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CLWM4000 Business And Corporations Law: Case Study Analysis Assessment 2 Answer

Assessment 2 Information

Subject Code:CLWM4000
Subject Name:Business and Corporations Law
Assessment Title:Assessment 2
Assessment Type:Case Study Analysis -Individual Written Report 2000 Words (-/+10%)
Weighting:30 %
Total Marks:30

Your Task

Using the Case Study provided, you will need to undertake an analysis of the various legal issues that are identified, cite relevant rules applicable to the issues, explain the application of the rules to the facts/situation in the case scenario using the IRAC method.

Assessment Description

You are required to answer the following two (2) questions, based on the Case Scenario below


Peter Daniel moved permanently to Australia 5 years ago. He had always wanted to run a small business in Australia. Unfortunately, for the last five years, he had not been able to set up his business as he was very busy trying to finish his accounting degree.

This year, Peter finally decided to take the risk and open a coffee shop in Melbourne. Peter is interested in the hospitality industry. When he was doing his accounting degree, he had the opportunity to complete a short course to be certified as a coffee barista but because he was too busy finishing his degree, he decided to do this later on.

When Peter, opened his coffee shop, he advertised lattes with a large sign that read “Buy a latte for $5 dollars and get a mini brownie for free”.

One day, on her way to work Gemma, a legal practitioner who works nearby went to Peter’s coffee shop to get a coffee. Gemma wanted to try a new coffee shop in the area. She had heard from one of her colleagues that there was a new coffee shop nearby giving mini brownies free with a latte. So, she decided to give it a go. She ordered and paid for a takeaway latte for $5 dollars expecting that she will get a mini brownie for free. Peter, made the coffee extra hot without froth. He gave it to her in a take-away coffee cup.

Gemma thanked Peter for the coffee and said to Peter “I hope it’s good coffee because I am very fussy”. Peter said, “Of course it’s good you will love it”. Gemma realised that something was missing so she asked Peter for the free mini brownie. Peter told her “Sorry, we ran out of mini brownies, but we have large brownies which are $8 dollars. Gemma did not want a big brownie because she was on diet, but she thought after all, a brownie is a brownie and she can never say no to a brownie, so she paid for it.

On her way back to the office, she drank her coffee, but it was too hot. Unfortunately, she burnt her throat which made it difficult to talk. She took the lid off her coffee cup and realised that it was not a latte. Peter had given her an extra hot flat white coffee instead of a latte.

Later that morning, she was scheduled to run an important conference on Contract and Consumer Law. Unfortunately, she had to cancel the conference as it was too difficult for her to talk. The consequence of the cancellation was that she would not be able to claim her $10,000 fee. The organisers of the conference had spent $25,000 promoting the conference.

Gemma was very upset that she could not run the conference that she had been working on for a long time. Not only had she lost the $10.000 fee, but she had also had to spend $1,000 dollars in medical bills.

One week later, she received a letter of demand from the conference organisers asking her to reimburse them the $25,000 that they had spent on promoting the conference. Now Gemma is “stressed out!”

After two weeks, Gemma went back to the office and one of her colleagues started to complain about Peter’s coffee shop. Her colleague told her that the owner of that coffee shop was very dishonest. He advertises Lattes for $5 dollars with a mini brownie for free, but he only makes large brownies and he always tells his customers that he ran out of mini brownies and convinces them to buy the large brownie for $ 8 dollars. On top of this, Peter makes terrible coffee. He always makes flat white’s instead latte’s and these are always extra hot, even though the coffee cup lid says hot not extra hot.

Gemma started to get very suspicious about Peter’s coffee shop and his business practices. She still has the receipt when she bought her coffee. Gemma knows a savvy law student who understands Australian Law so she wants this student to assist her in exercising her rights under Australian Contract and Consumer Law.

QUESTION 1 (15 Marks)

  • Please advise Gemma, if she entered in a contract with Peter and explain if this contract can be invalidated under the principles of Contract Law.
  • In your answer explain the meaning of Contract and which elements need to be satisfied in order to make a simple contract and how to identify if this contract is a valid contract.
  • You will need to address all the “essential elements of a contract” including (Offer and acceptance, intention and consideration) as well as “elements of a valid contract” (Capacity, Legality, Genuine Consent, Mistake, Misrepresentation, Durres, Undue Influence and Unconscionability.
  • You will need to address and explain if Gemma can invalidate the contract. You will also need to address and explain what sort of remedies she will be entitled if she decides to void the contract.

QUESTION 2 (15 Marks)

  • Please advise Gemma, if Peter breached her Australian Consumer Law Guarantees.
  • In your answer explain to Gemma her Australian Consumer Law Guarantees under the Competition and Consumer Act 2010 (Cth) Schedule 2.
  • You need to justify your view as to whether these guarantees are available and don’t forget to explain if Gemma will be entitled to claim the remedies.
  • Explain if Peter will have to pay penalties under the Competition and Consumer Act 2010 (Cth) Schedule 2.


Question 1

  • In the given scenario, Gemma, who is a legal practitioner has heard from her colleagues about the new coffee shop of Peter which was offering a latte for $5 with free mini brownie. One day she decided to visit that coffee shop and purchased a takeaway latte for $5. She has also asked for the mini brownie which was supposed to be delivered free with the latte but Peter told her to buy the large brownie for $8 due to the non-availability of mini brownies. Gemma paid for both latte and brownie and left the shop. In this scenario, Peter has made a unilateral offer in public for purchase the latte from his shop which will also provide a mini brownie for free of cost. By acquiring the latte from his shop, Gemma has accepted such offer and with such purchase, they have developed a legal contract with each other (Goldberger, 2020). Also, a consideration and legal intention was present in this arrangement hence this is a valid contract which is legally binding on both the parties. Such contract can also be validated under the provisions of contract law.
  • As per the law of contract, an agreement must contain certain essential elements to make it legally binding on the parties. In the absence of any of these elements, the contract shall become void or voidable hence it would not be enforceable by the law. In order to create a legal contract, there must be a legal offer and acceptance which should be free from any kind of fraudulent or illegal factors. It is defined with the meaning that an agreement with all relevant features which can be enforceable by law is considered as a contract. These essential elements which makes a contract valid and legally enforceable are offer, acceptance, consideration, legal intention and capacity. In addition to that there are some elements which must not be included in the creation of a contract like fraud, undue influence, duress and misrepresentation. Also, if the parties are not having legal and common intention to enter into a contractual relationship and entered into an agreement by using any illegal mean then also the contract shall be treated as void or voidable (Bowley, 2019). The significance of all essential elements to form a legal contract is detailed hereunder.
  • For making a contract enforceable by the law, it is required to undertake all the essential factors into consideration such as-

Offer and Acceptance: An offer is an expression of willingness of a person who wants to enter into a legal relationship with another person. It can be made in either oral or written form but should not be made for an illegal purpose. Also, the acceptance given by the offeree must be free from any undue influence or duress. 

Intention of parties: The parties entering into contract shall have common intention to form a legal relationship with each other. Disinterest from either of the party in the matter of contract may create future conflicts between the parties (Bigwood, and Mullins, 2018).

Consideration: A legal contract should comprise a valid consideration to enforce the subject of contract between the parties. The consideration can be determined and paid in any valuable form such as money, share or other valuable things.

In addition to that there are certain elements which should be considered while forming a valid contract. The contractual parties are bound to undertake such elements in the creation of contract. Some other major elements which are required to be considered while formation process of a valid contract are as follows: 

  1. Legality and Capacity: For making a valid contract, the object of contract must be legal and the parties entered into contract should carry the legal capacity to create a contract. If a contract has an illegal contract or an incapable party then it can be invalidated by the aggrieved party.  
  2. Duress: It refers to the conditions such as threat, violence or force used on a person for taking his consent under a contract. If a person has entered into a contract under any illegitimate pressure then such contract can be treated as void or voidable. The duress can be performed in both physical and economic form (Saiti, & Abdullah, 2016). For instance, a person may threat another person for financial or physical harm if he does not enter into a contract with him. 
  3. Undue Influence and Unconscionability: It generally occurs when a party is in dominant position or the relationship between the parties is unequal. If either of the party among the contractual parties has influencing power over the other then undue influence may occur in the contract. Moreover, it occurs in the contract of employment where the employer carries dominating powers over the employee. If the force of undue influence has been used in a contract, then such contract can be invalidated by the plaintiff party or by the Court. Similarly, as per the doctrine of Unconscionability, if a party has inserted certain unjust terms in the contract which will result into one-sided favour for the party, who carries superior bargaining power then also the contract shall be regarded as invalid. 
  4. Misrepresentation/Fraud: These acts are performed by the contractual parties to attract another party for creating the contract. If one party to contract makes false or untrue statement in subject to the contract to influence another party, it shall be regarded as invalid for the creation of a legal contract. The act of fraud or misrepresentation is performed by the defendant party to gain advantage over another party for his own interest (Deep, Singh, & Ahmad, 2016).  Hence, a consent taken by the act of fraud or misrepresentation shall not be considered as a valid consent for the development of contract. 
  5. Mistake: It may occur when the contractual parties have entered into a contract by mistake. Sometimes, the parties formed a contract in the relation of an object which cannot be enforceable by the law or not having any existence. It shall be considered as common mistake but if a party has mistakenly entered into a contract and another party is aware with such fact then it shall be taken as intentional mistake and such contract shall not be entertained under the law.

In a relevant case of “Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83” a legal issue of misleading and deceptive conduct has been found in which the plaintiff has bought a restaurant lease from the defendant which was operating illegally by allowing the seating to large number of people in comparison to the permitted sitting. When the plaintiff found such fact, he filed a legal suit against the defendant. In that case, the Court held that representation made by a person whether in expressed or silent way is treated as a misleading or deceptive conduct. The defendant has not informed the plaintiff about the illegal operation of him which shows that he has performed a misleading conduct hence the plaintiff won over the conduct of defendant.

  • In the given scenario, Gemma can invalidate the contract held between her and Peter by arguing that Peter has made misrepresentation or a false statement for influencing the customers in his coffee shop. The contract can be held void on the basis of misrepresentation and Gemma can file a claim for the compensation against the damages occurred to her. The damages for which the claim can be made will include the medical expenses spent by her and the loss of revenue she caused due to the failure of event. 

Question 2

  • In the given case law, Gemma purchased a take away latte from the coffee shop of Peter but he delivered a flat white coffee to her which was extra hot. Also, Peter has not offered the free mini brownie to her for which he has made an offer in public. Hence, he has breached the provisions of Australian Consumer law according to which a manufacturer or service provider is obligate to provide goods and services of acceptable quality to the consumers. 
  • As per the Schedule 2 of the Competition and Consumer Act 2010 (Cth), the guarantees offered to the consumers include several provisions for guarantee like guarantee to deliver acceptable quality of goods, guarantee in relation to the fitness of goods, guarantee to supply the goods by description and guarantee to express warrantee. Similarly in case of services, the guarantee of due care and skills, fitness of services for particular purpose and guarantee to provide the services in time (Pearce, & Pinto, 2018). In addition to that a person dealing under trade or commerce must not make a false or misleading statement in the relation of goods or services. If a person has made a false statement or misrepresentation in the relation to the following conditions then the plaintiff consumer may use the remedies against the defendant party.
  • Supply of goods and services;
  • Standard, value, quality, model or use of the goods and services;
  • The existence of goods and services or claims that goods are new;
  • Assent of particular person that he has acquired the goods;
  • Testimony of goods or services by any particular person (Lewins, 2017).
  • The approval, sponsorship, performance, characteristics, use or benefits of goods and services;
  • Price or goods and services;
  • Availability of relevant facilities such as repair or maintenance of goods;
  • Origin place of the goods;
  • Needs or requirements of goods or services;
  • Effect, exclusion, warranty, right, remedy or guarantee of consumer under the goods and services.
  • In the above given case, Peter has breached the provision of guarantee by making misrepresentation about the coffee delivered to Gemma. Gemma has ordered for latte and Peter delivered a white coffee which was not meeting the requirements of Gemma as she needed a latte with brownie for reveal her anxiety (Bant, & Paterson, 2019). Therefore, Gemma can make a claim against Peter for performing the breach of guarantee provisions under Competition and Consumer Act 2010 (Cth). She can claim for the compensation against the amount of damages caused to her due to the breach performed by Peter.
  • According to the provisions of Competition and Consumer Act 2010 (Cth), if any contravention of above mentioned provisions has been made by a person then specific penalties shall be imposed on him (Pearson, 2017). The penalties can be imposed in either monetary or non-monetary form such as monetary compensation, injunction, civil liability or litigation. 
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