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CONSIDERATION… CONSIDERATION… . . the price paid for the price paid for the promise the promise

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Page 1: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

CONSIDERATICONSIDERATION….ON….

the price paid the price paid for the promisefor the promise

Page 2: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Benefit/detrimentBenefit/detriment““Inconvenience sustained by one party at Inconvenience sustained by one party at the request of the other is enough to the request of the other is enough to create a consideration. I think, therefore, create a consideration. I think, therefore, that it is enough that [Mrs Carlill] took that it is enough that [Mrs Carlill] took the trouble of using the smoke ball. But I the trouble of using the smoke ball. But I think also that the [Carbolic Smoke Ball think also that the [Carbolic Smoke Ball Company] received a benefit from this Company] received a benefit from this user, for the use of the smoke ball was user, for the use of the smoke ball was contemplated by [them] as being contemplated by [them] as being indirectly a benefit to them, because the indirectly a benefit to them, because the use of the smoke balls would promote use of the smoke balls would promote their sale”.their sale”.CarlillCarlill v v Carbolic Smoke BallCarbolic Smoke Ball Bowen LJ at 271Bowen LJ at 271

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BargainBargain A promise asked for, or relied A promise asked for, or relied

upon, as an aspect of a bargain upon, as an aspect of a bargain between the parties to the between the parties to the contractcontract Dunlop Pneumatic Tyre Dunlop Pneumatic Tyre

CompanyCompany v v Selfridge & Selfridge & CompanyCompany [1915] AC 847[1915] AC 847

Australian Woollen Mills Australian Woollen Mills v v The The CommonwealthCommonwealth (1954) 92 CLR 424(1954) 92 CLR 424

Page 4: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

““An act or forbearance An act or forbearance of one party, or promise of one party, or promise therof, is the price for therof, is the price for which the promise of the which the promise of the other is bought, and the other is bought, and the promise thus given for promise thus given for value is enforceable”value is enforceable”

Sir Frederick Pollock, adopted by theSir Frederick Pollock, adopted by the House of Lords inHouse of Lords in Dunlop Dunlop

Pneumatic Tyre Company Ltd v Selfridge & CompanyPneumatic Tyre Company Ltd v Selfridge & Company Ltd at 855Ltd at 855

Page 5: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

““Between the statement or Between the statement or announcement, which is put forward as announcement, which is put forward as an offer capable of acceptance by the an offer capable of acceptance by the doing of an act, and the act which is put doing of an act, and the act which is put forward as the executed consideration forward as the executed consideration for the alleged promise there must for the alleged promise there must subsist, so to speak, the relation of a subsist, so to speak, the relation of a quid pro quo…The necessary connection quid pro quo…The necessary connection or relation between the announcement or relation between the announcement and the act is provided if the inference is and the act is provided if the inference is drawn that [the promisor] has requested drawn that [the promisor] has requested [the promise] to [do the act].”[the promise] to [do the act].”

Australian Woollen Mills v The Commonwealth at 456-7Australian Woollen Mills v The Commonwealth at 456-7

Page 6: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

ConsiderationConsideration

Must be bargained forMust be bargained for Must be performed in return Must be performed in return

for a promise – for a promise – quid pro quoquid pro quo Is a required element in the Is a required element in the

formation of a contract formation of a contract except deedsexcept deeds

Page 7: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Without consideration a Without consideration a promise cannot be promise cannot be enforced:enforced:

SOSO, only a party providing , only a party providing consideration can enforce a consideration can enforce a promisepromise

Consideration must move from Consideration must move from the promiseethe promisee

But, it need not move to the But, it need not move to the promisorpromisor

Joint promissee exception- Joint promissee exception- CoullsCoulls v v Bagots Executor and Trustee CoBagots Executor and Trustee Co (1967) 119 (1967) 119 CLR 460CLR 460

Page 8: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Dunlop Pneumatic Tyre Dunlop Pneumatic Tyre CompanyCompany v v Selfridge & Selfridge &

CompanyCompany [1915] AC 847[1915] AC 847“… “… in the law of England certain in the law of England certain principles are fundamental. One is that principles are fundamental. One is that only a person who is a party to a only a person who is a party to a contract can sue on it. Our law knows contract can sue on it. Our law knows nothing of a jus quaesitum tertio nothing of a jus quaesitum tertio arising by way of contract. Such a right arising by way of contract. Such a right may be conferred by way of property, as, may be conferred by way of property, as, for example, under a trust, but it cannot for example, under a trust, but it cannot be conferred on a stranger to a contract be conferred on a stranger to a contract as a right to enforce the contract in as a right to enforce the contract in personam. A second principle is that if personam. A second principle is that if a person with whom a contract not a person with whom a contract not under seal has been made is to be able under seal has been made is to be able to enforce it consideration must have to enforce it consideration must have been given by him to the promisor or to been given by him to the promisor or to some other person at the promisor’s some other person at the promisor’s request.” request.” Viscount Haldane LC at 853Viscount Haldane LC at 853

Page 9: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Past consideration is not Past consideration is not good considerationgood consideration

Consideration may beConsideration may be executoryexecutory executedexecuted BUT, not past.BUT, not past.

If what is done is not done as a If what is done is not done as a reaction to the promise, it cannot reaction to the promise, it cannot be good considerationbe good consideration Roscorla Roscorla v v ThomasThomas (1842) 3QB 234(1842) 3QB 234

EastwoodEastwood v v KenyonKenyon (1840) 113 ER 482(1840) 113 ER 482

Page 10: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

PRIVITY OF CONTRACTPRIVITY OF CONTRACT

Only parties to a Only parties to a contract may enforce, or contract may enforce, or be bound by, a contractbe bound by, a contract

Page 11: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Dunlop Pneumatic Tyre Co Dunlop Pneumatic Tyre Co LtdLtd v v Selfridge & CoSelfridge & Co

““My lords, in the law of My lords, in the law of England certain principles England certain principles are fundamental. One is are fundamental. One is that only a person who is a that only a person who is a party to a contract can sue party to a contract can sue on it.”on it.”

Lord Haldane at 853Lord Haldane at 853

Page 12: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

CoullsCoulls v v Bagots Bagots Executor Executor

““It must be accepted that, It must be accepted that, according to our law, a person according to our law, a person not a party to a contract may not not a party to a contract may not himself sue upon it so as directly himself sue upon it so as directly to enforce its obligations. For to enforce its obligations. For my part, I find no difficulty or my part, I find no difficulty or embarrassment in this embarrassment in this conclusion. Indeed I would find conclusion. Indeed I would find it odd that a person to whom no it odd that a person to whom no promise was made could himself promise was made could himself in his own right enforce a in his own right enforce a promise made to another”.promise made to another”.Barwick CJ at 478Barwick CJ at 478

Page 13: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Cases on PrivityCases on Privity

TweddleTweddle v v AtkinsonAtkinson [1861] 121 ER 762[1861] 121 ER 762

BeswickBeswick v v BeswickBeswick

[1966] 1 Ch 538.[1966] 1 Ch 538.

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SummarySummaryFor a contract to be formed there must For a contract to be formed there must

be:be: An An OfferOffer Which has been Which has been AcceptedAccepted by parties who by parties who intended to create intended to create

legal relationslegal relations And bargained or paid for their mutual And bargained or paid for their mutual

promises in the form of promises in the form of ConsiderationConsideration And only these parties may enforce theAnd only these parties may enforce the

contractual promisescontractual promises (Privity) (Privity)

Page 15: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Contents of Contents of the Contractthe Contract

TermsTerms

Page 16: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Term or representation?Term or representation?

Objective test of intentionObjective test of intention ““reasonable man”reasonable man”

Hospital Products LtdHospital Products Ltd v v United States Surgical CorpUnited States Surgical Corp (1984) (1984) 156 CLR 41156 CLR 41

Indicative factors includeIndicative factors include

1.1. Importance of statementImportance of statement

2.2. Time between statement and Time between statement and contractcontract

3.3. Special knowledge or skill or access Special knowledge or skill or access to truth of one partyto truth of one party

4.4. Inclusion of statement in any Inclusion of statement in any subsequent documentsubsequent document Ellul &Ellul Ellul &Ellul v v OakesOakes (1972) 3 SASR 377 (1972) 3 SASR 377

Page 17: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Term or representationTerm or representation

Oscar Chess Ltd Oscar Chess Ltd v v WilliamsWilliams[1957] 1 AllER 325[1957] 1 AllER 325

Dick Bentley ProductionsDick Bentley Productions v v Harold Smith Harold Smith Motors Motors [1965] 2 AllER 65[1965] 2 AllER 65

Page 18: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Dick Bentley case:Dick Bentley case:““[I]t seems to me that if a representation is [I]t seems to me that if a representation is made in the course of dealings for a made in the course of dealings for a contract for the very purpose of inducing contract for the very purpose of inducing the other party to act upon it, and it actually the other party to act upon it, and it actually induces him to act upon it by entering into induces him to act upon it by entering into the contract, that is prima facie ground for the contract, that is prima facie ground for inferring that it was intended as a [term of inferring that it was intended as a [term of the contract]. …But the maker of the the contract]. …But the maker of the representation can rebut this inference if he representation can rebut this inference if he can show…that he was in fact innocent of can show…that he was in fact innocent of fault in making it, and that it would not be fault in making it, and that it would not be reasonable in the circumstances for him to reasonable in the circumstances for him to be bound by it.” be bound by it.” LordLord Denning MR at 67Denning MR at 67

Page 19: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

What kind of term?What kind of term?A term may be either:A term may be either: a a ConditionCondition

Essential termEssential term Breach – entitlement to terminate/or Breach – entitlement to terminate/or

damagesdamages a a WarrantyWarranty

Ancillary termAncillary term Breach – damages, but no terminationBreach – damages, but no termination

an an Innominate term Innominate term Intermediate termIntermediate term Breach – termination if sufficiently Breach – termination if sufficiently

seriousserious

Page 20: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Test: how essential was the Test: how essential was the promise?promise?““The question whether a term in a contract The question whether a term in a contract

is a condition or a warranty, i.e. an is a condition or a warranty, i.e. an essential or a non-essential promise, essential or a non-essential promise, depends upon the intention of the parties depends upon the intention of the parties as appearing in or from the contract. The as appearing in or from the contract. The test of essentiality is whether it appears test of essentiality is whether it appears from the general nature of the contract from the general nature of the contract considered as a whole, or from some considered as a whole, or from some particular term or terms, that the promise particular term or terms, that the promise is of such importance to the promisee that is of such importance to the promisee that he would not have entered into the contract he would not have entered into the contract unless he had been assured of a strict, or a unless he had been assured of a strict, or a substantial, performance of the promise, as substantial, performance of the promise, as the case may be, and that this ought to the case may be, and that this ought to have been apparent to the promisor….have been apparent to the promisor…. Jordan CJ inJordan CJ in Tramways Advertising v Luna Park Tramways Advertising v Luna Park

Page 21: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Tramways Advertising Tramways Advertising

Pty LtdPty Ltd v v Luna ParkLuna Park

(NSW) Ltd (1938) NSWLR (NSW) Ltd (1938) NSWLR 633633

Associated Newspapers LimitedAssociated Newspapers Limited v v BanckBanckss (1951)(1951) 83 CLR 32283 CLR 322

Page 22: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

WarrantyWarranty

BettiniBettini v v GyeGye (1876) 1QBD 183 per Blackburn J said at (1876) 1QBD 183 per Blackburn J said at 188:188:

““[a condition is] a stipulation [a condition is] a stipulation [which] goes to the root of the [which] goes to the root of the matter, so that a failure to perform matter, so that a failure to perform it would render the performance of it would render the performance of the rest of the contract a thing the rest of the contract a thing different in substance from what different in substance from what the defendant has stipulated for.”the defendant has stipulated for.”

Page 23: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Innominate terms: Innominate terms: Hong Hong Kong FirKong Fir

““There are, however, many contractual There are, however, many contractual undertakings of a more complex character which undertakings of a more complex character which cannot be categorised as being “conditions” or cannot be categorised as being “conditions” or “warranties”….Of such undertakings, all that can “warranties”….Of such undertakings, all that can be predicated is that some breaches will, and be predicated is that some breaches will, and others will not, give rise to an event which will others will not, give rise to an event which will deprive the party not in default of substantially the deprive the party not in default of substantially the whole benefit which it was intended that he should whole benefit which it was intended that he should obtain from the contract; and the legal obtain from the contract; and the legal consequences of a breach of such an undertaking, consequences of a breach of such an undertaking, unless provided for expressly in the contract, unless provided for expressly in the contract, depend on the nature of the event to which the depend on the nature of the event to which the breach gives rise and do not follow automatically breach gives rise and do not follow automatically from a prior classification of the undertakings as a from a prior classification of the undertakings as a “condition” or a “warranty”.” “condition” or a “warranty”.” Diplock LJ 69/70Diplock LJ 69/70

Page 24: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Implied termsImplied terms

Terms may be implied by:Terms may be implied by:

Trade usage or customTrade usage or custom

StatuteStatute

Courts, based on facts and Courts, based on facts and circumstances of contractcircumstances of contract

Page 25: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Austral Pacific Group Ltd Austral Pacific Group Ltd (in liq)(in liq) v v Airservices Airservices Australia Australia (2000) 203 CLR 136(2000) 203 CLR 136

“…“…statutorily created statutorily created and take effect by legal and take effect by legal fiction, namely that the fiction, namely that the parties make a contract parties make a contract including the relevant including the relevant obligations.”obligations.”

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Terms implied by Terms implied by StatuteStatute

Page 27: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Revise: How to read a Revise: How to read a statutestatuteE.g. E.g. TRADE PRACTICES ACT 1974 - TRADE PRACTICES ACT 1974 -

SECT 52 SECT 52

Misleading or deceptive conductMisleading or deceptive conduct    

                        (1)  A (1)  A corporationcorporation shall not, in shall not, in trade or commercetrade or commerce, , engage in engage in conductconduct that is misleading or that is misleading or deceptive or is likely to mislead or deceptive or is likely to mislead or deceive. deceive.

                        

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Elements of a section:Elements of a section:

CorporationCorporation In trade or commerceIn trade or commerce Engage in conductEngage in conduct Misleading or deceptiveMisleading or deceptive

Defined by legislation (definitions Defined by legislation (definitions section) or by courts (case law.)section) or by courts (case law.)

Page 29: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

LegislationLegislation

Sale of Goods Act 1923 Sale of Goods Act 1923 (NSW)(NSW) Contract for the Contract for the salesale of of goods goods

(not services)(not services) Trade Practices Act 1947Trade Practices Act 1947 (Cth) (Cth)

Contract for Contract for supplysupply of of goodsgoods or or servicesservices by a by a corporationcorporation to a to a consumerconsumer

Page 30: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Sale of Goods ActSale of Goods Act

6 Sale and agreement to sell 6 Sale and agreement to sell

(1) A contract of sale of goods is a (1) A contract of sale of goods is a contract whereby the seller transfers contract whereby the seller transfers or agrees to transfer the property in or agrees to transfer the property in goods to the buyer for a money goods to the buyer for a money consideration called the price. There consideration called the price. There may be a contract of sale between may be a contract of sale between one part owner and another. one part owner and another.

Page 31: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Trade Practices Act – Trade Practices Act – Part V Division 2 Part V Division 2 Conditions and Conditions and Warranties in Warranties in

Consumer Consumer TransactionsTransactions

e.g. - s 70 Supply by descriptione.g. - s 70 Supply by description    (1)  Where there is a (1)  Where there is a contractcontract for the for the

supply supply (otherwise than by way of sale (otherwise than by way of sale by auction) by a by auction) by a corporationcorporation in the in the course of a business of course of a business of goodsgoods to a to a consumerconsumer … …

Page 32: CONSIDERATION …. the price paid for the promise. Benefit/detriment “Inconvenience sustained by one party at the request of the other is enough to create

Consumer s4B TPAConsumer s4B TPA          (1)  … (a)  a person shall be …a consumer if, and only if: (1)  … (a)  a person shall be …a consumer if, and only if:

                        (i)  the price of the goods did not exceed the prescribed (i)  the price of the goods did not exceed the prescribed amount; [$40,000]or amount; [$40,000]or

                      (ii)  where that price exceeded the prescribed amount--(ii)  where that price exceeded the prescribed amount--the goods were of a kind ordinarily acquired for personal, the goods were of a kind ordinarily acquired for personal, domestic or household use or consumption or the goods domestic or household use or consumption or the goods consisted of a commercial road vehicle; consisted of a commercial road vehicle;

                                                        and the person did not acquire the goods, or and the person did not acquire the goods, or hold himself or herself out as acquiring the goods, for the hold himself or herself out as acquiring the goods, for the purpose of purpose of re‑supply or for the purpose of using them up or transforming re‑supply or for the purpose of using them up or transforming them, in trade or commerce, in the course of a process of them, in trade or commerce, in the course of a process of production or manufacture or of repairing or treating other production or manufacture or of repairing or treating other goods or fixtures on land; and goods or fixtures on land; and

                                          (b)  a person shall be taken to have acquired (b)  a person shall be taken to have acquired particular services as a consumer if, and only if: particular services as a consumer if, and only if:

                                            (i)  the price of the services did not exceed the (i)  the price of the services did not exceed the prescribed amount; or prescribed amount; or

                                          (ii)  where that price exceeded the prescribed (ii)  where that price exceeded the prescribed amount--the services were of a kind ordinarily acquired for amount--the services were of a kind ordinarily acquired for personal, domestic or household use or consumption. personal, domestic or household use or consumption.

                                                                                                                                                                                

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Corporation – extended Corporation – extended definitiondefinition

s6 TPA Corporation

foreign, trading or financial corporation Persons

in trade or commerce between either of the States or territories or between Australia and places outside Australia

using post or telephonic services active within a territory

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s18 s18 Sale of Goods Act Sale of Goods Act 19231923 (NSW) (NSW)

Where there is a contract for the sale Where there is a contract for the sale of goods by description, there is an of goods by description, there is an implied condition that the goods shall implied condition that the goods shall correspond with the description; and correspond with the description; and if the sale be by sample as well as by if the sale be by sample as well as by description, it is not sufficient that description, it is not sufficient that the bulk of the goods corresponds the bulk of the goods corresponds with the sample if the goods do not with the sample if the goods do not also correspond with the description. also correspond with the description.

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Correspondence with Correspondence with descriptiondescription

SGA s18: Sale by description SGA s18: Sale by description

Where there isWhere there is a a contractcontract for the for the sale ofsale of goodsgoods by by descriptiondescription, , there is an implied there is an implied conditioncondition that the that the goods shall correspondgoods shall correspond

with the descriptionwith the description; …; …

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Sale by description?Sale by description?

Ashington Piggeries Ashington Piggeries vv

Christopher HillChristopher Hill [1971] 1AllER847[1971] 1AllER847

GrantGrant v v Australian Knitting Australian Knitting MillsMills

(1936) 54 CLR 49(1936) 54 CLR 49

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Ashington Piggeries Ashington Piggeries casecase::

Viscount Dilhorne:Viscount Dilhorne:

““Did the presence of DMNA Did the presence of DMNA merely affect the quality of the merely affect the quality of the herring meal or did it make a herring meal or did it make a difference in kind? If the former, difference in kind? If the former, then there was no failure to then there was no failure to deliver in accordance with the deliver in accordance with the description. If the latter, there description. If the latter, there was.”was.”

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TRADE PRACTICES ACT TRADE PRACTICES ACT 19741974(Cth)- s 70 Supply by (Cth)- s 70 Supply by

descriptiondescription(1)  (1)  Where there is a contract for the Where there is a contract for the

supply (otherwise than by way of sale by supply (otherwise than by way of sale by auction) by a corporation in the course auction) by a corporation in the course of a business of goods to a consumer by of a business of goods to a consumer by description, there is an implied description, there is an implied condition that the goods will correspond condition that the goods will correspond with the description, and, if the supply is with the description, and, if the supply is by reference to a sample as well as by by reference to a sample as well as by description, it is not sufficient that the description, it is not sufficient that the bulk of the goods corresponds with the bulk of the goods corresponds with the sample if the goods do not also sample if the goods do not also correspond with the description. correspond with the description.

                        

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Fitness for purposeFitness for purposeSGA s19(1) Fitness for purposeSGA s19(1) Fitness for purpose(1)(1) Where the buyer expressly or by Where the buyer expressly or by

implication makes known to the seller the implication makes known to the seller the particular purpose for which the goods particular purpose for which the goods are required so as to show that the buyer are required so as to show that the buyer relies on the seller’s skill or judgment, relies on the seller’s skill or judgment, and the goods are of a description which and the goods are of a description which it is in the course of the seller’s business it is in the course of the seller’s business to supply (whether the seller be the to supply (whether the seller be the manufacturer or not), there is an implied manufacturer or not), there is an implied condition that the goods shall be condition that the goods shall be reasonably fit for such purpose: reasonably fit for such purpose: Provided that in the case of a contract for Provided that in the case of a contract for the sale of a specified article under its the sale of a specified article under its patent or other trade name there is no patent or other trade name there is no implied condition as to its fitness for any implied condition as to its fitness for any particular purpose. particular purpose.

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Purpose made knownPurpose made known?? Obvious purpose?Obvious purpose?

Underpants – Underpants – GrantGrant v v Australian Knitting MillsAustralian Knitting Mills

Reliance on seller’s Reliance on seller’s judgementjudgement??

Ashington PiggeriesAshington Piggeries v v

Christopher HillChristopher Hill..

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Course of seller’s Course of seller’s business?business? David Jones LtdDavid Jones Ltd v v WillisWillis

(1934) 52 CLR 110 (1934) 52 CLR 110

Ashington PiggeriesAshington Piggeries v v Christopher Christopher HillHill

Not trade name?Not trade name? Reliance, not reputationReliance, not reputation

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Trade Practices Act Trade Practices Act s71(2)s71(2)Implied undertakings as to quality or fitnessImplied undertakings as to quality or fitness

            Where a corporation supplies … goods to a Where a corporation supplies … goods to a consumer in the course of a business and the consumer in the course of a business and the consumer, expressly or by implication, makes consumer, expressly or by implication, makes known to the corporation or to the person by known to the corporation or to the person by whom any antecedent negotiations are whom any antecedent negotiations are conducted any particular purpose for which conducted any particular purpose for which the goods are being acquired, there is an the goods are being acquired, there is an implied condition that the goods supplied implied condition that the goods supplied under the contract for the supply of the goods under the contract for the supply of the goods are reasonably fit for that purpose, whether or are reasonably fit for that purpose, whether or not that is a purpose for which such goods are not that is a purpose for which such goods are commonly supplied, except where the commonly supplied, except where the circumstances show that the consumer does circumstances show that the consumer does not rely, or that it is unreasonable for him or not rely, or that it is unreasonable for him or her to rely, on the skill or judgment of the her to rely, on the skill or judgment of the corporation or of that person. corporation or of that person.

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TPA s71TPA s71

Similar to s18Similar to s18 Consumer requirementConsumer requirement Purchase by trade name not a barPurchase by trade name not a bar

EE v v Australian Red Australian Red

Cross Society Cross Society (1992)(1992) Provision of Provision of servicesservices – – not supply of goodsnot supply of goods..

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Merchantable qualityMerchantable quality

Sale of Goods Act s19(2)Sale of Goods Act s19(2)

(2) Where goods are (2) Where goods are bought by descriptionbought by description from a from a seller who seller who deals in goods of that deals in goods of that

descriptiondescription (whether the seller be the (whether the seller be the manufacturer or not),manufacturer or not),

there is an implied there is an implied conditioncondition that that the goods shall be of the goods shall be of merchantable merchantable

qualityquality……

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Merchantable quality?Merchantable quality?

S64(3) of the Sale of Goods Act, defines S64(3) of the Sale of Goods Act, defines merchantable quality with respect to a merchantable quality with respect to a consumer sale as follows:consumer sale as follows:((3) Without limiting the meaning of the 3) Without limiting the meaning of the expression "merchantable quality", goods of expression "merchantable quality", goods of any kind which are the subject of a contract for any kind which are the subject of a contract for a consumer sale are not of merchantable a consumer sale are not of merchantable quality if they are not as fit for the purpose or quality if they are not as fit for the purpose or purposes for which goods of that kind are purposes for which goods of that kind are commonly bought as is reasonable to expect commonly bought as is reasonable to expect having regard to their having regard to their price,price, to any to any descriptiondescription applied to them by the seller and applied to them by the seller and to to all other circumstances.all other circumstances.

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Trade Practices Act s71Trade Practices Act s71

(1)  Where a (1)  Where a corporationcorporation supplies… supplies… goodsgoods to a to a consumerconsumer in the course of a businessin the course of a business, , there is an implied there is an implied condition condition that that the goods supplied under the the goods supplied under the

contract for the supply of the contract for the supply of the goods are of goods are of merchantable merchantable qualityquality,…,…

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Merchantable quality?Merchantable quality?

Carpet Call Pty LtdCarpet Call Pty Ltd v v ChanChan (1987) ATPR 41-025(1987) ATPR 41-025

RasellRasell v. v. Garden City Vinyl Garden City Vinyl and Carpet Centre Pty Ltd and Carpet Centre Pty Ltd (1991) ATPR 41-152(1991) ATPR 41-152

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Flooring:Flooring:Mavis was particularly interested in flooring as Mavis was particularly interested in flooring as she had difficulties keeping her slate tiles she had difficulties keeping her slate tiles clean. She searched for low maintenance clean. She searched for low maintenance flooring and after extensive shopping decided flooring and after extensive shopping decided on single sheet vinyl flooring. She saw just the on single sheet vinyl flooring. She saw just the thing at Discount Lino Barn, close to Kylie’s thing at Discount Lino Barn, close to Kylie’s home. Kylie indicated that she didn’t share her home. Kylie indicated that she didn’t share her mother’s preference for vinyl flooring as it was mother’s preference for vinyl flooring as it was cold underfoot and had suggested kitchen cold underfoot and had suggested kitchen carpet. Kylie and Mavis spoke to Mike at carpet. Kylie and Mavis spoke to Mike at Discount Lino Barn who suggested under-floor Discount Lino Barn who suggested under-floor heating could address Kylie’s temperature heating could address Kylie’s temperature issues. Kylie provided details of the under floor issues. Kylie provided details of the under floor heating options while her mother left the heating options while her mother left the conference room to offer slices of her coffee conference room to offer slices of her coffee cake to the other staff…. cake to the other staff….

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She is also angry about the flooring she has She is also angry about the flooring she has had installed. Despite Kylie’s protests she had installed. Despite Kylie’s protests she went with the single sheet vinyl, and did not went with the single sheet vinyl, and did not have under floor heating installed. The vinyl, have under floor heating installed. The vinyl, while easier to clean than the slate, is while easier to clean than the slate, is marking and scuffing badly however. She marking and scuffing badly however. She has only had it down 6 months, and already has only had it down 6 months, and already there are a number of wear marks. Her there are a number of wear marks. Her cupcake classes – which she runs 5 times a cupcake classes – which she runs 5 times a week and more often in school holidays – are week and more often in school holidays – are now so popular that she has at least 20 now so popular that she has at least 20 students per class. Because of her students per class. Because of her renovations she has room for them all renovations she has room for them all around her lovely new island bench, but the around her lovely new island bench, but the vinyl around the island bench almost looks vinyl around the island bench almost looks like a race track. like a race track.

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It is as if her students have worn a It is as if her students have worn a path around the bench – and in only path around the bench – and in only 6 months. 6 months. The vinyl was quite expensive – as The vinyl was quite expensive – as she had heavy grade domestic she had heavy grade domestic installed – but Mavis is very unhappy. installed – but Mavis is very unhappy. She hasn’t yet paid the bill for the She hasn’t yet paid the bill for the vinyl as she has been arguing with vinyl as she has been arguing with the company. They are, according to the company. They are, according to Mavis, now getting nasty, and want Mavis, now getting nasty, and want their $45,000 immediately. their $45,000 immediately.

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FridgeFridge

She also advised that her mother was She also advised that her mother was having problems with Whitegoods having problems with Whitegoods World from which she had bought her World from which she had bought her fridge. Kylie advised that her mother fridge. Kylie advised that her mother required a “French door” fridge with required a “French door” fridge with freezer drawers underneath to freezer drawers underneath to accommodate the large baking trays accommodate the large baking trays she used for her cakes. She had she used for her cakes. She had ordered the fridge she needed from ordered the fridge she needed from Whitegoods World but had Whitegoods World but had experienced delivery problems. experienced delivery problems.

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Her oven purchase was much more Her oven purchase was much more successful than her fridge which, on the successful than her fridge which, on the very day it was due to be delivered – not very day it was due to be delivered – not only did not arrive, but the shop called her only did not arrive, but the shop called her to advise that delivery was delayed for one to advise that delivery was delayed for one month. Mavis said to the shop keeper: month. Mavis said to the shop keeper: “Well that’s no good to me. I ordered that “Well that’s no good to me. I ordered that fridge for today. I need that fridge today. fridge for today. I need that fridge today. I told you when I needed the fridge. The I told you when I needed the fridge. The only reason I ordered from you was that only reason I ordered from you was that you told me I could have it today. If you you told me I could have it today. If you can’t give it to me today, you can just keep can’t give it to me today, you can just keep your fridge!! I don’t want it anymore.” your fridge!! I don’t want it anymore.” Mavis then rang Quick Fridge and ordered Mavis then rang Quick Fridge and ordered and received another fridge that and received another fridge that afternoon– suitable for her requirements. afternoon– suitable for her requirements.

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However, one month later, However, one month later, Whitegoods World delivered the Whitegoods World delivered the fridge originally ordered and fridge originally ordered and demanded payment. Mavis demanded payment. Mavis refused to accept the fridge or to refused to accept the fridge or to pay, and advised them that the pay, and advised them that the order had been cancelled. They order had been cancelled. They are threatening to sue Mavis for are threatening to sue Mavis for the price of the fridge - $5,500.the price of the fridge - $5,500.

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OvenOvenMavis returned to the conference room. Mavis returned to the conference room. She advised that she had had to make a She advised that she had had to make a large coffee cake that morning, even large coffee cake that morning, even though her preference would have been to though her preference would have been to make cup-cakes. In fact, one of her legal make cup-cakes. In fact, one of her legal problems was her cup-cake oven. Cake problems was her cup-cake oven. Cake Cookers is a specialist retailer which sells Cookers is a specialist retailer which sells products designed for those who like to products designed for those who like to cook cakes. It retails a number of cook cakes. It retails a number of specialist pans and other baking utensils – specialist pans and other baking utensils – many imported from America and not many imported from America and not readily available in Australia - as well as a readily available in Australia - as well as a special range of cake ovens. special range of cake ovens.

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They are located in Broome – They are located in Broome – and Mavis lives in NSW, but and Mavis lives in NSW, but Cake Cookers sells throughout Cake Cookers sells throughout Australia by catalogue. Mavis Australia by catalogue. Mavis wanted a special cake oven in wanted a special cake oven in her new kitchen. She saw an her new kitchen. She saw an oven that looked perfect for oven that looked perfect for her in their catalogue – the her in their catalogue – the picture showed 8 slide out picture showed 8 slide out patty pan trays instead of oven patty pan trays instead of oven trays – exactly what she trays – exactly what she wanted. wanted.

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She rang the store and spoke to Cathy. She rang the store and spoke to Cathy. She told Cathy all about her cupcakes, She told Cathy all about her cupcakes, her favourite recipes, and her interest in her favourite recipes, and her interest in the patty pan oven in their catalogue. the patty pan oven in their catalogue. Cathy told her that the patty pan oven Cathy told her that the patty pan oven had eight slide out patty pan holders – had eight slide out patty pan holders – instead of oven racks – and that each instead of oven racks – and that each patty pan holder would take one dozen patty pan holder would take one dozen patty pans. Even better, they came with patty pans. Even better, they came with self cleaning silicone inserts. Mavis was self cleaning silicone inserts. Mavis was delighted about the self cleaning but delighted about the self cleaning but concerned that each tray would only take concerned that each tray would only take one dozen patty pans. Although after one dozen patty pans. Although after discussion with Cathy, she was convinced discussion with Cathy, she was convinced that the overall capacity of the oven was that the overall capacity of the oven was appropriate, and so she placed an appropriate, and so she placed an order….order….

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Mavis advised that even if she had known Mavis advised that even if she had known about the cake order she would have had about the cake order she would have had difficulty fulfilling it because of problems with difficulty fulfilling it because of problems with her newly installed cake oven. When the oven her newly installed cake oven. When the oven arrived she saw that instead of Australian arrived she saw that instead of Australian sized delicate patty pan holders, the cake trays sized delicate patty pan holders, the cake trays were American size muffin holders – and two were American size muffin holders – and two trays were even jumbo sized Texas muffin size trays were even jumbo sized Texas muffin size holders. This is not what Mavis wanted at all.holders. This is not what Mavis wanted at all.

Mavis rang Cathy and told her the oven was Mavis rang Cathy and told her the oven was not what she had wanted at all, and not not what she had wanted at all, and not suitable for the cakes in which she specialised. suitable for the cakes in which she specialised. Cathy said she was sorry that Mavis was Cathy said she was sorry that Mavis was disappointed, but there is nothing that they disappointed, but there is nothing that they can do about it now. Mavis wants to know if can do about it now. Mavis wants to know if she still has to pay the $8,000 for the special she still has to pay the $8,000 for the special cake ovencake oven. .