Advise avis as to its potential liability

Assignment Help Business Law and Ethics

Reference no: EM133200328

CONSUMER PROTECTION

Problem 1

Wiz Ltd agrees to lease premises for its retail computer business in a new shopping mall recently built and managed by Transfield Ltd. Two other computer retail outlets also open within the same shopping complex. Wiz Ltd believed that it would have only one competitor. During the negotiations, Wiz did not ask about how many competitors there would be and Transfield remained silent on the issue. Wiz now wishes to rescind the contract and/or claim damages from Transfield.

Please advise it of any rights it may have under the Australian Consumer Law. Cite relevant cases and/or statutes. Please do not refer to common law misrepresentation.

Problem 2

Hardly Normal Pty Ltd sells household appliances and electronic equipment through its various stores around Australia. In July 2017, it starts selling SuperSonic Capsule Coffee Machines. Like other capsule coffee machines on the market, SuperSonic machines use small coffee capsules to produce espresso coffee. However, the distinguishing feature of SuperSonic machines are their speed - the machines use very high pressure water to produce cups of coffee much quicker than competitor models. SuperSonic machines sell at a higher price than other coffee machines.

Alison purchases a SuperSonic machine from Hardly Normal. The machine works perfectly well for a month, but in August, the pressure seal on the machine breaks, and the very high water pressure causes the machine to explode. Luckily, Alison is not injured, and she returns the machine to Hardly Normal for a refund.

(a) Has there been a breach of the consumer guarantee of acceptable quality, under the Australian Consumer Law?

When Alison returns to the store, an employee - Meg - tells Alison that the malfunction is a ‘manufacturer's warranty issue'. Meg tells Alison that she will have to contact the SuperSonic Company - the manufacturers of the SuperSonic machine - and seek a refund directly from them, rather than from Hardly Normal.

(b) Has Hardly Normal Pty Ltd engaged in misleading or deceptive conduct, or breached any of the specific prohibitions on false or misleading representations?

THE LAW OF TORTS

Problem 3

Avis is a bunk bed manufacturer. It sells beds, with a tag "suitable for children ages 7+". Bob, a 5-year-old boy, is badly injured when he falls down from the top level of an Avis double bunk when attempting to get down from the bed. He was staying with friends. There is no ladder or guard-rail.

Advise Avis as to its potential liability under the tort of negligence. Approximately 24 minutes of writing time.

THE LAW OF BUSINESS ORGANISATIONS

Problem 4

Merle, Art and Lance are all partners in an accounting firm called "MAL Financial Services", operating in Victoria. Lance is also a director of a large company "Gardens Galore Ltd" (GG) that manufactures garden products and fertilisers. Unknown to the other partners, Lance has been regularly depositing money for GG (for various amounts) directly into MAL's trust account, withdrawing the proceeds and then wrongfully using the funds for his own personal use.

With Lance now broke and in Brazil, the Board of GG wish to bring legal action for the fraud against the remaining partners. Advise the Board. Cite relevant cases and/or statutes.

Problem 5

Rebbo is a newly appointed CEO of a large public company. She is aware that amongst various other statutory obligations and duties under the Corporations Act she has a duty under s 180 to exercise care and diligence in her role. However, she is very worried that she may be liable for breach of this duty whenever she makes a poor or unprofitable commercial decision. Please advise her. Cite relevant cases and/or statutes.

Problem 6

Michael and Andrew are brothers. They both have a keen interest in technology. They decide to form a business to pursue various technology projects, and decide that a company will be the best business structure to adopt.

They establish CathXander Pty Ltd. Michael and Andrew are its only shareholders (taking 25,000 x $1 shares each), and they are also its only directors. Michael takes a much more active role in managing the company than Andrew. Andrew relies heavily upon Michael to provide him with information about the company, particularly in relation to its finances, and its dealings with other companies. Andrew does not himself investigate the finances or transactions of CathXander Pty Ltd, other than by relying on Michael to provide him with this information.

In June 2017, Michael arranges for CathXander Pty Ltd to purchase a very large quantity of electronics components. The components are acquired from ErinElectronics Pty Ltd, a company that Michael has a significant shareholding in. The transaction generates significant profits for ErinElectronics Pty Ltd. Michael signs the contract on behalf of CathXander Pty Ltd; Andrew does not sign the contract, and is not aware of the contract, as Michael does not inform him about it.

The transaction puts CathXander Pty Ltd in a disastrous financial position. After paying for the very large order, it is no longer able to pay its debts. When Andrew eventually finds out (in August 2017), he is very worried - about his own potential responsibility, as well as about the failure of the business.

Have Michael and / or Andrew breached any of their directors' duties? Discuss the duties owed by both Michael and Andrew.

Reference no: EM133200328

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