There are several problem questions in Part B.

The mark for each question is indicated below. Your answers should be clearly expressed, and should refer to relevant legal authorities (cases and/or legislation) as indicated in each question.

FACTS: Clint Cleano (Clint), the CEO of Cleaning R Us Pty Ltd (Cleaning R Us), has just introduced a chemical-free cleaner called Oxy CFC that he hopes would transform the fast-growing cleaning industry. He needs to achieve sales quickly because he is experiencing serious cash flow problems, so he retains the services of Fabulous Advertising Group (Fabulous Advertising), a marketing company. Clint tells the advertising company that Cleaning R Us is unable to pay up front for its services and will need credit. Fabulous Advertising does its due diligence, obtaining a credit history from Cleaning R Us' bank, Latrobe Bank Ltd (Latrobe Bank). The bank manager, Larry prepares the credit report negligently one afternoon in his office before his appointment with an elderly gentleman, Mr Enjo who wants to borrow money from the bank. The credit report prepared by Larry does not accurately present Cleaning R Us' actual financial position. After receiving the credit report from Latrobe Bank, Fabulous Advertising accept the contract with Cleaning R Us and provide $80,000 worth of services. Unfortunately, Oxy CFC is a complete failure and Cleaning R Us is put into liquidation. Fabulous Advertising loses $50,000 because Cleaning R Us can only afford to pay $30,000. In the meeting between Mr Enjo and Larry, Larry does not explain the terms and conditions of the loan thoroughly before Mr Enjo signs the loan documents. Larry knows that Mr Enjo is old (in his late 70's), with little formal education, and does not speak much English because he was an Italian migrant. Larry also does not explain to Mr Enjo that he is guaranteeing his debts by mortgaging his family home in favour of Latrobe Bank. Six months later, Mr Enjo fails to pay the loan instalments and Latrobe Bank seeks to enforce the mortgage against Mr Enjo to seize and sell his family home. Use only common law and/or equitable principles to answer questions 1, 2 and 3. Do not use legislation.

1. Advise Fabulous Advertising whether it should take action against Larry, the bank manager, in tort for negligent misstatement.

2. Assuming that Larry is potentially liable in negligent misstatement, is Latrobe Bank vicariously liable to Fabulous Advertising?

3. Could Mr Enjo have the mortgage set aside on grounds of unconscionable dealing by Latrobe Bank?

FACTS: Amigo is looking to buy a new sport utility vehicle (SUV) with the money he has recently won from a lottery. He hopes that he would receive the money in the next few days. On Thursday, he visits a car dealership, and speaks to salesperson and owner of the dealership, Domino. Domino shows Amigo the different models of SUV available. While showing him the Power Tower model, Domino comments that it has a towing capacity of 5 tonnes. At the time, Domino believes this to be true, without checking the SUV's specifications in a publication from the manufacturer. Amigo says nothing in response, but after viewing several other models, he decides to purchase the Power Tower SUV for $30,000. Domino takes Amigo to the office and prepares a sale document with a description of the SUV and gives a copy to Amigo. Domino then informs Amigo that the 10% deposit will be forfeited if Amigo does not return with payment before 12 pm the following Tuesday. Amigo is not very happy with the short turnaround time, but he really likes the Power Tower SUV, so he pays the 10% deposit and signs the contract of sale. On Tuesday of the following week, having visited his bank in the morning, Amigo returns with a cash cheque for $27,000 and collects his Power Tower SUV. Domino tells Amigo that he is lucky that his 10% deposit is not forfeited! On the weekend, Amigo goes shopping for some wood he needs for a small home renovation, and he tries to tow a load of 3.5 tonnes of wood. This causes serious damage to the SUV, and Amigo abandons it. Amigo later finds out from an advertisement in the newspaper, that the towing capacity of the Power Tower model is only 3 tonnes. Use only legislation (and any relevant cases) to answer questions 4 and 5.

Do not use common law and/or equitable principles.

4. Does section 23 of the Australian Consumer Law (ACL) render the term below void?

"10% deposit will be forfeited if Amigo does not return with payment before 12 pm the following Tuesday".

5. Amigo says that Domino acted unethically by breaching section 18 of the Australian Consumer Law (ACL) when Domino told him that the Power Tower has a towing capacity of 5 tonnes. Is he right?