Reference no: EM131237818 , Length: 1400 Words
1500 words - 10% leeway (excluding citations, quotes, footnotes and bibliography).
Bolt Pty Ltd (hereafter referred to as ‘Bolt’) is an Australian technology company that develops and sells consumer electronics and software. Bolt is running a sale campaign for one of their popular mobile phone models – the Bolt Worldly. The sale advertisement that is currently featured on all promotional material contains the following statements and features in large, bold text:
‘Was $899 Now $699’
‘Emits 20% less radiation than any other mobile phone on the market!’
‘Made for Australians, by Australians’
However, at the very bottom of the advertisement the words ‘Produced and manufactured in
Thailand’ can be seen in very small fine print.
In fact, two days prior to the sale, Bolt had increased the price of the Worldly to $899. At no time, other than the two days prior to the sale, was the Worldly priced at $899. Its everyday regular price is $699. There were also only three Worldly mobiles in stock and available for the price of $699. Further, Bolt had conducted no tests on the radiation and therefore had no basis on which they could make such a claim.
Rosie, an environmentally friendly, health conscious student came across the advertisement in the newspaper and visited a Bolt store the very next day with her friend Hannah. At the store Rosie approached a salesman and told him that she wanted to go ahead and purchase the Worldly at the sale price of $699. The salesman informed her that it had sold out. ‘Unfortunately the Worldly has sold out and is no longer available, however our newest model is now available and you can purchase it for only $1099’, said the salesman.
Meanwhile, Hannah approached a saleswomen named Lily, who was located in the computer section and told her:
‘I need a laptop to take to my university lectures. I have 8 hours’ worth of lectures every Tuesday so the battery needs to last at least 8 continuous hours because I can’t charge it during the lecture. My current laptop only lasts 3 hours and I am missing out on taking down important notes’.
Lily assured her that the new Bolt BP is perfect for her requirements as not only is it lightweight but the battery is designed to last 12 hours without charging. Hannah purchases the laptop for $2000.
The following Tuesday Hannah takes her new BP laptop with her to university. Within 4 hours the battery had died and the computer had turned off. Hannah was infuriated. The next day she returned to the Bolt store and explained to Matthew, the sales manager, what had happened. Unconcerned, he simply pointed to a sign at the front of the counter which read:
Dear Customers,
The guarantees under the Australian Consumer Law do not apply to electronics sold and distributed by Bolt. Further, Consumers cannot return or exchange Bolt goods purchased from the Bolt store unless, it was otherwise agreed to by Bolt, and at Bolt’s sole discretion.
As the end of financial year was approaching, Bolt wanted to rapidly increase their profit margin. They developed a strategy to increase their earnings by changing the trade agreements that were in place with their external suppliers, specifically Crisco. Crisco is a very small business that has been run by the Crisco family for the last 70 years. Crisco supplies Bolt with the battery devices that are used in all Bolt laptops. This is Crisco’s most valuable contract – it makes up 95% of their total annual profit. Bolt is aware of this. Bolt sent a letter to Crisco which stated:
‘We are in market for a new battery supplier as we believe you are too expensive. However, if you agree to pay a monthly rebate to Bolt we will not only continue our supply relationship with you but we will increase the quantity of our orders by up to 20% annually. This monthly rebate figure will be determined by Bolt solely. Further, should you agree to the above, you also agree that the supply agreement can be terminated at anytime at the sole discretion of Bolt. A decision is required by you within 24 hours’.
There was no basis for imposing the rebate as Bolt did not believe Crisco’s prices were too expensive, nor did they intend to terminate their relationship. Crisco contacted Bolt seeking further information and a chance to negotiate the terms set out in the letter. Bolt refused to provide this information and to negotiate the terms. This left Crisco distressed and so they immediately agreed to the terms. In fact, the new terms are likely to see Crisco unable to sustain their business.
Hannah and Crisco want to bring an action against Bolt under the Australian Consumer Law.
Advise whether:
1. The Bolt Worldly advertisement is in contravention of any provisions under the ACL. (500 words)
2. Bolt is in breach of the guarantee provisions under the ACL. What rights or remedies (if any) are available to Hannah? (500 words)
3. Bolt has engaged in any prohibited conduct under the ACL in relation to their dealings with Crisco? (500 words)