TASK INSTRUCTIONS

You work in in a legal practice and ultimately will be required to provide advice to the firm's client, Minh. Minh has detailed the following facts.

Factual Scenario

Nutty Nightwear Pty Ltd is a company which specialises in the sale of nightwear items for children. The company operates in, and is registered in, the state of Victoria. Nancy is the Director of the company.

Just Sew! Pty Ltd is the company which manufactures the nightwear items for Nutty Nightwear. Just Sew! also operates in, and is registered in, Victoria. Justin is the Director of the Just Sew!

Nutty Nightwear Pty Ltd designed new pyjamas for children (sizes 00-14) which can sold as top and bottom together or as nightwear separates. In her capacity as Director, Nancy sent a written order for 1,000 pairs of pyjamas to Justin in his capacity as Director of Just Sew! Nancy specified the pyjamas were to be made from a new fabric that she had not used before. Nancy was well aware that under the Australian Product Safety Laws mandatory standards for nightwear for children the new fabric is categorised as a Category 4 fabric and so she provided clear instructions to Justin to attach a warning label that was in accordance with Category 4 fabric. Nancy even specified to Justin that he must use a Category 4 High Fire Hazard Label (including black ink on a red background) and that a label must be attached to each individual item.

On the basis of the order, Justin manufactured 1,000 pairs of pyjama and sent them to Nancy. The pyjamas have the Nutty Nightwear Pty Ltd logo printed on them.

When Nancy inspected the pyjamas she discovered that the warning label was a low fire hazard label that is for fabrics in Categories 1- 3. Nancy telephoned Justin and told him that she refused to pay because of the labelling issue and she returned the pyjamas to Just Sew! on the same day.

Just Sew! incurred costs of $30,000 to produce the order. Justin realised it was his mistake for using old labels and was afraid of losing further contracts with Nutty Nightwear Pty Ltd, so he accepted the returned pyjamas. At the same time he did not want his company to have to cover the $30,000 in production costs so, rather than destroying the non-compliant pyjamas, he decided to sell them via an online auction site as a way to recoup the production costs.

And so Justin advertised the pyjamas as a 'Buy It Now' purchase on a wholesale online auction site. To push things along a little, he included the following as part of the advertisement:

This advertisement will automatically close in ten seconds. But if you click to buy these original and newly released designer pyjamas within that time then they will be available at the fabulously low price of $30,000!

To create the advertisement and to enter the auction, and to provide the item description and bidding details, Justin provided the name, ACN and contact details of Nutty Nightwear Pty Ltd. But for the payment, he used the account details of Just Sew!

Minh is a sole trader of a small children's clothing store in Victoria and she recognised the company name of Nutty Nightwear. She had used the company's products in the past and had been pleased with their quality and how well they had sold, so she put in a bid of $30,000 and secured the purchase.

Justin was keen to get the pyjamas off his premises so he delivered the goods to Minh on credit. When the pyjamas arrived, Minh inspected them and was dismayed to discover the warning label on each item was for fabrics in Categories 1-3 and not Category 4 as it ought to have been. She realised she could not legally sell the pyjamas as they were.

Minh now seeks your firm's advice about any possible methods of recourse against Just Sew! Pty Ltd at common law, equity and statute law. The file has been allocated to you.

You must now undertake some initial legal research to:

(i) locate ten sources that are relevant to advising Minh,

(ii) cite those sources and to demonstrate how you found them, and

(iii) undertake an initial analysis of each source to indicate how and why it might assist Minh to achieve any remedies potentially available to her.