Is there any basis for ABC Heating to argue the merits of Clause 15 in this hypothetical situation? Please give example of Australian cases where it may or may not have merits.

Susan purchased a house in Brunswick East as an investment property and rented it out to tenants (without using a real estate property agent).

On 1 June 2021, the heater in the rented property malfunctioned. The heater operates on gas, which is used to heat air in a unit outside the house and then blow the air into the house through a system of ducts under the floors. The tenants contacted Susan and provided an urgent repair notice. After three follow up emails and three follow up phone calls to Susan, she organised a Plumber to inspect the heater (Plumbers 'R' Us ('PRS'). After inspection PRS informed Susan that the heating unit located outside the house would need replacing. PRS advised that they worked with two main heating suppliers in Melbourne: ABC Heating Pty Ltd and DEF Heating Pty Ltd.

On 2 June 2021, Susan contacted both heating suppliers and obtained quotes. She decided to go with ABC Heating Ptd Limited which quoted for a unit which was efficient and had the following characteristics:

• The unit costs $4,000;
• Could be installed by any qualified plumber;
• Had a 95% energy efficiency rating (the energy efficiency rating determines how well the unit will perform in regard to how hard the unit must work to heat the air going into the space. These energy efficiency values are important to consider when purchasing a unit. The higher the rated value the lower the operating cost for the unit will be.

ABC Heating sent Susan a contract. The contract included the following terms:

12. The heating unit supplied under this contract has a 95% energy efficiency rating.

...

15. The heating unit must be installed correctly to achieve the outcomes promised under this contract. The unit may not work optimally with all duct systems or built structures and the supplier is not responsible for any loss if they are incompatible.

...

21. This agreement constitutes the entire agreement between the parties. The parties agree that no negotiations, commitments or representations form part of this agreement apart from those included in this document.

Susan reviewed the contract and paid particular notice to clause 15 of the Contract.She was concerned because her house was 100 years old and the ducted heating was at least 55 years old. The next day, Susan called ABC Heating and asked the representative, Dave, about the ducts in her house. The representative, Dave said that based on that information (55 years old) the unit would work fine.

However, what the representative, Dave, failed to tell Susan was that ABC Heating had done an investigation only the year before that had found that the heating unit failed to work properly in 40% of installations where the ducts were more than 50 years old. All agents of ABC Hearting had been informed about the investigation and the representative had a copy of the report on his desk. After the representative's reassurance, Susan agreed to buy the unit and signed the contract. PRS installed it, which cost $1000 including removing the old broken unit.

The following week Susan received a series of phone calls from her tenants complaining that the heater was not working. They said it would turn on and start heating but would turn itself off when it got to about 14 degrees Celsius. It would then only restart if the unit was switched off and on again at the wall. The tenants were furious that their heating was not working (as it was getting really cold in Autumn) and demanded that Susan fix it immediately.

Susan called ABC Heating to complain about the unit. ABC Heating said that they were extremely busy and would not be able to inspect the unit for two months. PRS was able to do an inspection of the installation that week and found that there was nothing wrong with the installation so the problem must be with the unit.

The tenants were adamant that they could not wait two months without heating for the unit to be inspected. They gave Susan a breach notice claiming that Susan had breached her duty to get the heater fixed urgently. Susan was so annoyed when she received the breach notice as she thought it was completely unreasonable when she could not fix the heater herself. However, in the face of possible VCAT proceedings Susan compromised.

She purchased seven large electric heaters for the tenants ($700) so they could heat the whole house and agreed to pay the increased cost of their electricity bills. The increased cost of the tenants' electricity bills for the three months of June, July and August was $1,500/month. The tenants did pay $100/month less in gas bills but did not tell Susan and she did not think to ask.