Janet is looking for her first car. In the local paper she sees a full-page colour advertisement for Trevor's Car Sales Pty Ltd: Used car sale. Unbeatable offers on 3-year old models. Low kilometres. 12-month warranty. The featured vehicles include 3 model Mazda 2s priced at $9,999 drive away.

On Saturday morning she goes to take a look. She takes a liking to the silver Mazda 2, and has a good look around the outside and inside. She notes with satisfaction that the odometer shows 75,000. The salesman tells her: "Personally, I think this one is the best of the lot." Janet asks Trevor about previous ownership of the car and Trevor replies: "The car had only one previous owner." Janet replies that she would like to buy it, but the best she can do is $9,500 cash. He replies: "Alright. Come inside."

In the office Trevor prepares a sale document with a description of the vehicle and a cash sale at $9,500 and gives a copy to Janet, which she reads. They agree that Janet will return with payment within 7 days. There is no mention of warranty. Janet signs the sales document.

Next Wednesday, having visited her bank, Janet returns with a bank cheque for $9,500 and collects her new car. There is a zipper case on the driver's seat containing the handbook and previous service record, which she puts in the boot.

Three months later Janet finds that her car is slipping out of gear. Next morning she drops it off with Vincent, her mechanic. Vincent calls her that afternoon. The automatic clutch of the Mazda 2 is badly worn and needs replacing. The total cost for the work is $2,500. From the handbook and service details Vincent discovered that the previous owner was a company, and the Mazda 2 was a fleet car. At the time of the sale it had actually covered 175,000 kilometres.

Problem-Based Questions

QUESTION 1

Is there a contract between Janet and Trevor's Car Sales Pty Ltd? Refer to relevant case law and principles in answering this question.

[5 marks]

QUESTION 2

Janet tells you that had she known about the true condition of the car, she never would have bought the car, and asks you to explain the legal situation to her. What rights does Janet have under the common law? Refer to any applicable case law and principles in answering this question. What remedies can Janet obtain under the common law?

[7 marks]

QUESTION 3

Does Janet have any rights under the Australian Consumer Law (Competition and Consumer Act 2010 (Cth), Schedule 2)? Discuss any applicable legislative provisions and relevant case law. What remedies can Janet obtain under the Australian Consumer law?

[8 marks]