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Consumer Law Assignment: Determination of Breach of Contract

Question

Task: This consumer law assignment requires you to provide answers about a case study. You're required to answer the question with reference to any relevant statute and case law.

Case study
Andrew and Margaret visit their local travel agent to discuss the possibility of taking a holiday on an island off the Queensland coast. Neither has previously travelled outside Victoria and they explain to the agent that they would like his advice on the best value available, specifying they would like a restful holiday. They require access to a nice beach and facilities for golf and water skiing. The agent recommends that they go to Gunk Island, which he assures them, will satisfy all their stated requirements. They book accordingly with the travel agent. Gunk Island fails to live up to their expectations. Their accommodation is a deserted cabin with no water, no toilet facilities and no vehicle access. It appears to have been deserted for some time. The only beach within walking distance is covered with rocks and coral, and is very unsuitable for swimming. There are no facilities for water skiing and the only golf course on the island is a mini golf course in the village, four kilometres away, which has been vandalised by youths. The price paid by Andrew and Margaret for their holiday package was approximately the same as for most alternative resorts for which they had been shown brochures by the travel agent.

Upon their return to Melbourne, Andrew and Margaret consult you and state that they wish to take legal proceedings against the travel agent. They point out that, apart from the cost of the holiday, they have incurred other expenses. These include the cost of medical treatment for Margaret, who suffered a nervous breakdown as a result of unsatisfactory facilities on Gunk Island; Margaret’s anticipated loss of wages (she will be unable to resume work for at least three months); and the cost of additional airfares incurred. They instruct you because the facilities at the resort were so poor they decided to catch an earlier flight home. As a result, they had to pay an extra amount for their flight as their holiday package required them to fly home on a specific date.

Advise Andrew and Margaret as to their prospects of success in an action against the travel agent. If they succeed, what will be the extent of the remedies that will be available to them?

Your answer must provide relevant justifications and refer to legal principles and cases to support your discussion.

1. Identification of issues.
2. Identification of the source of the law on each issue: case law, statute.
3. Accurate explanation or justification of the relevant law on each issue.
4. Application of the relevant law to each issue.
5. Presentation and organization of work in a logical manner.

Answer

Advise To Margret And Andrew In Concerned With The Given Case Situation

Identification of case issues for this consumer law assignment

• Determination of breach of contract by local travel agent with Andrew and Margaret
• If yes, extent of remedies available with Andrew and Margaret in context of breach of contract by the local agent.

Identification and explanation of relevant legislation on the determined issues
Provisions of the Australian Consumer Law (ACL) provide protection to the consumer for the good and services purchased by them (Queensland Government, 2021). Services discussed in this law are inclusive of travel plans. Provisions of these laws are mandatorily applicable for all business entities and impose duties and obligation to the travel agents operating in Australia to ensure good faith and consumer protection (Wan, 2020).

In situation where, travel agents breach the provisions of ACL, they are in legal obligation to compensate for damages and financial losses suffered by consumers as a consequence of breach (Oliver and Schoff, 2017). In this aspect, provisions of Competition and Consumer Act 2010 along with fair trading laws mentions that consumer guarantee is said to be breached if a travel agent fails to act as per due diligence that is expected to be standard for particular purpose within reasonable time (Queensland Government, 2021). In addition to this, it is mandatory obligation of hotels to be safe and serve with standard quality. Their services should be as mentioned standards and description given while booking. Further, advertisement made by them should not be misleading and false in any context.

The crucial point to be focused in this aspect is that above described rights and duties cannot be removed even if hotel or travel agent clearly does it by mentioning it in the agreement terms. (Kariyawasam and Wigley, 2017).

Remedies available with the consumers if delivered services are not as per the standards:
Consumers are entitled to avail remedy regarding their services purchased by them if it is not in accordance with the fundamental consumer guarantees mentioned by law. Extent of remedy is determined by analysing the problem and associated damages and consequential losses occurred due to it (Pearson, 2018). In the respect of damages, consumers are entitled for compensation from supplier if they had suffered from additional losses occurred due to breach of consumer guarantees (Wan, 2020). Although for this, it is important loss must be foreseeable in nature and not because of actions that were not controllable on the part of supplier. Therefore, type of remedy is determined by classifying the consumer problem it major or minor.

A problem is said to be minor if there is termination of contract or service and full refund is requested. Minor problems are generally fixable by business although for such issue immediate refund cannot be demanded (Australian competition and consumer commission, 2021). Instead of this business are provided by with genuine opportunity to resolve the issue. However, if this is taking so much time then consumer can fix it and claim reasonable cost or cancel the contract by claiming refund.

On the other hand, problem is said to be major if
• If it had immediately stopped consumer to purchase it if they had aware about exact situation
• Delivered services were sustainability unfit at primary place for which purchase was made (Wan, 2020)
• Delivered services had created unsafe situation for consumers
• Delivered services is not as per requested services by the consumers as mentioned in Australian Competition and Consumer Commission v Dell Computer Pty Ltd (2002) 126 FCR 170. As per this case, comparison of service delivered and requested in comparison to price and quality.
Consumers are entitled by compensation in accordance with their problem and related damages. Damages are not mere restricted to financial losses but also include medical injury caused due to their breach of consumer guarantee (Australian competition and consumer commission, 2021). These are consequential loss which are the additional expense or loss to be paid by consumer because of issue with services provided by supplier. Generally these expenses are financially in nature but it may be able to be incurred in non-monetary form. Example of such kind of expenses is loss of time productivity that might have been used by consumer to do something fruitful (Kariyawasam and Wigley, 2017). These losses are recoverable from supplier who failed to satisfy consumer guarantees. If in situation, where supplier denies their obligation for paying these remedies then consumer is in position to legal action against them.

Damages are inclusive of loss of productivity time but converting this damage in monetary amount is difficult. However, it can be determined through analysis opportunity cost by considering reasonable evidence provided by the consumers.

However, travels agentsare not liable to make payment for following losses:

• problems which were no related to their breach conduct regarding services delivered
• Losses occurred due to event which is purely independent of breach conduct of travel agent, after the services provided by them which were not in their control.

Application of laws in the concerned case
This specific example shows that, Andrew and Margaret living in Queensland consulted the local travel agent to visit Gunk Island as per their needs and specifications. According to the local agent’s advice trip to the Gunk Island booked by both of them with travel agent and revealed that the tourist arrangements and recreational facilities for them in the Gunk Island is horrible and it is not in accordance with the cited expectations. The additional costs is incurred by couple apart from expected and regular expenses that sustains tourists because of the destination’s poor condition and trip plans changing and adjusting for the same. Andrew and Margaret are in position to take legal proceedings against the local agent because of the poor services in against of payment made by them. Considering the case, as the agent or the vendor has made an agreement or sale contract, in this condition the booking trips are to be cross checked with the mentioned terms and conditions. Further, Formal sales contract of agreement is considered as the travel agent has been prepared and has been agreed reciprocally and the concern parties have approved it.

Therefore, in the given provisions if it was mentioned in the contract that if suppliers fails to comply with the terms of consumer guarantee then the same will be considered as breach of contract. In this case, due diligence was to provide reasonable services as per request of customer in safe environment which was not met. This shows breach of consumer guarantee. By considering the given case scenario it can be noticed that there has been major problem to Andrew and Margaret due to breach as:

  • Andrew and Margaret have stopped from purchasing the travel plan if they had they known their accommodating does not have toilet and water facilities and vehicle access.
  • Further travel plan was substantially unfit because accommodation area was deserted and beach was not suitable for swimming and no recreational facilities in nearby areas due to which they have incurred additional costs.
  • This plan had created unsafe situation for the couple due to remoteness of area
  • Andrew and Margaret had clearly stated their expectations and paid accordingly by having faith on assurance of travel agent but delivered services were horrible and created several problems for couple.

By taking the reference of the case, Australian Competition and Consumer Commission v Dell Computer Pty Ltd (2002) 126 FCR 170 in the same price paid by Andrew and Margaret all the services were available by other travel agents. This provision makes Andrew and Margaret in position to claim the refund of tour package and additional cost incurred by them due to changing plans. Apart from the monetary refund, they can claim for medical treatment if damage has been occurred due to their poor services. As mentioned in the above provisions, it is clearly mentioned, that damages are inclusive of loss of productivity time so cost of medical treatment for Margaret and her three months’ pay will also covered in the damages as these were foreseeable in nature.

All these points shows that Andrew and Margaret can recover following remedies with the legal action

  • Refund on the entire travel plan
  • Additional cost incurred while travelling
  • Medical expenses of Margaret
  • Productivity loss to Margaret

Further, there is no protection available with supplier as per ACL to deny the described damages. Therefore, in case of denial, Andrew and Margaret can pursue the legal claim.

References
Australian competition and consumer commission. 2021. Consumers right and obligation. [Online].Available through .[Accessed on 12th May 2021].

Kariyawasam, K. and Wigley, S., 2017. Online shopping, misleading advertising and consumer protection. Information & Communications Technology Law, 26(2), pp.73-89.

Oliver, J. and Schoff, P., 2017. Agency and Competition Law in Australia Following ACCC v Flight Centre Travel Group. Journal of European Competition Law & Practice, 8(5), pp.321-328.

Pearson, G., 2018. Enforcement and Effectiveness of Consumer Law in Australia. In Enforcement and Effectiveness of Consumer Law (pp. 75-97). Springer, Cham.

Queensland Government, 2021.Using a travel agent.[Online].Available through .[Accessed on 12th May 2021]. Wan, A., 2020. Law of Commerce.

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