The University of Newcastle FACULTY OF BUSINESS AND LAW
Semester 1, 2019
Business Law (PACC 6009)
Problem Based Assignment, Bathurst Street Campus
Instructions to Students:
Assignments will be marked on the following criteria:
ASSIGNMENT PROBLEM (20%)
You act for Handy Hardware Supplies Pty Ltd (HH), an Australian based company which supplies computer hardware products through its website on the internet. On Tuesday 5 March 2019, Zach Coventry, a professional gamer, visited HH’s website in search of a specific type of personal gaming computer (PC). Zach was due to compete in a major online (E-sports sponsored) gaming competition on 29 March 2019 and Zach’s current gaming PC had been running slowly and/or failing intermittently. Not willing to risk equipment failure at the upcoming event, Zach needed to immediately find and purchase another gaming PC. The competition rules stipulate that in circumstances where competitors replace or upgrade their PC, in order to be eligible to compete, a gamer is required to provide the competition’s organisers with a certificate from their supplier outlining the details of any upgrade of their computer’s motherboard, Central Processing Unit (CPU) and/or Graphics Card.
It was the first time Zach had been on HH’s website. After seeing the words: “If you purchase from us, your satisfaction is guaranteed”, on HH’s homepage, Zach decided to purchase a particular Gaming PC from HH for the price of $4,599.00. Immediately before doing so, he rang HH and spoke to a representative of the company who talked Zach through the online purchase process. Zach told the sales representative that it was vital that the PC be delivered on or before 10 March, so he had sufficient time to prepare for the upcoming competition. Before hanging up, the sales representative told Zach that HH specialised in the production and supply of the latest specialized ‘high end’ custom gaming parts and machines and that in her opinion, the gaming PC Zach had chosen would meet all of his requirements.
After ending the call, Zach saw the ‘confirm purchase’ page on the screen where the following information appeared:
Item: Gaming Desktop PC (order no. 964904535)$4,599.00 (incl GST) Delivery details:Mr Zach Coventry
69A Ridges Road PARRAMATTA NSW
Promised delivery date:08 March 2019 I have read the terms and conditions and agree to them
“Terms and Conditions” (click here)
YES, PROCEED TO PAYMENT NO
Zach was in a rush and so simply clicked “YES” followed by “PROCEED TO PAYMENT”.
When the Gaming PC was delivered to Zach on 22 March 2019, he found that its operating speed was not satisfactory. This was due to the fact that the purchased computer contained a standard, common (not ‘high end’) CPU. Zach was not happy and given the fact that the competition was now only days away, he placed the central CPU (that he took out of the delivered HH PC unit) into his son’s computer before ringing HH to complain. After some discussion regarding Zach’s requirements, he was told that HH could send him an alternative CPU for the PC for an additional cost of $3,00.00. The alternative CPU was of suitable ‘gaming grade’ but much more expensive than advertised with other available suppliers. When Zach raised this, he was told that if he did not purchase the CPU from HH they would not provide the necessary certificates for the balance of the other computer parts (eg, the motherboard and graphics card) delivered with the new PC. Zach needed the certificate for the new motherboard and graphics card to be eligible to compete and so felt compelled to purchase the CPU from HH.
Zach went on to compete in the competition but failed to qualify for the finals because of his inability to properly prepare and his stressed state of mind caused by what had occurred in the leadup to the competition.
When Zach later contacted HH to further complain about the first delivered motherboard and treatment he had received, he threatened to sue HH if HH did not agree to refund the $4,599.00 and $3,000.00 paid to HH. Zach also wants monetary compensation for stress and disappointment caused by the whole experience.
The manager of HH told Zach that the company is not liable and referred him to the following clause contained in the “Terms and Conditions” page of their website:
Clause 7: The customer agrees that Handy Hardware Supplies Pty Ltd shall not under any contract be liable for any loss, harm or injury caused to the customer by any act or omission of Handy Hardware Supplies Pty Ltd.
Zach claims he did not see clause 7 when first placing the order and so it does not apply to him.
Handy Hardware Supplies Pty Ltd seeks your advice about whether Zach is likely to succeed in his proposed legal claim(s) against them and whether he is legally entitled to the remedies he seeks from the company.
NOTE: For the purposes of this assignment, students are to refrain from discussing any applicable legislation (including the Sale of Goods Act) or any consumer protection law (such as the Australian Consumer Law).
The main issue that has been highlighted in this case is, whether Zach is likely to succeed in his proposed legal claim(s) against them.
Whether he is legally entitled to the remedies he seeks from the company?
The contract has been made between two parties named Handy Hardware Supplies Pty Ltd and Zach. The contract is binding on both parties. The contract has various essentials that are required to be satisfied for the valid contract. These below are the essential elements which needs to be satisfied by both parties before entering into the contract.
An offer is the state of expression that has been made by the party in accordance with the stated terms in the case Australian Woolen Mills v The Commonwealth. It is said in the case that the offer has been made and the party is willing to negotiate on the discussed terms it is called invitation to the treat. The terms that are given till the other party will accept those terms.
Terms & conditions
The terms and conditions are the part of the offer made to the party in which various clauses and condition had been given and it is on the discretion of the other party either to make the acceptance of these conditions or negotiate the condition. On acceptance of these conditions, the contract becomes valid and the party cannot revoke the contract.
In the case of Associated Newspaper Ltd v Bancks, it was held that the court had considered a term was a condition that should be entitled in termination of the event of a breach. In the case, the plaintiff asked the company to present the comic in the form of the page of the defendant newspaper. But the company had alleged that plaintiff had repeatedly broken the contract for undertaking to publish the comic on the front page. The court had found that the promise had been made by the company to publish the comics in the newspaper but it was the condition to publish on the front page. Therefore the court had found that the defendant can revoke the contract.
In the case of L'Estrange v F Graucob case, the signature of the contracting party’s issues was held. In the given case, the court ruled that the parties when signed a document they record their agreement and then they will be bound by the terms of the contract. It does not matter whether the party had read the document or not. The signing of a document means that all the terms had been read by the part and they are bound by the contract. They cannot revoke the contract in these cases . However, there are some limitations that are:-
However, the scenario will be changed if the party had not signed the document and he is only bound by the terms that he is aware of.
Acceptance occurs when the person agrees to the offer that has been made to him. It can be done by way of words or through conduct. If the contract had been accepted by the party which means he agrees with the terms of the contract. If the acceptance had been given by communication and the sufficient communication had been made then it is deemed to be accepted the offer. The acceptance can be made on emails, telephone, and postal acceptance rule.
The consideration is the important part of the contract as consideration, it means that the price paid simply for the promise. The price should be in the form of money and it should be in accordance with the promise. The consideration is the amount of money that has been paid in return of promise. It is the type of acceptance of the offer and the contract is deemed to been executed.
Intention to create legal relation
To form a contract it is necessary that both the parties have the intention for creating an agreement. The legal relations can be given by giving consent, consideration, accepting the offer terms. The intention to create legal terms is an important part of the organization.
Capacity to enter into the contract
The parties must have been attained a cartage age to enter a contract. According to the Australian contract Law, the person must have attained the age of 18 to enter into a legal relationship. The parties do not have an unsound mind, nor prohibited by law .
There are several details have been given as below which reflects the facts of the cases. This will be helpful in identifying the discrepancies made by the parties to the contract.
From the scenario, it can be said that there is a problem between the parties regarding the contractual obligation. As rule suggests that there is the offer been made by the company and the customer accepts the offer than the contract becomes complete. But in certain cases where the offer was not clear and the terms are not clear that the party can revoke from the contract.
It was established in the case Associated Newspaper Ltd v Bancks that the condition in the contract made will not necessary that it makes a contract. The party has the right to revoke from the contract. There is a certain condition that has been provided which are necessary for the parties to read and accept. In the case study, Zach in a hurry had not read the clauses and that clearly states the company would not be responsible for any act.
In the case, L'Estrange v F Graucobit, it was established that if the person signs the contract that means he had read all the clauses mentioned in it but it was also mentioned that if not signed than the clauses he read will only be accepted. Zach had not read the clause 7 and that means he has the right to refund. The terms page does not show acceptance if it shows that Zach cannot claim the amount.
From the scenario, the company has to prove that Zach had read all the clauses and he had also talked with the executive who has also guaranteed him that his all requirements will be fulfilled. It means that the company cannot revoke from the contract.
He has also paid the amount that means the consideration is there and it all essentials had met by Zach in this case study. Therefore, it could be inferred that in this case Zach entered into the legal contract with the Company and met with all the applicable requirements and legal laws. This reflects that if any mistakes and wrongdoing made by the company in this contract then Zach will be liable to take refund from the company and if in case it is not given then he could take legal action for the same.
It is found that a contract is legally binding on the parties to the contract when there all the legal implications and rules to make contract has been complied with by both the parties. In this case, the company fails to disclose the material information to the Zach which resulted in failure to comply with the contract rules and regulation. After assessing the case, and given details, it could be inferred that Zach was not disclosed complete information before entering into the contract therefore, he would be liable to take the refund from the company. Nonetheless, it has been found that the company is liable to refund the amount to Zach for the stress and pain given to him. Therefore, it is inferred that Zach could easily ask for the refund or if a refund is not given to him then he could easily seek other remedies to take back his money from the company.