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Business Law Assignment Analysing Different Case Scenarios

Question

Task:
Business Law Assignment Task: You are required to address the issues stated in the question. Use the IRAC method to structure your answer and separate headings for ‘Issue(s)’, ‘Rules’, ‘Application’ and ‘Conclusion’.

Question 1
Annie made a reservation at “Frederico’s” to meet some friends who she hadn’t see for a while. While Annie was getting a drink from the bar, a waiter carelessly spills a tray of drinks onto Annie’s expensive handbag, which she left on her seat. When she complains to the restaurant manager, he directs Annie’s attention to a sign on the wall that states:

‘The restaurant takes no responsibility for goods lost, damaged or stolen’.

Annie didn’t notice the sign when she walked in because it was obscured by a large cactus.

Meanwhile in the kitchen, Frederico the restaurant owner had decided to add a new range of taco dishes and salads to his menu. He had placed a large sign on the restaurant window promoting his mexican dishes as ‘the best Mexican in town, made with all fresh ingredients!’. Marco, the owner of “Marco’s”, the Italian restaurant next door, is rather annoyed about the sign. He has been serving freshly made pasta for years. Marco had noticed piles of empty tins outside in the parking area and accused Frederico of misleading customers. He thinks that Frederico uses tinned jalapenos in his dishes. Frederico’s response is that even if the jalapenos are from a tin, they are fresh from the tin. Marco has now threatened legal action under s 18 of the Australian Consumer Law.

Focus on the disclaimer and s 18 of the Australian Consumer Law (ACL).

Is the disclaimer valid? Does the sign prevent Annie from suing the restaurant? Can Annie seek compensation? Is Marco entitled to bring such a legal action under ACL s 18? If so, is such an action likely to succeed?

Question 2
Jess is 16 years old high school students who serve at a coffee and BBQ van on school holidays for family friends Jim and Sue. Jim and Sue have known Jess’s parents for many years. Jess doesn’t expect to be paid because she doesn’t have any previous experience and her parents have told her that this is a good opportunity to get some work experience. She is paid by Jim and Sue at a rate of $50 cash a day to do a 5 hour shift. She also gets a lift from Jim and Sue to and from the location that the van is at, as she doesn’t drive yet. The van provides food at outdoor locations for a number of outdoor events.

During the Covid-19 lockdown Jim and Sue ask Jess to sign a Jobkeeper application. Jim and Sue say that they can’t keep paying her if she doesn’t sign. One day jess slips over and hurts her back. Jess stops work immediately, and she is not able to keep going with her athletics training. She has an ultrasound and an MRI which show that she has sustained soft tissue damage to the left side of her spine which could take 8-12 weeks to heal. Jim and Sue are very sorry to hear the news and tell her that she is not really an employee and cannot claim workers compensation.

Focus on the enforceability of the Jobkeeper application and whether the work is carried out by an employee or independent contractor.

Is there a contract between Jess and Jim and Sue? Is the Jobkeeper application enforceable? Is this a case of unconscionable conduct? Is Jess an employee or independent contractor? Are Jim and Sue correct that Jess can’t claim workers compensation?

Answer

Answer 1
Issue

  • The first issue presented herein business law assignment is whether the disclaimer posted on the wall at Frederico’s amounts to be valid in nature?
  • Is Annie entitled to claim any damages for her loss against the said restaurant?
  • Whether Marco is eligible to institute a legal action against Frederico under Sec. 18 of the Australian Consumer Law?

Rule
Under the Competition and Consumer Act, 2010-part 3 express enumeration of the range of consumer guarantees has been carried out. The list of consumer guarantees relating to services has been mentioned (Sec. 60 – 62) (Galapo, 2021).

Sec. 60 (Guarantee regarding rendering of services with due care and skill)

Under this provision suppliers are entrusted with the duty that the services that has been availed by the consumers has been provided with the required standard of care and skill as is reasonably expected (Galapo, 2021). Within the purview of the phrase “due care and skill” two aspects needs to be taken into consideration which involves execution of the reasonable or the acceptable level of knowledge or skill that are incidental for rendering any specific services (Consumer guarantees, 2021). Secondly, it is also important that while rendering any such services the desired or necessary level of care needs to be undertaken with the objective of avoiding causation of any loss or damage to the customers in the process of providing the same. For instance, A hired B for painting his house but, while undertaking the task B accidentally spilled a can of paint over the new paved driveway of A. This shows that B did not undertook his responsibility of rendering the service of painting with due care and is required to pay for the damage (Galapo, 2021). Tait Management Services Pty Ltd v Boyle and Anor [2012]

Rules relating to disclaimers and other exclusion clauses

Disclaimers are basically clauses or statements purported to exclude the liability generating from any loss or damage due to placing of reliance on any information, the same shall not be effective under circumstances if any such information amounts to be misleading or fraudulent in nature (Consumer guarantees, 2021). For a disclaimer to be effective it is essential that statements made or the disclaimer is prominent and properly visible. Disclaimers should not be obscured or hidden with any images, graphics or text and thirdly, the same should not contradict or undermine the basis of the offer. Medical Benefits Fund of Australia Limited v Cassidy [2004]

Sec. 18 CCA, 2010
As per the said provision, any individual while carrying out any trade or commerce are totally prohibited from engaging into conducts that has the effect of misleading or deceiving the consumers (Law Quarter, 2021). The concerned provision mainly strives towards creation of a business norm that needs to be abided by, while failure shall lead to accruing of liabilities. Brown v Jam Factory Pty Ltd (1981)

Part 3-1 of the ACL has expressly mentioned (Sec. 29-38) about the conducts that are prohibited under the purview of false and misleading representations (Government, 2021). For instituting an action u/s. 18 of ACL, the onus of proving the infringement lies upon the plaintiff (Government, 2021). TPC v Vaponordic (Aust) Pty Ltd (1975)

Application

  • Annie was waiting for her friends at Frederico and decided to take the services of the restaurant Frederico for which she shall be paying.
  • The waiter while rendering service on behalf of the restaurant are required to act in conformity to the consumer guarantees relating to services that is with due care and skill as can be reasonably expected from such service providers.
  • But, by spilling the glass of drink on to Annie’s hand bag the waiter showed his negligence and not performing his job with due care and skill that is necessary.
  • Moreover, the disclaimer that absolves the concerned restaurant from any responsibility for the lost, damage or stealing of any goods abridges the enlisted consumer guarantees. The sign board mentioning the said disclaimer was also not placed at a proper position that shall be easily visible as it was behind a large cactus.
  • Frederico in order to gain more customers started serving Mexican dishes as well with the sign that he shall provide best Mexican food made with fresh ingredients.
  • Marco being the owner of the Italian restaurant finds out Frederico uses tinned Jalapenos in his dishes as the former discovered a huge pile empty tins in the parking lot. As per Marco’s allegation these tinned Jalapenos are not at all fresh and is misleading the consumers as per the large sign placed by Frederico.
  • Frederico by using such tinned Jalapenos are said to committing an unfair trade practice of false and misleading representation about the quality and standard of foods served to its consumers u/s. 29 of ACL. This needs to be proved on the balance of probabilities by Marco.

Conclusion

  • Firstly, it can be concluded that the disclaimer shown by Frederico’ s manager to Annie was not valid as attempts to exclude consumer guarantee mentioned u/s. 60.
  • Henceforth, Annie is entitled to sue Frederico for the negligence of their waiter in serving drinks and damaging her expensive hand bag.
  • Secondly, it can be stated that Marco is entitled to bring an action u/s. 18 ACL against Frederico for using tinned Jalapenos that are not fresh ingredients in his dishes as promoted through the sign by the latter. But for this Marco needs to put up necessary evidence to prove that such jalapenos are not fresh.

Answer 2
Issue

  • Does there exist any contract between Jess and Jim and Sue?
  • Whether the conduct of Jim and Sue can be categorised as an unconscionable conduct?
  • Whether Jess is entitled to claim worker’s compensation against the injury suffered?

Rule
Formation of a valid contract

The seven most essentials elements required for the purpose of creating a legally valid and enforceable contract:

  • Agreement between the parties (offer and acceptance)
  • Intention in creation of legal relations amongst the parties
  • Legally valid amount of consideration to be agreed and exchanged between the parties
  • Parties possessing the desired capacity to enter into a contractual arrangement.
  • Legality of the basis of contractual transaction.

Legal capacity
There are certain class of individuals who are not permitted to enforce any contractual obligations or rather do not possess the contractual capacity to enter into any agreement. This involves minors, bankrupts, mentally disbalanced or ill, corporations and any intoxicated individual.

Unconscionable conduct
An unconscionable conduct can be described as any transaction between weaker and dominant parties, whereby any unfair or undue advantage has been undertaken by the dominant one. Usually, these conducts are a result of duress and undue influence executed by one party against the other. Any form of unconscionable conduct is said to be prohibited in both equity as well as under the statutes (country & Contacts, 2021). Application of the equitable principles takes place where an undue advantage of any special disability such as age or illiteracy of the weaker section has taken place. Blomley v Ryan (1954)

Eligibility criteria under the Jobkeeper payment scheme
The employees that shall be eligible involves:

  • Individuals who have been current employees of any eligible employer under the scheme (Hero, 2021).
  • Has been employed on a full time or part time basis along with systematically casual employees working for at least 12 months.
  • Minimum age of the employee is 18 yrs and above
  • The individual is an Australian citizen and holds a permanent visa (Commission, 2021).

Assessment of the employment relationship
There are certain legal tests involve in assessing whether an individual is an employee or an independent contractor (country & Contacts, 2021). Under a contract of service an employee is entrusted with the specific benefits as well as protections which an independent contractor is not made subjected to. Employees are generally made entitled to industrial awards along with long service leaves, sick leaves but the independent contractors are not provided with anu such benefits. Moreover, employees are entitled to worker compensation insurance whereas the independent contractors are not (country & Contacts, 2021). Application of the control test as mentioned in Zuijs v Wirth Bros Pty Ltd (1955) shall assist in the process of distinguishing an employee from an independent contractor. It is required to be seen that whether the employer has absolute control over the manner in which the work is to be done along with the amount of work. FCT v J Walter Thompson (Aust) Ltd (1944)

Worker’s compensation
Under this scheme an insurance of financial nature is granted to the workers in case of suffering from any accident or injury within the course of employment (Australia, 2021). This shall include any form of injury such as physical, mental, any kind of disease contacted while serving, injuries incurred while travelling to the place of employment and others.

Application

  • Here Jess being 16 yrs old serves at a coffee and BBQ van owned by Jim and Sue. According to the necessary age of majority that is 18 yrs Jess cannot be said to have entered into any contract due to being a minor with Jim and Sue.
  • Although Jess did not expect to receive any salary for her services at the coffee and BBQ van but still, she gets paid at the rate of 450 per day for five hours shift. Apart from this Jim and sue also provide her with the pick up and drop facility to the location of the van which can be considered to be employment benefits.
  • In addition to this Jim and Sue asked Jess to sign the Jobkeeper application to continue her payment but as per the employer and employee eligibility criteria, Jim and Sue’s business does gets eligible but, Jess as per her age is not covered under the scheme.
  • Suddenly, Jim and Sue asked Jess to sign the Jobkeeper application while the former are already aware that Jess is still a minor serving for them. This further shows that Jim and Sue are taking an unfair advantage of Jess’s weaker position due to age as they have also declined from paying any workers compensation for the injury sustained by Jess while working for them.

Conclusion

  • Therefore, it can be stated that as Jess is a minor there exist no valid contract between Jess and Jim and Sue.
  • Secondly, due to non-fulfilment of the eligibility criteria of Jess as an employee under the Jobkeeper payment scheme, the Jobkeeper application suggested by Jim and Sue is not enforceable. Moreover, by asking Jess to sign on the application or that she won’t be paid anymore by Jim and Sue shall be considered to be an unconscionable conduct.
  • Thirdly, as per the classification mentioned above relating to a independent contract and an employee, it can be said that Jim and Sue paid Jess with a fixed rate of salary for her services and also provided her with other benefits. This shows that Jess shall be considered as an employee of Jim and Sue.
  • Fourthly, as Jess is an employee working for Jim and Sue, it is their responsibility to provide her with the necessary worker’s compensation to treat her injury. Therefore, they cannot claim that Jess is not entitled to worker’s compensation.

References
An introduction to section 18 of Australian Consumer Law | Law Quarter. (2021). Retrieved 15 June 2021, from https://lawquarter.com.au/an-introduction-to-section-18-of-australian-consumer-law/

Australia, B. (2021). An employer’s guide to workers’ compensation. Retrieved 15 June 2021, from https://www.businessaustralia.com/how-we-help/be-a-better-employer/managing-people/an-employers-guide-to-workers-compensation

Commission, F. (2021). When a JobKeeper enabling direction will have no effect. Retrieved 15 June 2021, from https://www.fwc.gov.au/jobkeeper-benchbook/jobkeeper-enabling-directions/when-direction-will-have-no-effect

Consumer guarantees - a guide for businesses and legal practitioners. (2021). Retrieved 15 June 2021, from https://www.accc.gov.au/publications/consumer-guarantees-a-guide-for-businesses-and-legal-practitioners

country, E., & Contacts, G. (2021). Legal Framework Differentiating Employees from Independent Contractors. Retrieved 15 June 2021, from https://knowledge.leglobal.org/eic/country/australia/legal-framework-differentiating-employees-independent-contractors/

Galapo, A. (2021). An Analysis and Discussion into Australian Consumer Law Part 1: Section 18. Retrieved 15 June 2021, from https://legalwiseseminars.com.au/insights/an-analysis-and-discussion-into-australian-consumer-law-part-1-section-18/

Government, A. (2021). Schedule 2—The Australian Consumer Law. Retrieved 15 June 2021, from https://www.cbos.tas.gov.au/__data/assets/pdf_file/0006/408255/ACL_Schedule_2.pdf

Government, Q. (2021). Avoid misleading your customers about price, quality and value. Retrieved 15 June 2021, from https://www.qld.gov.au/law/laws-regulated-industries-and-accountability/queensland-laws-and-regulations/business-advice-rights-and-responsibilities/avoid-using-unfair-business-practices-against-consumers/avoid-misleading-your-customers-about-price,-quality-value

Hero, E. (2021). JobKeeper Payment Q&A Guide [Updated 2021] • Employment Hero. Retrieved 15 June 2021, from https://employmenthero.com/blog/employment-law/jobkeeper-payment/

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