Emma owns Fantastic Toys, a retail shop selling childrens toys, including the battery-operated Speedy Sonic remote-control car. Lachlan visited Emmas store and purchased a Speedy Sonic remote-control car for $300 for his daughter. Five days later, and without any unusual usage of (or damage being caused to) the car, the battery compartment in the car heated up very quickly. The car caught on fire, and that fire caused extensive damage to Lachlans house. Luckily, Lachlan and his daughter were able to escape, and no-one was injured.

Lachlan takes the burnt car and his receipt back to Fantastic Toys. He wants to obtain a refund and compensation for the damage caused to his house on the basis of a breach of the consumer guarantees set out under the Australian Consumer Law. Emma refuses, pointing to the following exclusion clause on Lachlans receipt (which she claims absolves her business from any liability in relation to the incident):

CONDITIONS OF RETURN:

Please retain this receipt as proof of purchase.

Returns can only be made within 28 days of purchase

Australian Consumer Law consumer guarantees do not apply to sale of toys

Fantastic toys excludes all its liability once the toy box is opened and not in a resaleable condition.

Emma argues that since the toy car is not unopened and is not in resaleable condition the exclusion clause protects Fantastic Toys from any liability. Moreover, the Australian Consumer Laws consumer guarantees do not apply to toys.

Answer the following questions;

Is Emma required to provide a refund to Lachlan and compensate him for the fire damage caused to his house, according to the consumer guarantees in the Australian Consumer Law? [8 marks]

Do the exclusion clause on Fantastic Toys receipt and Emmas oral statements about the clause breach misleading and deceptive conduct (s 18) and specific false or misleading representations (s 29) provisions of the Australian Consumer Law? Please assess Emmas conduct under both of these provisions. Do not discuss remedies [7 marks]