LAWS 1018 - Business Law - 2020 03

Question 1 is on contract law.

Assignment Instructions use the IRAC problem solving method.

refer to the text book in preparing this question.

Your answers must include legal references (relevant cases and/or sections of Acts).

You are required to use the Harvard style of referencing. You should include a reference list in your assignment, including a list of legal references you have used.

You must reference each and every time that you use material from a source, including direct quotes, paraphrases and even ideas. This includes referencing course materials.

Please use the University of South Australia's law course materials.

Question 1: Contract Law

It has now been 1 year, and Emily is no longer involved in Botanica. Joel and Peta have continued the business on their own, and they are now leasing the premises from Emily at a commercial rate. Botanica is doing very well.

Joel and Peta need more storage for their rare and exclusive plant section in the store. Joel goes to Franc's Storage Solutions and speaks to the owner, Franc. Franc recommends the 'Ultimate Shelves'. The Ultimate Shelves are a premium product and are top of the range. Joel tells Franc that it is very important that the shelves they get are the highest quality because they will be placing their most expensive plants on the shelves. Franc tells Joel, 'Of course the Ultimate Shelves are great quality'. Joel asks Franc if the Ultimate Shelves can hold at least 10kg of weight per shelf. Franc replies, 'Absolutely. I guarantee that the Ultimate Shelves will hold at least 20kg of weight per shelf. They are very strong.' Based on this conversation, Joel decides to buy two Ultimate Shelves.

Franc hands Joel a document which contains the details of purchase. It lists Franc's Storage solutions as the seller, and the product number of the Ultimate Shelves, as well as the price. At the bottom of the document, in red, bold lettering, it says, 'Please see the terms and conditions available at the counter.' Just below this is a space for the customer's signature. Joel signs the document, 'Joel, on behalf of Botanica'. At the counter, where Joel signed the form, is a pile of documents called Terms and Conditions. In that document, Clause 14 reads, 'Franc's Storage Solutions is not responsible for any loss, damage or injury caused by any of the products sold by Franc's Storage Solutions.' Joel saw the pile of documents, but he did not take one, and did not read it.

Joel and Peta build the Ultimate Shelves following the instructions very carefully. The shelves look fantastic. Joel and Peta display all of their rare and exclusive plants on the shelves. Later that day, they hear a loud crash. The shelves have collapsed! On the floor are all of their rare and exclusive plants. The pots are broken and the plants are damaged. Joel and Peta are furious. Joel and Peta are certain that they followed the instructions exactly when building the shelves, and they know that they only put 15kg of weight on each shelf (they were being extra cautious).

Joel calls up Franc and is very angry. Joel says, 'the shelves you sold me are rubbish. They have just collapsed and all of our rare and exclusive plants are ruined. You have cost us a lot of money. You said that the shelves could hold at least 20kg of weight, and they didn't!' Franc responds, 'I'm sorry Joel. But there is nothing in the written contract saying that the shelves hold 20 kg of weight. Besides did you see Clause 14 in the terms and conditions? Clause 14 says I am not responsible for any damage.'

Using relevant legal principles of contract law, including case law, please answer the following questions:

a)Is the statement that the Ultimate Shelves can hold at least 20kg of weight a contractual term?

b) Will Clause 14 protect Franc from liability in this situation?