Centre complained of conduct by Hornsby Centre in carrying on bus under its corporate name which was likely to mislead/deceive because its use suggested some affiliation of newly est HC with SC. Both carried on bus which provided display where builders and materials suppliers who chose to become exhibitors displayed products * Held: * s52 is concerned with conduct which is deceptive of public members in their capacity as consumers of goods or services; not merely with protection of reputation or goodwill of competitors in T/C * use of appellant’s name wasn’t deceptive within meaning of s52 and s80 * s 52(1) requires: corporation, MDC and occurrence of that conduct in T/C |

Classes of persons mislead?

World Series Cricket v Parish (1977) | * Facts: K Packer signed up best 15 Aus cricketers and best 15 in world. P was chairman of Aus cricket establishment. Pakistan was putting ads in women’s weekly calling for women to come and see ‘super tests’. P lawyers used TPA to argue ads super tests were deceptive or misleading conduct because it might lead some segments of public to imagine super tests were put on by Aus test cricket board rather than competition ran by packer. P sought injunction. * Held: Under S80 of TPA, any person can get injunction. No need to show loss or damage or threat to property as in equity. Injunction was granted to stop women’s weekly publishing cricket ads. | Taco Co v Taco Bell (1982) | * Facts: TB was US co est. in Granville + Sydney. US asked TC to stop calling itself TC, but TC est. bus in Bondi before TB est. bus in Sydney/Granville. Each side alleges that other was misleading public. * Held: in favor of TC as they had already est. bus reputation in Sydney before TB * Principles: * Evidence that some person formed erroneous conclusion is admissible and may be persuasive but is not essential. Such evidence does not itself conclusively est conduct is misleading/deceptive or likely to do so * Court must determine that question for itself. * Test is objective * Held: Court put forward four propositions when deciding misleading/deceptive conduct: 1) Who is segment of public who might be misled? 2) Once this is est. must ask whether any one of those people may be MD. In doing so, one must look at intelligent and unintelligent, gullible, not gullible, men and woman of all ages, etc. 3) Once this is worked out, it is a matter for court to decide whether conduct was MD. One must make sure misconception has arisen by misleading/deceptive conduct not innocent conduct. 4) Were they induced into error or were they induced into error by their own assumption? If induced into error by own assumption, bus is not liable. | Parkdale v PUXU (1982) | * Facts: 2 rival manufacturers of furniture. Their manufacturing was similar to each others’. Expensive manufacturers put forward argument that < expensive manufacturer were engaging in MDC because they were making furniture which looked expensive. * Held: there was adequate labelling to differentiate who exactly was manufacturer. It’s not MD that two products were similar. Adequate labelling negatives what would otherwise be MD conduct. | Campomar Sociedad v Nike (2000) | * Facts: Nike manufactured shoes; Spanish company makes sports fragrance called Nike. Both products sold in same section of sports retail store. Nike argued misleading/deceiving conduct. * Held: HC upheld Nike argument and granted them injunction. Their approach was based on correctness of Taco Bell test and test of ordinary person in Parkdale * Test: what is likely reaction to rep by ordinary and reasonable member of class to whom rep is directed | Fraser v NRMA (1995) | * Facts: NRMA was huge insurance co and mutual society. It did not have share holders, just members of mutual society. Directors wanted NRMA to be demutualised so they had to get all members to vote for this to occur. Directors put forward a vote ‘yes’ case but no promotion of vote ‘no’. * Held: NRMA was not misleading simply because it put forward a ‘yes’ case only, it was also because for a ‘yes’ vote, they promised voters that they would give them free shares |

S18 and misrep in pre-contractual negotiations * Exemption clause cannot be relied upon as defence to action in contravention of s18 of ACL

Byers v Dorotea (1986) | * Facts: rep was made as to proposed features and quality of certain home units to be constructed. Applicants agreed to buy units but reps were untrue * Held: applicants were induced to enter contracts by MDC and court ordered refund of their deposits | Clark Equipment Aus v Covcat (1987) | * Held: exemption clause in contract for supply of goods cannot be relied upon if vendor made misrep in negotiations leading up to contract which constitute misleading/deceptive conduct as respondent conduct in making rep is antecedent to contract in which exemption clause is contained | Butcher v Lachlan Elder Realty (2004) | * Facts: real estate agent issued ad brochure for property which included misrep re: title to land. Brochure contained disclaimer that real estate agent didn’t guarantee info accuracy but believed it to be reliable. Disclaimer stated interested persons should make their own enquiries * Held: in issuing brochure, real estate didn’t engage in MDC as it merely conveyed what vendor was rep to prospective purchasers. It only purported to pass on info supplied by another | Exemption of news media in respect of news and information * s19: exempts certain info providers (news media) from general prohibition of misleading/deceptive conduct * s19 (2): exemption doesn’t extend to statements made in ad context * s19 (3): info provider not exempted where misleading statements were made under contract, arrangement or understanding with person supplying goods/services of type subject to pub

PROMISES, PREDICTIONS AND REPRESENTATIONS AS TO FUTURE MATTERS * In determining whether statement is misleading or deceptive distinction must be drawn between: * statements of existing fact: e.g. “I have $1 million to invest in development” * predictions/rep as to future: “I will have $1 million to invest in development by 1 December 2011” * General propositions: * where opinion is expressed it may concern past, present or a future matter * it can be statement of fact as to speaker’s present state of mind * such opinion can contravene s18 if person (at time rep is made) did not believe in what was being expressed * if opinion is expressed as to future matter; such opinion is subject to s4 and must be made upon reasonable ground

Promises and predictions as to future matters * Promise, prediction or opinion only contravenes s18 where, at time promise, prediction or opinion was given, it was unjustified * maker did not believe what was promised or predicted at time that promise or prediction was made; and/or * person who expressed opinion did not believe in correctness of opinion that time opinion was expressed; and/or * promise, prediction or opinion was not made on reasonable grounds; and/or * promise, prediction or opinion was not properly qualified

James v ANZ Banking Group (1986) | * Facts: A acts for guy who owns chicken shop operated by most significant shopping centre, A chicken man was offered 4 year lease, and told that if he pays on time, he will get another 4 year lease renewal. A chicken man worked out that he needed to work 8 years to pay out costs of chicken shop. He pays on time, and wants 4 year renewal option. Shopping centre decides to relocate all chicken people so they do not want to renew lease for another 4 years. * Held: It was not misleading for shopping centre to offer lease renewal unless they knew that they will not be able to renew lease. It is not MDC to make a promise; only so if it was untrue at the time it was made. * Principle: It is misleading to make promise when at time you make it, you know it’s not true. You are making implied rep what you are saying is true. If facts change & promise is not carried out that is not MD | Bill Acceptance v GWA (1983) | * Held: Lockhart J- when promise does not come true, that may not always amount to misleading/deceptive conduct. It only amounts to it where you make promise with no intention to carry it out at time that it was made. By implication, you are rep that it is true. * Principle: Mere fact that rep as to future conduct or events do not come to pass does not make them misleading or deceptive merely because of that fact... If representor made representations with knowledge of their falsity or with reckless indifference to their accuracy then there may be a breach of s18 |

Representations as to future matters * Representor has to adduce evidence of reasonable basis for having made rep with respect to any future matter * Rep of itself still has to be capable of being misleading or deceptive * Even where representor honestly believed in accuracy of rep as to future matter it does not necessarily follow that he has reasonable grounds for that belief * This means that, where rep as to a future matter has been made without an honest belief in its accuracy, then it may be misleading or deceptive either because: * it was not made on reasonable grounds; and * rep of existing fact that he is that maker of rep has an honest belief in its accuracy, is also false * It is only the first of these points that Section 4 affects

* s4 (1): If person makes rep with respect to any future matter (inc. doing of, or refusing to do, any act); and person does not have reasonable grounds for making rep; rep is taken, for purposes of this Schedule, to be misleading. * s4 (2): For purposes of applying ss(1) in relation to proceeding concerning rep made with respect to future matter by party to proceeding or any other person; party or other person is taken not to have had reasonable grounds for making rep, unless evidence is adduced to contrary. * s4 (3): To avoid doubt, ss(2) does not: a) have effect that, merely because such evidence to contrary is adduced, person who made rep is taken to have had reasonable grounds for making rep; or b) have effect of placing on any person onus of proving that person who made rep had reasonable grounds for making rep * s4 (4): ss(1) does not limit by implication meaning of ref in this Schedule to a) misleading rep; or b) rep that is misleading in a material particular; or c) conduct that is misleading or is likely or liable to mislead; and, in particular, does not imply that rep that person makes with respect to any future matter is not misleading merely because person has reasonable grounds for making rep

Wheeler Grace v Wright (1989) | * Facts: Gold mining venture. Investor went to C to get investment advice for WG. C only told good half of story to WG. C did not give properly qualified advice. * Leigh J: not only is it misleading/deceiving to make promise you know is false, but, it’s also misleading/deceiving to make promise that isn’t properly qualified. Must give balanced advice otherwise you are liable for misleading/deceiving conduct |

S18 AND CONTRACTUAL TERMS

Issues: * Do warranties binding in contract also breach s18? * Will such promises amount to a false rep that representor believed that what was promised or predicted was accurate at the time at which the promise was made (time of contract)? * Would s4 apply so that representor needed to have reasonable grounds for making promise at time at which it was made?

Campbell v Back Office Investments (2009) | * French CJ: “...There is no reason in principle why fact that false statement is contained in contractual doc thereby takes use of that statement in doc out of scope of "misleading or deceptive conduct". Whether proffering of contractual doc containing false statement amounts to misrep or misleading or deceptive conduct is matter of fact to be determined by ref to all circumstances. Circumstance that such rep is subject of contractual warranty does not, as matter of law exclude making of it from purview of statutory prohibition.“ | Accounting Systems 2000 v CCH (1993) | * Lockhart and Gummow JJ: " making of statement as to presently existing state of affairs, if false, may be engaging in MDC, where statement is embodied as a provision of a contract.” | Futuretronics Int. v Gadzhis (1992) | * Held: * appears that contractual promise could amount to implied rep that representor had present intention to carry out promise (at point in time in future) * Where it can be shown no such intention existed on part of representor at time of rep (time of making of contract) he would be guilty of MDC * There is further implied rep that may be made in this scenario: that representor had present ability to carry out promise being made * If that is shown to not be true at time at which it is made that would also be misleading or deceptive |
DISCLAIMERS AND EXCLUSION CLAUSES * Statements that are intended to limit liability of person or other legal entity in event of something going wrong. * You cannot contract out of operation of s 18 * You can draft exclusion/disclaimer/exemption/warning clause which has the effect of either: * altering form of rep itself * affecting likelihood that representee did rely upon MD conduct (which goes to issues of reliance and causation for the purpose of s236)

Henjo Investments v Collins Marrickville (1987) | * Held: exclusion clauses do not absolve one from liability under s52 MDC | Keen Mar v Labrador Park Shopping Centre (1989) | * Morling and Wilcox JJ: reversed finding of reliance made by primary judge holding that well-drafted disclaimer, drawn to attention of contracting party and acknowledged in writing to have been made, was sufficient to negate reliance. | John G Glass v Karawi [1993] | * Facts: real estate agent, acting for vendor in sale of office building, passed on incorrect figure for area of building. Figure was included in brochure indicating that source was consultant acting for vendor, including name of real estate agent and disclaimer clause that info was prepared with care by real estate agent or was supplied to it by reliable sources and real estate agent had no reason to doubt its accuracy. Disclaimer stated real estate agent did not guarantee info and that all interested parties should make their own inquiries to verify info * Held (FFC): real estate agent was liable under section 52 of the TPA for damages to purchaser for incorrect figure because real estate agent] adopted info and incorporated it as essential and prominent feature of their selling effort on behalf of vendor. There was no expressed disclaimer but rather express assertion of such belief. * Importance: highlights risk that dealer assumes under s 1041H by innocently distributing defective info memorandum. | Butcher v Lachlan Elder (2004) | * Facts: property on water front up for sale. B wanted to purchase property from LE. They agreed to sell their house to finance buying the new house, gave them brochure and told them that it had everything they needed to know. B wanted to build small pool on another side and demolish current pool to make entertainment area. B later discovered pool was built outside land boundaries. They could not demolish it and rebuild an entertainment area. * Issue: did agent breach s18 or was simply been passing on vendor’s info for “what it was worth”? * Emphasis was placed on: 1) nature of parties 2) character of transaction 3) content of brochure * Held: small print on brochure did not guarantee accuracy of any of statements made. Just that ‘it was deemed to be reliable’ but more inquiries should be made. Brochure was not MD even though it was used as only source of reliance when planning to build entertainment area. | Lezam v Seabridge (1992) | * Held: Misleading person into signing doc on basis that it is application form for licence or ‘marketing’ doc when in fact it purports to be contractual doc containing exemption clauses would, if est. as a fact, appear to be breach of s 52. * Principle: disclaimer clause will only be effective if it has effect of enabling conduct as a whole to be seen as not being MD |
RELIANCE and CAUSATION * To run damages claim, you must start by: * proving there is MDC * proving that MDC caused loss or damage * proving MDC was relied upon * Inducement is causative link between MDC and damages received. If you knew rep was false to begin with, you cannot have relied on it- therefore you are not MDC and would be entitled to no damages. * To recover damages applicant must prove loss/damage claimed suffered was “because of” conduct in contravention of s18 * Main principle: recovery under[s18]is founded by applicant's actual reliance upon MDC of respondent although that conduct was not only factor in applicant's decision to enter particular agreement, and although applicant did not seek to verify rep or did so inadequately and so failed to discover their falsity * Examples of reliance: * payment of a higher price when purchasing an asset; * failure to obtain further warranties in a contract; * Refraining from taking action which would have prevented loss; * Not taking action which would have yielded a benefit; * Providing a mortgage over an asset in the expectation that an advance would be made.

Gould v Vaggelas (1985) | * Facts: V was vendor. Told G lies about takings of resort. G then bought island bus. This was fraud and thus not run under s52, but what court said about reliance is applicable to s52. * Held: Wilson J created 4 propositions in relation to s52 MDC 1) If rep was false, recipient of rep has no case if they did not rely on it. 2) If someone creates rep that was intended to induce, court will assume other party was induced. 3) You can rebut presumption by showing that other party knew true position despite rep made 4) Rep need not be sole inducement it just needs to be inducing factor. It does not have to be major cause of loss, it just needs to be ‘a’ cause. | Henville v Walker (2001) | * Facts: H was architect. He bought property in WA doing architectural work for developers. He decides to become developer to make money. He talks to real estate agent, W and shows him his development plans and asks how much they would be worth. W predicts they would sell 290. H goes back to redo developments plans and tries to double their value. H grossly underestimated cost of expenditure. W grossly overestimated how much they would be worth. Development plans did not work out as expected. Business made loss. * Facts: H’s own actions caused his loss. W’s miscalculation was another cause of the loss. H was entitled to get remedy for all loss from W. no need to consider CN in Trade Practices * Principle: P can be ‘a’ cause of his loss but they can recover from a D where the D’s actions were another cause of loss | Lam v Ausintel Investments (1990) | * Held: no inducement as L had comm. pressures to act in way he did despite knowledge of true risks. | Henjo Investments v Collins Marrickville (1987) | * Held: There was inducement as rep made in relation to bus was relied on by C to make purchase. Rep that induced upon were that bus was licensed to serve alcohol AND that bus was licensed to seat over 100 people when in fact this was not true. | Neilsen v Hempstead Holdings (1986) | * Facts: Purchaser of motel bus was told occupancy level was 80%. Purchaser gets accountant to check figures who fails to pick up that 80% occupancy was really only 30% occupancy. * Held: purchaser relied on what vendor said despite fact that accountant failed to pick up error. | Janssen-Cileg v Pfizer (1992) | * Facts: Pharmaceutical co manufactured product which P was bad mouthing * Held: 3rd party reliance by pharmacists and health department caused loss by JC. JC got remedy under s52. | Elders Trustee v EG Reeves (1987) | * Held: if one is so careless in protecting their interests it ceases to be MDC that was relied upon | Rumpe v Camrol (1985) | * Facts: Vendor of restaurant bus puts ads in newspaper and says it is licensed to open until 3am. Purchaser starts asking question on bus and finds out bus is licensed to operate till 12. Nevertheless, he enters the contract. * Held: there is no MDC/ Inducement/Reliance on rep because he knew truth before he entered the contract. | DAMAGES UNDER S236 ------------------------------------------------- s 236 ACL:
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(1) “If:
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(a) person (claimant) suffers loss/damage because of conduct of another person; and
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(b) conduct contravened provision of Chapter2 or 3;
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claimant may recover amount of loss/damage by action against that other person, or against any person involved in contravention.”
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(2): action under ss1 may be commenced any time within 6 yrs after day on which cause of action that relates to conduct accrued

Kabwand v NBA (1989) | * Finding that conduct is MD will not necessarily result in applicant being entitled to recover damages as s52 does not itself provide remedy in damages but rather ss82 and 87 * Right to damages arises where applicant suffered loss/damage by conduct in contravention of s52 * Person claiming damages must show either he was introduced to do something which gives rise to damage OR to refrain from doing something giving rise to damage by conduct contravening s52 | Janssen Cilag v Pfizer (1992) | * Held: loss/damage BY conduct of another person was construed as extended to recovery of loss/damage by 1 person from 2nd person who engaged in MD conduct which was relied on by 3rd party and as a result of that 3rd party reliance, 1st person suffered loss |

Gates v City Mutual Life Assurance Society (1986) | * Facts: G (on faith of false statements made to him by agent of CMLAS) arranged for superannuation policy to be extended to include disability cover. Clause however only entitled G to benefits if he was totally incapacitated. G suffered injury which precluded him from working as builder although he could still carry out less remunerative forms of employment. * Held: * although conduct engaged in by CMLAS was misleading, G wasn’t entitled to recover damages because there was no evidence additional insurance cover provided wasn’t worth additional $2.09/month paid for it * Damages were assessed under s82 on tortious basis of putting appellant back in position he would have been in but for misleading conduct * Relevant question to be asked in assessing damages is not how much better off the client would have been if MD statements had been true but how much worse of he was by reason of that person having relied upon statements | Elders Trustee (1987) | * Held: Person cannot recover damages under s82 TPA where that person fails to est. sufficient causal link b/w respondent conduct and applicant loss/damage | Henjo Investments v Collins Marrickville (No 2) (1988) | * Held: * MDC by H was cause of purchase of restaurant by CM * In addition to capital loss suffered by CM, CM was entitled to recover part of its trading losses attributable to MDC by H * If a man is induced by misrep to buy article, and while it is still in his possession, it becomes destroyed/damaged, he can only recover difference b/w value as rep and real value at time it was bought | Wardley Aus v WA (1992) | * Held: Entry into contract per se will not amount to loss/damage where it was contingent on occurrence of future event which may/may not occur. | Poseidon & Sellars v Adelaide Petroleum NL (1994) | * Facts: due to misleading statements by S, AP discontinued negotiations with 3rd party AND continued to deal with Poseidon in relation to purchase of mining option. * Held: but for misrep, AP would have had some chance of entering into alternative contract with 3rd party which would have resulted in profits to AP. AP was entitled to recover damages under s82 for lost chance (assessed as amount of benefit that would have been gained – 60% allowance for probability that agreement wouldn’t have proceeded) | Kizbeau v WG&B (1995) | * Facts: contract for sale of motel bus with lease of premises was entered into in reliance upon false rep by owner that upstairs section of premises could lawfully be used for seminars and conferences * Held: when assessing damages under s82 court must consider all relevant events that occurred after bus purchase when determining value of bus at date of purchase | Marks v GIO Aus Holdings (1998) | * Facts: M entered loan agreement with GIO in reliance on rep that interest was to be charged at specified base rate + fixed margin (1.25%). Loan agreement however specified margin above rate could contrary to rep be increased and it was in 1992 to 2.25% * Held: GIO engaged in MDC in contravention of s52. However, M failed to prove he suffered actual loss/damage due to GIO MDC. * McHugh, Hayne and Callinan JJ: GIO loan at > margin was more beneficial to borrowers than any other loan that was available. Value should be assessed objectively. * Gummow and Gaudron JJ: Expectation loss as opposed to reliance loss, doesn’t indicate that damages are payable simply for thwarted expectations. | Kenny & Good v MGICA (1992) (1999) | * Facts: finance provider insurer relied on valuer to value its security over real estate. Value of property then fell from just under 4m at time of valuation to s.65m at time of sale by mortgagee. * Held: appellant valuer should be responsible for part of loss of mortgage insurer which led to decline of property value because it was loss attributable to incorrect valuation. | Henville v Walker (2001) ** | * Facts: H obtained advice from real estate agent W about purchase of WA property. Agent stated there was demand for quality units when this wasn’t true. * Held: H decision to develop property was induced by W breach in overvaluing worth of property. H was entitled to recover for entire loss sustained from project. * Principle: principles of common law, relevant to assessing damages in contract or tort, are not directly in point. But they may provide useful guidance, because they have to respond to problems of same nature as problems which arise upon application of Act. They are not controlling, but they represent an accumulation of valuable insight and experience which may well be useful in applying the Act | Murphy v Overton Investments (2004) | * Facts: OI granted M lease of unit in retirement village. M argued prior to entering lease, misleading statements were made by OI regarding extent of liability which induced them to enter lease and due to that, they suffered loss or damage. * Held: if M suffered any loss/damage due to OI conduct, they did so when they entered lease. There was no evidence of any loss or damage at that time. M failed to show if there was full disclosure by OI, they would have been able to negotiate more favorable lease. | HTW v Astonland (2004) | * Facts: Fosters sought advice of HTW to provide him with rental levels for retail shops and demand for retail tenancies and availability of tenants * Held: HTW gave negligent advice. P was entitled to damages (price paid –value of Plaza at the end) |

Object of damages: * object of damages under s236 is usually to put applicant in position as if misrep had not been made * It is not usually to compensate applicant’s expectation interest (putting applicant in same position as if statement was true) * BUT if applicant loses chance of comm. gain due to misrep damages may be awarded for the value of the chance of that gain * Lost benefit: lost benefit is referrable to opportunities foregone by reason of reliance on misrep. In this respect, measure of damages in tort begins to resemble expectation element in measure of damages in contract save that it is for P to est. he could and would have entered into different contract * Where contract is purchase of asset usual measure of damages is difference between price paid and true value of asset at date of purchase: Henjo and Gould v Vaggellas * Tort measure is not appropriate where contract was rescinded because it assumes that the applicant has elected to affirm the contract: Argy v Blunts * In an appropriate case, consequential losses may be awarded: Henjo

What is loss/damage? * Stress, anxiety and inconvenience flowing from positive act Zoneff v Elcom Credit Union (1990) * Recoverability of whole loss where D conduct was cause of whole loss even though applicant conduct was also cause of loss * Loss of opportunity Sellars v Adelaide Petroleum (1994)
Effect of supervening conduct: * Distinction must be drawn b/w loss occasioned by latent defect at time of purchase and losses from supervening cause. If cause is inherent, its existence should be taken into account. If cause is supervening, additional loss is not consequence of inducement Twycross v Grant (1877)

March v Stramare (1991) | * HC distinguished between: * supervening acts/events occurring in ordinary course of things by virtue of particular risk arising from D act; and * acts/events which transformed outcome of D conduct into something of far > consequence not readily foreseeable by D only one regarded as breaking chain of causation b/w wrongful conduct and subsequent loss |

Where applicant fails to mitigate loss: * Positive act by applicant after he relied on MDC * Reasonable positive act by applicant which was done with aim of mitigating loss suffered due to reliance on MDC by respondent isn’t supervening cause of applicant subsequent losses and is recoverable under TPA Hellyer Drlling v MacDonald Hamilton (1983) * Unreasonable acts by applicant subsequent to relying on MDC will break chain of causation * Omission by applicant after he relied on MDC * Obligation to mitigate only arises when it becomes apparent bus cannot be made profitable * Onus of proof is on applicant to show any losses suffered were reasonable in circumstances * If respondent alleged applicant failed to mitigate loss, onus of proof lies with respondent * Post reliance conduct by applicant which < loss suffered by other person MDC * Applicant isn’t entitled to recover such losses because they weren’t suffered

LIMITATION ISSUES * Cause of action doesn’t necessarily accrue on day contravention occurred but when loss/damage is suffered by MDC

------------------------------------------------- s236(2): (s82(2) TPA)
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Action under ss1 may be commenced any time within 6 yrs after day on which cause of action that relates to conduct accrued

Hawkins v Clayton (1988) | * Facts: P alleged negligence caused economic loss * Held: kind of economic loss which is sustained and time when it is first sustained depend upon nature of interest of infringed and nature of interference to which it is subjected | Magman Int. v Westpac (1991) | * Facts: W engaged in MDC and M entered loan agreement to borrow money for 5 years. * Issue: W raised question of whether or not claim by M was statute barred. * Held: borrower of FX loan may not suffer loss until loan is due to be repaid as it will not be possible before that time to ascertain net loss if any of taking of loan in that form | Wardley Australia v WA (1992) | * Facts: After ASX crashed L loaned money secured by shares which were worth 1/3 from what they were originally worth. L was in trouble but he was politically connected to WA. Bourke (premier) asked everyone to contribute money to save L. R failed to repay loan and NAB initiated proceedings against WA to get their money back. * Held: you don’t suffer loss when you enter contract, you suffer loss when loss actually occurs. | Karedis v Antoniou (1995) | * Facts: restaurant bus was sold on basis of higher takings, truth was that takings were < rep. They sued after 3 years and 9 months of purchasing bus. * Held: It was wrong to say they suffered loss the day they entered bus or that they suffered within 12 months. You must examine all facts and examine when in those 12 months did P suffer loss. That was when cause of action accrued. | Murphy v Overton [2004] | * Facts: M entered retirement village lease in 1992 and sued in 1999. M argued loss occurred when O started to charge for everything in 1997 * Held: loss was contingent when contract was first entered into but loss became actual when O started to charge full costs. |

Insurance cases and when loss/damage is suffered Zoneff v Elcom Credit Union (1990) | * Held: where insured entered into contract of insurance by MDC that insurance covered some risk which wasn’t covered even loss of opportunity to effect insurance cover for risk isn’t suffered until insurer denies liability for claim made by insured in relation to uninsured risk |

Cases involving loss of chance * Loss of chance to obtain benefit by entering another transaction OR rescinding disadvantageous transaction is suffered when contract would have been entered into/rescinded while breach causing victim to forgo benefit arising out of contract may only cause loss when contract is terminated
Estoppel as reply to limitation defence

Cth v Verwayen (1902) | * Facts: V was injured when 2 warships collided. * Held: Cth wasn’t estopped from raising limitation defence simply because it initially failed to be pleaded, that proceedings were statute barred because of nature of pleadings. Award of costs could adequately compensate harm which flowed from D conduct * Principle: it is possible to rely on doctrine of estoppel/waiver to rebut limitation defence |

Fraudulent concealment as reply to limitation defence * Doctrine of fraudulent concealment is open to P to commence proceedings outside limitation period * Wardley Aus v WA (1992): possible applications of the doctrine: * where cause of action alleges fraud or fraud is element in cause of action * time doesn’t begin to run until discovery of fraud * where D fraudulently concealed existence of cause of action * time doesn’t begin to run until both concealment and ascertainment of cause of action are discovered * Doctrine has no application to limitation provision in statute creating cause of action because court has no power to disregard words of statute on basis on equitable doctrine * Fraudulent concealment of existence of misleading conduct may have legal consequences

ANCILLARY LIABILITY * If following factors are est, then one is personally liable for MDC * Are individuals liable for breaches of s18? Yes because: * they may be primarily liable for MDC (being the person who contravened the section) OR * under s 2 as a person “involved in” a contravention of Section 18

------------------------------------------------- s2 ACL: (TPA s75B)
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Involved: a person is involved in contravention of provision of this Sch or in conduct that constitutes such a contravention, if person:
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(a) aided, abetted, counselled or procured contravention; or
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(b) induced, whether by threats or promises or otherwise, contravention; or
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(c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
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(d) has conspired with others to effect the contravention.

Yorke v Lucas (1985) | * Facts: Vendor sold their record shop bus to Y through agent (L). TWS told numerous lies about their bus profitability. Bus was not making profits TWS rep to L. Y (purchaser), succeeded in a claim against TWS and vendors. But TWS had no money, so Y also sued L agency who claimed they never knew about TWS’s lies. * Held: L is not liable because he did not know. L must have mental element. In their obiter, they also said L co would not have been liable because they were acting as a conduit. * Principle: When you are going to make a person involved in contravention personally liable, you must show they had requisite mental element – that they were knowingly concerned in contravention. It is not enough to show that they mislead or deceived without intention. That only applies to co. The language of s75B is criminal law. | Giorgianni v R (1985) | * Held: phrases like ‘aid, abet, counsel and procure’ and phrases like ‘knowingly concerned’ involve a mental element and that is why you have to prove intent | Rural Press v ACCC [2003] | * Held: people are involved in contravention only where they have knowledge of actual elements that make up contravention. |

Principles: * Knowledge requirement e.g. in case of misrep ‘knowledge of falsity of statement’ * Need to prove actual knowledge which may be wilful blindness OR ignorance which is dishonestly/deliberately maintained * Distinction b/w actual and constructive knowledge. Circumstances which may lead court to impute knowledge on facts inc: * actual knowledge * wilfully shutting one’s eye to obvious * wilfully/recklessly failing to make such enquiries as honest/reasonable person would make * knowledge (actual) of circumstances which would indicate facts to honest and reasonable person * knowledge of circumstances which would put reasonable person on inquiry

Pereira v DPP (1988) | * Facts: P was convicted of inter alia being knowingly concerned in importation of trafficable quantity of cannabis * Held: willful blindness is actual knowledge rather than constructive knowledge * 3 matters should be noted: * question remains one of actual knowledge * question is that of knowledge of accused and not of hypothetical person in his position * where knowledge is inferred from circumstances surrounding commission of alleged offence, knowledge must be only rational inference available |

APPORTIONMENT OF LOSS – CN AND CONCURRENT WRONGDOERS

------------------------------------------------- s137B ACL: Reduction of amount of loss/damage if claimant fails to take reasonable care (s82(1B) TPA)
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If:
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(a) person (claimant) makes claim under ss 236(1) of ACL in relation to economic loss/damage to property, suffered by claimant because of conduct of another person; and
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(b) conduct contravened section 18 of ACL; and
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(c) claimant suffered loss or damage as result:
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(i) partly of claimant’s failure to take reasonable care; and
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(ii) partly of conduct of other person; and
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(d) other person did not intend to cause loss/damage and did not fraudulently cause loss/damage;
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amount of loss/damage that claimant may recover under ss 236(1) of ACL is to be reduced to extent to which court thinks just and equitable having regard to claimant’s share in responsibility for loss/damage

------------------------------------------------- s87(1): -------------------------------------------------
(1)Nothing in this Part operates to exclude the liability of a concurrent wrongdoer (excluded concurrent wrongdoer) in proceedings involving apportionable claim if:
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(a):concurrent wrongdoer intended to cause economic loss/damage to property that is subject of claim
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(b) concurrent wrongdoer fraudulently caused economic loss/damage to property that is subject of claim

Apportionable claim elements: * claim for damages made pursuant to s236 * s236 claim must be for economic loss OR claim for damage to property * damage claimed must have been caused by conduct that was in contravention of s18

Argy v Blunts (1990) | * Facts: solicitor who acted for himself when buying residential property failed to obtain zoning cert. * Held: notwithstanding such failure, he relied on vendor agent/solicitors and was entitled to succeed |

Henjo v Collins Marickville (1987) | * Held: It could be said that CM, through his solicitor failed to find out H mislead them. Reasonable care could have been exercised but CM’s agent failed to do so. BUT H could never have relied on 82 (1B) even if it hadn’t been enacted prior to 1985 because limitation on recovery of damages is only where D did not intend to fraudulently cause loss. Agent for H was fraudulent. H would never be able to jump requirement that he never intended to cause loss | Henville v Walker (2001) | * Facts: W was real estate agent who rep H could sell his apartment for 280-290 ea when they were worth only 181 ea. If W was giving expert advice, he should have known that H was relying on him and so he must have caused the loss. * Held: there is CN on part of H but also H is not cause of his own loss where D intended to cause him loss. | Burke v LFOT (2002) | * Facts: vendor (LFOT) rep to purchaser tenants were est retailers/high quality tenants who contributed 1/3 of gross rents (in fact defaulted on several rental debts and were often in arrears in payments) * Held: B was negligent in not advising purchase to inquire about solvency and financial standing of tenants and vendor. LFOT had positive obligation not to use MDC conduct to induce purchase while B had duty to advise purchaser to check accuracy of rep that constituted MDC. CN not given due to unjust enrichment | I&L Sec v HTW Valuers (2002) | * Facts: MDC conduct involved erroneous valuation of real estate by respondent valuer over which mortgage was to be given as sec for loan by appellant who made loan in reliance upon accuracy of valuation. Borrower defaulted and sec when realised was insufficient to meet borrower liability * Held: once amount of loss/damage suffered by contravening conduct is est, that is the amount which P has right to recover. Respondent misleading conduct was a cause of whole of appellant loss. |

How proportionate liability works? * It has capacity to diminish quantum of damages recoverable by P where D can prove P suffered loss/damage partly as a result of P failure to take reasonable care provided D didn’t intend to cause loss/damage OR fraudulently caused loss/damage * In apportioning responsibility for damage to which P contributed court: * must exclude that proportion of damage to which P contributed under any relevant law * may have regard to comparative responsibility of any concurrent wrongdoer who isn’t party to proceedings

s137B (d): D didn’t intend to cause loss/damage * Intent: construed in same manner as person aiding/abetting/counselling/procuring as seen in Yorke v Lucas * Actual knowledge is required: person must have knowledge of essential matters which go to make up the offence whether or not he knows that those matters amount to crime Yorke v Lucas * Distinction b/w actual/constructive knowledge: actual knowledge and wilful blindness * Knowledge of essential facts: matters of fact which must be known to alleged accessory before liability arises

s137B (d): D didn’t fraudulently cause loss/damage * D must rebut presumption that conduct which caused loss was fraudulent * Fraud is proved when false rep has been made knowingly; without belief in truth OR recklessly Derry v Peek (1889) * When claim is made and damages are awarded: D must alert P if there are other concurrent wrongdoers otherwise D will pay all costs. Once liability has been determined, D: * cannot contribute to any damages/contribution from concurrent wrongdoer in respect of apportionable claim * cannot be required to indemnify another concurrent wrongdoer * P can bring another action against concurrent wrongdoer for damage/loss but this is limited to damages previously recovered
REMEDIES UNDER S237 AND S243

------------------------------------------------- s237: Compensation orders etc on application by injured person or regulator: (s87 (1) TPA)
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(1): Court may:
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(a): on application of person (injured person) who suffered, or is likely to suffer, loss/damage because of conduct of another person that:
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(i) was engaged in contravention of provision of Chapter 2, 3 or 4; or...
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(b) on application of regulator made on behalf of one or more such injured persons;
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make such order as court thinks appropriate against person who engaged in conduct, or a person involved in that conduct.
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Note 1: For applications for order or orders under this ss, see s 242.
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Note 2: Orders that court may make include all or any of the orders set out in s 243.
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(2) Order must be order that court considers will:
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(a) compensate injured person, or any such injured persons, in whole or in part for loss or damage; or
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(b) prevent or reduce loss/damage suffered, or likely to be suffered, by injured person or any such injured persons.
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(3) Application under ss (1) may be made at any time within 6 years after day on which:
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(a) if subsection (1)(a)(i) applies—cause of action that relates to conduct referred to in that subsection accrued...

------------------------------------------------- s243: Kinds of orders that may be made: (s87 (2)TPA)
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Without limiting section 237(1), 238(1) or 239(1), orders that court may make under any of those sections against person (respondent) include all or any of the following:
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(a) order declaring whole or any part of contract made b/w respondent and person (injured person) who suffered, or is likely to suffer, loss or damage referred to in that section, or of a collateral arrangement relating to such a contract:
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(i) to be void; and
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(ii) if court thinks fit—to have been void ab initio or void at all times on and after such date as is specified in order
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(b) order:
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(i) varying such a contract or arrangement in such manner as is specified in the order; and
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(ii) if court thinks fit—declaring contract to have had effect as so varied on and after such date as is specified in the order
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(c) order refusing to enforce any or all of provisions of such a contract or arrangement;
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(d) order directing respondent to refund money or return property to injured person;
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(e) except if order is to be made under s 239(1)— order directing respondent to pay injured person amount of loss or damage
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(f) order directing respondent, at his own expense, to repair/provide parts for goods that had been supplied by respondent to injured person;
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(g) order directing respondent, at his own expense, to supply specified services to injured person;
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(h) order, in relation to instrument creating or transferring an interest in land, directing respondent to execute an instrument that:
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(i) varies, or has effect of varying, the first mentioned instrument; or
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(ii) terminates/otherwise affects/has effect of terminating or otherwise affecting, operation or effect of first mentioned instrument.

Essence of ss: * Requirement that person who is party to proceedings suffered or is likely to suffer loss/damage by conduct of another person * Availability of relief whether or not Court grants injunction or makes an order

Multigroup Distribution v TNT [2001] | * Giles J: damages limitation period is now 6 years. It used to be 3. There is no damages period where a claim comes under s87 (1). There is limitation on s87 (1)(a) | Akron Pacific v Illife (1997) | * Facts: There was a time when people invested in yearling horses. People would buy shares in horse to race their horse and win race. I was high income earning accountant who invested in these yearlings. Cummings was also involved in this investment. Market collapsed. I was able to prove that he had been misled/deceived in a very limited respect that he was guaranteed to get back a limited amount of money. Court was convinced with this argument. * Mason J: described s 87 as a ‘smorgasbord’. Court can apply far more complex remedies than simply declaring them void ab initio. Court has to scan all remedies available like one scans a smorgasbord to pick remedy most appropriate. |

Avoidance orders: * Distinction between avoidance orders and rescission under general law: * S87 provides court with no authority to confirm unilateral act to rescind contract induced by misleading conduct; contract declared void under this s remains on foot until order is made. At general law, court adjudicates as to whether victim election to rescind for misrep was lawful and any election operates from day it was made. * TPA remedy allows for wider range of contracts to be avoided than general law * Under TPA, contract may be declared void from certain date. This is not available at general law * s87 orders are subject to statutory limitation period * General law rule barring rescission of executed contracts has no operation under TPA * Principles: * contract will not be declared void unless it was induced by contravention * avoidance orders are often accompanied by orders for refund of money paid and return of bus * avoidance order will not be made where applicant is unable to return what was acquired under contract * re entry by 3rd party landlord onto premises on which purchased bus is carried on will not prevent contract for sale of bus being avoided * avoidance orders will not be made unless all parties to contract are before court and are amenable to order * affirmation may break causal link b/w MDC and any loss/damage suffered so that order becomes inappropriate
Variation orders: * court must take reasonable care to ensure justice is achieved b/w parties * variation order shouldn’t overcompensate/undercompensate P who suffered loss/damage by MDC * purpose of variation order is to ensure victim suffers no loss/damage from that contravention * once P proves he suffered loss/damage, then he must be granted relief that compensates for entire loss * variation order useful to prevent/< prospective loss by relieving P from future contract obligations induced by contravention * variation order may be made where right to avoidance has been lost because it is no longer possible to restore parties to contractual position they were in before contravention * variation order may be made where right to avoidance has been lost due to P affirmation to contract * variation order is appropriate where avoidance order would penalize D more than is necessary to compensate P * variation order may not be made for non compensatory purpose which would enable grant of orders that fulfill expectations * variation order is unlikely to be made if it would impose regime which doesn’t rep bargain struck by parties

Monetary orders: * Court must ensure justice is achieved between the parties * monetary order shouldn’t overcompensate/undercompensate P who suffered loss/damage by MDC
Limitation issues: * Claim made under s87 which is independent of any claim for other remedies must be commenced within 6 yrs of date when cause of action accrued * There is no express limitation period where injunctive relief is claimed

Mayne Nickless v Multigroup Distribution Services [2001] | * Facts: M claimed damages and account for profits. * Held: s87 wasn’t time limited because there was no time provision in relation to commencement of proceedings. Account for profits wasn’t available as relief. |

More flexible and extensive nature of relief: * Where P suffered loss/damage, he may claim under s82 as more justice can be done than with mere award of damages * s87 gives authority to intervene by means of anticipatory remedies to prevent loss/damage occurring by misleading conduct * loss/damage may have broader meaning in s87 as phrase encompasses act of reliance by entry into contract induced by misleading conduct whether or not that act resulted in compensable damage * Relief under s87 is not always available because: * it is discretionary in nature * may be refused where events occurred since contract was entered into under influence of contravening conduct that made it impossible to do justice between parties

Murphy v Overton (2004) | * Facts: O sold retirement village to 3rd party during trial * Held: relief under s87 ceased to be available to M who had to be content with damages under s82 | Henjo v Collins Marrickville (1988) | * Held: by reasons of delays on P part in prosecuting case and intervening operational changes made by P to bus, contract for sale of bus shouldn’t be avoided. |

INJUNCTIONS – S232

------------------------------------------------- s232: Injunctions: (s80 TPA)
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(1) Court may grant injunction, in such terms as court considers appropriate, if court is satisfied person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:
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(a) contravention of provision of Chapter 2, 3 or 4; or
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(b) attempting to contravene such a provision; or
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(c) aiding, abetting, counselling or procuring a person to contravene such a provision; or
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(d) inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision; or
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(e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or
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(f) conspiring with others to contravene such a provision.
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(2) Court may grant injunction on application by regulator or any other person...
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(4) Prohibitory injunctions: Power of court to grant injunction under ss (1) restraining person from engaging in conduct may be exercised:
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(a) whether or not it appears to court that person intends to engage again, or to continue to engage, in conduct of a kind referred to in that subsection; and
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(b) whether or not person has previously engaged in conduct of that kind; and
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(c) whether or not there is an imminent danger of substantial damage to any other person if the person engages in conduct of that kind.
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(5) Mandatory injunction: Without limiting ss (1), court may grant injunction under that ss restraining person from carrying on a business or supplying goods or services (whether or not as part of, or incidental to, the carrying on of another business):
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(a) for specified period; or
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(b) except on specified terms and conditions.
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(6) Without limiting ss (1), court may grant injunction under that ss requiring a person to do any of the following:
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(a) refund money;
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(b) transfer property;
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(c) honour a promise;
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(d) destroy or dispose of goods.
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(7) Power of court to grant injunction under ss (1) requiring a person to do an act or thing may be exercised:
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(a) whether or not it appears to court that person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing; and
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(b) whether or not person has previously refused or failed to do that act or thing; and
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(c) whether or not there is imminent danger of substantial damage to any other person if the person refuses or fails to do that act or thing.

Standing to seek injunctive relief and public interest purpose of the Act * s80 empowers ACCC and any other person to seek injunctive relief * When injunctive relief is sought to protect public interest, general law limitations have no application

World Series Cricket v Parish (1977) | * Facts: P didn’t commence action in rep capacity but rather brought proceedings personally because any person can seek relief (inc. injunctions) to restrain WSC from engaging in MDC conduct (appeal as to tradition of test cricket) * Held: TPA is public interest legislation and when injunctive relief is sought to protect it, general law limitations on availability of injunctive relief will have no application | Phelps v Western Mining Corp (1978) | * Facts: P was concerned about mining of uranium in Aus and alleged ad published were MDC * Held: remedy in s80 is for protection of class of persons affected by conduct (MDC) |

Interim injunction * You may get interim injunction which involves court making interim order pending a final hearing. * It may be for a couple of days/weeks/months until further order OR you may get final Injunction which is more permanent in nature. Only available in finals hearing of matter * In deciding whether or not to grant interim injunction, Court should apply 2 fold test: * whether there is serious question to be tried * whether balance of convenience favours grant * In relation to injunctive relief under s80: * there is no need to show damages will be inadequate remedy * TPA is public interest legislation and when determining balance of convenience must be considered
Ex parte orders * In urgent cases interlocutory injunction may be granted ex parte (occurs where interim injunction is sought in nature of Mareva injunction or Anton Piller order) * P should disclose all material facts relevant to grant of injunction Thomas Edison v Bullock (1913)

Anton Pillar AG (1975) | * Held: Under s80 there are different kinds of injunctive relief. Eg there is an Anton Pillar order. This may be granted where someone is in possession of illegally obtained intellectual property. |

Serious question to be tried: Under general law, injunctive relief only granted where infringement of P right causes P to suffer loss

Beecham Chemicals v Bristol (1968) | * Held: old approach was that P has to show prima facie case to qualify for injunction. This is no longer the case | American Cynamid v Ethicon [1975] *** | * Facts: 2 pharmaceutical companies battling each other in England. * Held: you only get interim injunction pending a final hearing after answering following questions * Is the matter of serious nature/concern i.e.: is there a serious question to be tried? * Where does balance of convenience lie? (Balance of convenience is to stop MDC. You will get injunction once you show potential for MDC) |

Balance of convenience * Balance of convenience in relation to proceedings under TPA: protection of public interest * Relevant factors to be considered: * strength of P case: if P has a strong case, balance of convenience will favour P Castlemaine Toohey v SA (1986) * risk of uncompensatable damage/injury to P * irreparable harm/damage is a factor in weighing up balance of convenience * uncompensatable harm means common law damages will be inadequate * if damages are adequate remedy no interlocutory injunction will be granted * delay on party of party seeking relief * each case depends on its own facts * relief refused where there is no satisfactory explanation for it Pacific Hotels v Asia Pacific Int. (1987) * delay is excused where D had no notice of complaint Great American Success v Kattaineh (1976) * if P seeks undertaking from D prior to application, reasonably delay may be excused * if D is guilty of fraud P delay may not bar relief especially if fraud concealed cause of action * sufficiency of P undertaking to damages : undertaking given to court that if interlocutory injunction is later dissolved applicant will compensate D for any injury/loss caused by injunction

Mareva Injunctions * Mareva Injunction is order by court granted in favour of applicant who is able to show there is genuine likelihood that D will dispose of their assets so that ultimate verdict in favour of applicant is frustrated * Elements to prove: * applicant must have prima facie cause of action * applicant must prove D has assets within jurisdiction of court * applicant must prove there is real risk that D is likely to frustrate judgment by disposition of dissipation of his assets * applicant must persuade court that balance of convenience is in P favour(adduce evidence of risk) * applicant must give undertaking to pay damages suffered by D or 3rd person in event that order was wrongly given

Mareva Case (1975) | * Held: you can stop D from moving assets from jurisdiction if you have claim against them for damages | Jackson v Sterling Industries (1987) | * Held: Mareva relief was affirmed. Aus courts have power to grant Mareva type interlocutory relief, but no power to order provision of security as distinct from freezing entitlement of D to deal with assets |