Case Study On Legal Institutions

Issue

The case in question holds two contractual agreements, and several issues are identifiable. The first contract is between Ron and Rafael. Ron puts an offer to buy a carpet but gives specifications on the type of material that he wanted the carpet to be made of. Ron also specifies the kind of material that that was not to be used. He had his reasons for the details that he presents to Eco Warrior (EWCC) Company through Rafael. The company uses two types of materials to make carpets; goat’s hair and recycled fishing nets, which make Ron specific on what he wanted, he makes sure that this is in writing. He foreshows a situation whereby EWCC Company would use either of the materials, maybe from the fact that previous customers didn’t mind. Rafael agrees to all the specifications put forward by the buyer; he is well informed that carpet made of goat's hair would cause issues to Leon, Ron’s business partner. At some point, Rafael tries to convince Ron, that company’s goat hair carpet couldn’t cause allergy, but Ron insists. He accepts the offer to supply the fishing net carpet at the cost of $45000.

The issue arises after the contract is sealed, with carpet presented and payment is made. Leon began showing allergic symptoms after coming into contact with the new carpet. It is at this point that Ron begins to suspect that EWCC Company did not honor their deal to present the carpet that had been ordered and instead they had brought what Ron had categorically told them not to bring. The fact that he is not sure if that was the case leads him to enter into the second contract where he hires a cleaning company to clean the new carpet to see whether symptoms would cease for Leon. Leon also goes for a check-up to determine the cause of his health problem whereby it is determined that the cause of his problem was an allergy to goat’s hair.  The issue here is whether EWCC breached the contract and whether they should compensate for Leon’s medical expenses and replace the carpet or return the money. 

In the second contract, Ron hires a steam cleaner, which he intended to clean and reduce the health effects that the carpet caused his partner Leon. The contract is between him and Bo, who owns a Hire and Cleaning service company. Ron takes the steam cleaner but does not work as expected; it, just spills the cleaning mixture on the carpet. Here several issues can arise; the machine might have been in a poor working condition, or Ron’s workers did not know how to use it. The issue here is to determine whether Ron is entitled to his actions of the failure to complete the hiring payment and his demand for the deposit that he had already paid. 

Law and principles

One of the laws that govern contractual agreement is the Australian Consumer Law (ACL). ACL outlines the specifications in the competition and consumer Act 20101. For instance, according to this act, it is against the Australian law to engage in deception about a given transaction. The Competition and Consumer Act 2010 interprets what constitutes a deceptive engagement, and unfair contractual terms.  The above is dictated by ACL section 18, which gives a standard practice and conduct in the market place. One can be held liable in the event that they fail to speak up or give specifications which turns out to be misleading. There are however things to note that have to be definite for ACL to apply, for instance, the definition of ‘a consumer’1. Under ACL, a consumer is someone who purchases a product with a price of $40000 or less. In our case, Ron’s carpet contract is beyond this amount, but in the second case where Ron hires a steam cleaner, this applies. The second thing is that ACL applies to products obtained or acquired for domestic use. Under this, the cases scenario Ron claims against EWCC Company can stand under ACL. The carpet call Pty Ltd V Chan case qualified a carpet to be a domestic product when acquired for personal use2.