Business Law

Sunday, July 2, 2017

Case #1: Introduction

The main issue in this case is about whether  Maxine is entitled to a refund of her money or a new pair of sneakers from Cheapest Ever Shoes Pty Ltd. Maxine made the purchase of the pair of sneakers despite noticing the sign stating ‘No refunds, customer must choose carefully’. In order to determine whether Cheapest Ever Shoes Pty Ltd is liable to refund the money to Maxine or give her a new pair of sneakers, we must determine whether the practice by Cheapest Ever Shoes Pty Ltd of fixing a very low price on a pair of sneakers which proved to be of poor quality was an unfair practice and or a misleading/deceptive conduct.

Rule

Section 53a of Trade Practices act of 1974 states that a business organization involved in trading activities shall not in connection with the supply or in connection with the promotion of goods and services “falsely represent that goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use” (Trade Practices Act 1974, 2004).  Under section 55A which stipulates certain misleading conduct in relation to services, it states that, “a corporation shall not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, and the sustainability for their purpose or the quantity of any services” (Trade Practices Act 1974, 2004). Section 56 of the same act continues to say under bait advertising provision that, ” a corporation shall not, in trade or commerce, advertise for supply at a specified price, goods or services of there are reasonable grounds, of which the corporation is aware or ought reasonably to be aware, for believing that the corporation will not be able to offer…” (Trade Practices Act 1974, 2004).

 

According to the terms and conditions of trade, the buyer has a right to inspect the goods delivered or purchased by him/her and notify the seller within seven days of delivery or purchase of any defect, shortage of quantity, damage or failure to comply with the description given on the product label or given to the buyer on time of delivery or purchase. The buyer also has a right to be given an opportunity by the seller to inspect with a reasonable period of time after purchase or delivery and then report back to the seller for refund or for exchange with another product (Terms and Conditions of Trade, n.d.).

Application

In relation to the provisions of Trade Practices act of 1974, a business organization or corporation should not engage in any practice that is deemed to be unfair to the consumer is that is likely to mislead the consumer. At Cheapest Ever Shoes Pty Ltd, there was a pair of sneakers which was placed in as bin labelled ‘sports shoes’. The shoes were being sold at a very low price compared to other sports shoes sold in other retail stores with the price at Cheapest Ever Shoes Pty Ltd being almost half the price of sports shoes in other sports shoes retail stores within. It is also clear that a good sports gear for playing tennis is quite expensive and this is not the case in Cheapest Ever Shoes Pty Ltd.

Therefore, it can be said that Cheapest Ever Shoes Pty Ltd was engaging in misleading or deceptive conduct. Displaying a cheap pair of sneakers in a bin labelled ‘sports shoes’ was a deceptive conduct. Since on the first day of use of the pair of sneakers purchased by Maxine from Cheapest Ever Shoes Pty Ltd, they had proved not fit for sports as they had already started to wear off. Though comfortable, the pair of sneakers was not fit for sporting activities. It can be said that Cheapest Ever Shoes Pty Ltd was selling a good pair of sneakers, most probably at the right price but with the wrong label or displayed at the wrong category. This can be said to be a misleading or a deceptive conduct as customers like Maxine were deceived to purchase the pair of sneakers for sporting activities yet it was not fit for sporting activities.

To prove that the seller (Cheapest Ever Shoes Pty Ltd) was aware of the misleading conduct it was engaged in, there was a sign on the front counter stating ‘No refunds, customers must choose carefully’. It can be said that the seller was aware of the product displayed in the bin labelled ‘sports shoes’ was not fit for the stipulated purpose and therefore, customers were likely to return the products claiming for refunds or for new products having not being satisfied with the performance of the products purchased. Therefore, Cheapest Ever Shoes Pty Ltd was engaging in unfair practices. This is because, as earlier mentioned, it was engaging in misleading/deceptive conduct which was even further soiled by the sing on the front counter. In fact, it is not mentioned whether Maxine was made aware of the specific purpose of the sneakers she found in the sports shoes’ bin. The seller ought to have explained to the buyer or made the buyer aware of the specific use of the product displayed. The pair of sneakers purchased by Maxine might have been for sporting activities but not fit for tennis thought it looked suitable for the game. Therefore, the seller should have made an effort of informing the buyer the specific use of the product or at least ask the buyer the intended use of the product purchased so that he/she could advice accordingly.

Conclusion

Cheapest Ever Shoes Pty Ltd was involved in unfair practices and misleading/deceptive conduct. This is against the Trade Practice act of 1974 in section 53a, 55A and 56. The remedy available to Maxine is that she should sue the Cheapest Ever Shoes Pty Ltd for damage (Goldring, 2001). Since she reported defect on the product bought from the seller within a reasonable period of time, she is entitled to refund for her money or a new pair of sneakers which will suite her purpose. However, since the seller through the manager of Cheapest Ever Shoes Pty Ltd is of the opinion that Maxine cannot be refunded back her money neither can she be given a new pair of sneakers, she should than sue the seller for the damages caused out of purchase and subsequent use of a pair of sneakers placed in a bin labelled ‘sports shoes’ but they got worn out on the first day of use.

 

 

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