Reference no: EM131043067 , Length: word count:1500

Right Phone Pty Ltd is a company which supplies mobile phones and network connection services to its customers. The mobile phones supplied by Right Phone are manufactured by an overseas company and imported into Australia by a local importer, Viking Pty Ltd. Jodee signed a written contract with Right Phone to purchase a mobile phone and to be connected to the mobile phone network. The cost of the phone was $100 which Jodee paid immediately and the network connection charge was $20 per month to be paid monthly. The cost of any phone calls made would be in addition to this amount. The contract was for a period of 18 months. When Jodee opened the box that the mobile phone came in, he found a piece of paper with the following statement.

"MANUFACTURER'S GUARANTEE

The manufacturer guarantees this mobile phone against defects in materials or workmanship for a period of 12 months only from the date of purchase and by using this mobile phone the purchaser agrees that the liability of the manufacturer shall be limited to the replacement or repair of any defective mobile phone during that time only."

After 13 months of normal use, Jodee's phone began to malfunction due to the use of inferior components inside the phone. It kept turning itself off after 10 minutes of continual use. When Jodie tried to recharge the phone, he received a severe electric shock which required him to go to hospital. The electric shock also caused damage to other kitchen appliances plugged into the same power point.

Jodee contacted the customer service department of Right Phone and after being on hold for half an hour eventually spoke to a service assistant to explain the problem. The service assistant stated that Right Phone was not the manufacturer and so did not give any warranty in relation to the phone. She informed Jodee that the only warranty given was by the manufacturer and that, as the 12 months had passed, Jodee had to organise and pay for the repairs to the phone and other appliances himself. She also pointed out to Jodee the following clause in the contract with Right Phone that he had signed:

"The only guarantee or warranty applicable to the purchase of any mobile phone supplied by Right Phone Pty Ltd is the guarantee or warranty given by the manufacturer and Right Phone Pty Ltd shall not be liable whatsoever for any loss or damage caused by any defective mobile phone supplied by it."

Jodee wrote to Right Phone informing it that it had supplied a defective phone and that he was no longer bound to pay any further amounts under the contract and would seek damages.

Explain in a legal problem solving format whether:

1. Jodee is correct in asserting that Right Phone is in breach of the statutory guarantee with the result that Jodee is not obliged to pay anything more under the contract and can claim damages.

2. Does Jodee have any (and if so, what) rights against Viking Pty Ltd under Part 5-4 Division 2 and/or under Part 3-5 of the Australian Consumer Law in relation to the defective phone?

Reference - Business and Corporations Law 2nd EDITION by Fitzpatrick, Symes, Veljanovski and Parker

Chapter 2- Introduction to Contract Law by David Parker

Chapter 3- The Offer to Contract by David Parker

Chapter 4- Terms of Contract and Capacity of Parties by David Parker

Chapter 5- Genuine Consent of Parties in Contract Law by David Parker.