QUESTION ONE (10 MARKS)

Last month, Roger, acting on behalf of a large Wollongong company, Hallmark Pty Ltd, secured the sale of an expensive, state of the art toaster to Mr and Mrs Lee, an intellectually impaired couple who could hardly read or write English. In the course of securing the sale, Roger told the couple that their existing toaster may one day blow up, and repeatedly urged them to buy a new toaster despite being told that they did not want a new one. Roger stood in close and prolonged physical proximity to Mr and Mrs Lee, and yet failed to explain the terms of the contract to them. He simply said to them "You don't need to read the contract, just sign it". Mr and Mrs Lee have made no payments in respect of the agreement and require advice as to whether they can seek relief on the ground that Roger engaged in coercion or harassment in connection with the sale of the new toaster. They also wish to know whether they can legally restrain Roger and his company from employing similar sales tactics in the future.

Advise Mr and Mrs Lee of their legal position in these circumstances. Support your answer with case law and legislation where applicable.

QUESTION TWO (10 MARKS)

Danny operated a retail clothing business in North Wollongong. He had a contract with a supplier Wormald Pty Ltd (Wormald) for the purchase and installation of a business burglar alarm for his warehouse which would cost less than $100,000. He needed the burglar alarm to deter or prevent any theft and this would have been impliedly made known to Wormald. There was a robbery recently when the thieves broke into the warehouse and stole merchandise worth several thousand dollars. At the time of the robbery, there must have been a malfunction in the alarm, as no sound came out of it. Danny was most upset about the loss of his merchandise and needs advice as to whether he could recover his loss.

Advise Danny of his legal position in these circumstances. Support your answer with case law and legislation where applicable.

QUESTION THREE (10 MARKS)

Tiptop Pty Ltd (Tiptop) is a commercial agent in Sydney whose business involves purchasing old debts at a discount and then pursuing the debtors for payment. Lucy, an unemployed mother with a disabled, dependent child, had defaulted in making repayments on a car loan of $2,000 with the National Finance Ltd (National). Despite the fact that National had repossessed and sold Lucy's car, the amount recovered by National was insufficient to discharge Lucy's loan debt entirely. When Tiptop eventually purchased Lucy's debt from National some ten years later, accumulated interest had increased the amount Lucy owed to $10,000. An employee of Tiptop contacted Lucy by telephone and indicated that if a satisfactory arrangement for payment could not be reached legal proceedings would be initiated. In the course of that telephone call, the parties reached an agreement that Lucy would pay $5,000 as satisfaction of the debt. The amount of $4,500 was immediately debited from her credit card and Lucy agreed to make arrangements to extend her credit limit on that card to enable payment of the remaining $500.

Advise Lucy of her legal position in these circumstances. Support your answer with case law and legislation where applicable.

QUESTION FOUR (10 MARKS)

Early in February this year, Ken came to Olive's second-hand car yard in Wollongong and asked to be shown an economical vehicle suitable for use as a second family car. Olive pointed out to Ken a Toyota Corolla. On the windscreen of the Corolla was a sign saying "2010 model. $10,000. Mechanical Inspection Welcomed". Later, acting on a request from Ken, Melvin, a mechanic, was sent to Olive's car yard to inspect the vehicle. Melvin asked Olive if the vehicle was "Okay" and was told "What can you expect for $10,000?" Melvin replied that he would not bother inspecting the vehicle and would tell Ken that "on the inspection I have made I can see nothing wrong with the car". Melvin then reported to Ken in those terms. Ken called on Olive and said, "The inspection was alright. Can I have the car?" Olive said "Yes". The parties signed a written contract describing the vehicle as "a second-hand 2010 Toyota Corolla", specifying $10,000 as the price and containing the following clause: "No warranty express or implied is given as to the state, fitness or quality of the vehicle and the purchaser accepts responsibility for all latent defects". Ken paid $10,000 to Olive and drove the Corolla out of the car yard. At the first corner the engine fell out of the car. A hastily summoned mechanic Thomas informed Ken that, although the body was that of a 2010 model, the engine was a reconditioned 2004 model which had been improperly installed. Ken was thinking of commencing proceedings against the dealer and the manufacturer.

Advise Ken of his legal position in these circumstances. Support your answer with case law and legislation where applicable.

QUESTION FIVE (10 MARKS)

Tess had been living in England for some years. She married in 2015 and shortly afterwards returned to live in Sydney. With the money she saved while away, she went on a shopping spree to acquire all the things she needed to set up a household. One of the things she bought was an expensive foreign made Ligny dinner set. She paid $13,000 for the 12 place settings and looked forward to hosting dinner parties for her many friends. In light of the price, it was important for Tess to choose a set which would continue to be available so she could replace any plates that broke and thus still maintain the integrity of the set. She bought the Ligny set because she had seen it featured in an advertisement in the newspaper Wollongong Telegraph. The advertisement read: "Satisfaction guaranteed to all customers. You can buy the Ligny set with confidence as it will remain in production for at least five years". One year after her purchase, Tess attempted to buy a replacement for a plate she had broken. She was told that because the Ligny set had sold so slowly, its production had to be discontinued. Tess is bitterly disappointed at not being able to have and use a complete set.

Advise Tess of her legal position in these circumstances. Support your answer with case law and legislation where applicable.

QUESTION SIX (10 MARKS)

Vladimir has decided to discontinue his law degree and start his own franchise business. After failing to get finance from the major banks, he successfully obtained a loan of $500,000 from Acme Finance (Acme). This loan is at an interest rate of 15% per annum. When Vladimir contacted his lender to discuss his problems, he was referred to the punitive conditions in the loan agreement, which will see the lender financially support him, but only at an interest rate of 25% per annum. Vladimir argues that this is contrary to Acme's motto of "Assisting the Small Business Owner when the Big Banks will not".

In the meantime, Vladimir decided to refurbish his office and went with his wife to a shop whose representative Wendy showed them some floor tiles. Wendy said to Vladimir's wife that the tiles when laid would look the same as the one on show at the front of the shop. When the tiles were laid, they had a film over them that prevented them from being shiny and they showed up all the marks. Vladimir hired an expert, Mary, to inspect the tiles. Mary provided a report which pointed out that the tiles suffered from "optical hazing" but noted that this did not affect the technical performance of the tiles.

Advise Vladimir of his legal position in these circumstances. Support your answer with case law and legislation where applicable.

QUESTION SEVEN (10 MARKS)

"Under the manufacturers' liability regime, a person who suffers loss or damage due to a safety defect in goods may commence proceedings against the manufacturer to recover compensation. Compensation can be awarded to the person for injury, to a third party who is dependent on the person who is injured; and for loss or damage to property. A claim may be made against a manufacturer under a defective goods action regardless of whether there is negligence or a contract between the person and the manufacturer".

Critically discuss this statement.