David has set up a recreational playcentre which caters for children to use trampolines and various play equipment. He has leased a suitable location and begins to fit out the premises. He buys $200,000 worth of gym mats from Gym Matz Pty Ltd. The mats are described as 'industrial quality' and 'designed for long lasting use'.

David opens the business and is regularly fully-booked, with up to 200 customers each weekend. A few months after the business is opened, David notices that many of the mats are worn out or damaged, resulting from the heavy foot traffic. It turns out that there were almost 3 injuries a week associated with slipping on the mat. He contacts an employee of Gym Matz Pty Ltd named Ian, and demands that the mats be replaced or that he get a refund. Ian refuses, saying that the damage is a result of wear and tear and points out a clause in the contract David has signed that states: 'Gym Matz Pty Ltd assumes no responsibility or liability regarding the fitness of the supplied mats for any purpose'.

On the premises as well, is a cafe selling coffee and pastries to patrons of the playcentre. The cafe earns substantial revenue throughout the year, and especially during school holiday periods. The pastries have been described as 'freshly baked', although in reality, the dough used for the pastries was made in Europe and shipped to Australia only to be baked almost 3 weeks after the dough is made. Further, the cafe claims that these pastries are made using purely 'organic' ingredients which are

certified five stars by the 'Health Foundation' as being healthy due to having low fat and sugar. In fact, the ingredients are not organic, have a high fat and sugar content and no such authority as the Health Foundation exists. These pastries are in turn supplied in bulk for various party functions held at the playcentre. A number of customers have now discovered the truth of the nature of the pastries being sold.

Please answer the below answers, based on the above facts:

1. (a)Advise David whether he satisfies the definition of 'consumer' under the Australian Consumer Law (ACL), whether any of the consumer guarantees have been breached and if so, what remedies he is entitled to. (10 marks)
2. (b)Advise whether the caf has engaged in any prohibited conduct under the ACL (10 marks)