Law 10013 Commercial Law Take Home Assessment Task (TAT): breaches of consumer law

Law 10013 Commercial Law Take Home Assessment Task (TAT): breaches of consumer law 150 150 Affordable Capstone Projects Written from Scratch

Referencing Style:  Please use the AGLC 3 referencing style for all case and legislative references. The tool link is in the Reference Resources folder of the subject Web site.

Question 1:

John, a young landscape gardener who has just started his own business, wishes to obtain waste disposal services for his business.  He conducts the business through a company, John’s Landscape Design Pty Ltd (JLD).  He is its only worker.  JLD has an annual profit of $50,000 per year.  At the beginning of 2017, he contacted Expert Garbologists Pty Ltd (EP) to provide recycling, general garbage and green waste collection services for his business.

Before JLD agrees to engage EP, the EP sales representative said to John:

“John, most people lock in a 2-year contract in order to prevent them from running the risk of not being able to get waste management services. You also avoid an annual increase in fees.

This industry works like this: there are only a couple of operators, and there is a waiting list for services. I know of several businesses like yours that have been caught without proper waste disposal services.  They have been charged with By Law offences and copped a stiff fine from their local Council.  “

He named 2 other competitors of EP, and said:

“EP’s prices are significantly lower on the fixed fee and have a lower rate for the variable component of the service. In fact, John, why don’t you take advantage of the free offer we have now – 1 month service free? That way you can check out our service for yourself.

John takes the deal.

The contract provided for the provision of 3 skips (Bins) to be located at John’s business premises, which were collected each month and then returned empty within 24 hours.

The 2 year contract provided for a fixed monthly fee of $100 and then an additional monthly variable fee based on the assessed weight of waste collected each month over and above the weight of one small skip. (A typical small skip, when empty, weighs about 250 kilograms).

There was a $500 deposit required to be paid on signing up which was refunded on termination according to the terms of the agreement.

The agreement was a printed form with administrative details on the front page, which John completes and signs.  On the reverse side, EP’s standard terms are set out.  Relevant clauses were:

  1. This is a 2-year contract between EP and you (user).
  2. This agreement gives EP exclusive rights to remove waste from the user’s premises.
  3. At any time over the course of the contract period, EP may increase the fixed monthly fee by 10% without giving notice to the user.
  4. Unless the user contacts EP in writing 6 months prior to the termination of the agreement, the contract will be renewed on the same terms for a further period of 2 years.
  5. There is an administration service fee for early termination of this contract equal to the remaining period of the agreement. If at the time of termination the user has outstanding payments due, the contract cannot be terminated until those debts have been paid. During this time, fixed fees will be charged and there will be an equipment rental fee for the skips located on the user’s premises.
  6. EP may terminate this agreement at any time, by giving the user 30 days’ notice. On termination, the user must pay EP the full monthly fee from the date of the notice of termination to its expiry.

 

JLD received its first invoice in January 2017, which included the deposit for $500 and paid it promptly.

Some 6 months later, John suffers a back injury, which prevents him working for 3 months. He contacts EP to suspend the service for this period.

EP refuses, pointing to the terms of the agreement. Further, they insist on his continuing the agreement and pay the remaining 15 months fixed fees on his contract, and the rental fee for the skips on his business premises. They point out that he already has now 3 months of outstanding fees comprising fixed and variable fees.  They commence debt recovery proceedings in the Magistrates’ Court for the amount.

This information causes John such anxiety knowing he cannot work for a while that he is hospitalised.  John did not realise he had signed up to the 2 year contract.  Due to his condition, he is not able to make any decision on the contract further nor pay any more fees.

Finally, in January 2018, John decides to sell the business but the only offer is for a fraction of its true worth and dependent on changing the waste management services operator.

It is now September 2018. EP has renewed his contract for another 2 years from January 2019 – 2021. They point to clause 5 in the agreement and say they will only cancel this renewal on full payment of all outstanding debts. They also inform John he has forfeited his original deposit.

John now learns that EP’s variable cost services are almost 25% higher than other competitors in his area, and the information about the Council penalties was false.

 

  1. Put yourself in the shoes of the Australian Consumer and Competition Commission. What steps would you advise that it take in this situation to remedy any breaches of consumer law in this scenario?

(10 marks)


 

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