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QUESTION 1: 15 Marks Gary owns a macaroon bakery which sells macaroons over the counter to customers in the local area. To supplement his income, he does a catering business on the side and supplies celebratory functions of close friends and family with macaroons. On the premises, is a special machine which assists with production of large-scale quantities of macaroons. This machine is a rather expensive one and Gary only has one of these machines. In the week before Christmas, the machine breaks down. Gary contacts the Australian repairer of the machine, RepairsGalore Pty Ltd, who informs Gary that they will pick up the machine for repairs at 3 pm the next day. Gary informs the repairer that this is the only machine he had and that he will not be able to keep up with his orders during the Christmas period, if it was not delivered back within the next 3 days. The repairer assures Gary that would not be an issue. Unfortunately, RepairsGalore Pty Ltd was short on staff due to staff redundancies and hence, was unable to start on the repairs until three days after it had picked up the machine. The repairer rings Gary and informs him that the work will only be completed in another week’s time. Gary attempted to hire out a machine from his usual supplier but as the machine was not able to produce as many macaroons as his usual machine, he suffered $3000 worth of loss of sales during the Christmas period. In addition, Gary suffered significant loss of revenue amounting to $10,000, as a result of not being able to fulfil two catering contracts for his close friends Joe and Tom. RepairsGalore Pty Ltd had not been informed about these two catering contracts. As a result of the dismal situations he found himself in, Gary decided three months after suffering the above losses that he would negotiate the purchase of a new machine from an alternative supplier, Cavendish Pty Ltd. Leading up to the purchase of the machine, the sales representative assured Gary of the superior production capabilities of the machine. He said the machine was capable of producing at least 200 macaroons at a time, that the macaroons would be firm, would be consistently shaped with perfection and that it needed to be serviced just once every six months. Gary purchased the machine and found after five months of use that the machine was only capable of producing 150 macaroons for the day with superior quality but that subsequent batches were not passing the quality assurance test in terms of firmness and consistency in shape. He approached the supplier indicating the losses he had suffered as a result of the promises about the capabilities of the machine being untrue. The sales representative simply replied, “Sorry- We can’t help you. You did sign the written contract on the day you agreed to purchase the machine and these promises are not outlined anywhere in that contract. You have no rights.” Gary is furious. Please answer the below questions based on the above facts: (a) Advise Gary as to his ability to claim all of his losses as against RepairsGalore Pty Ltd under contract law. (8 marks) (b) Advise Gary as to how he could sue for the false promises made to him by the sales representative from Cavendish Pty Ltd before he signed the written contract even though these promises are not in the written contract? Discuss at least 2 arguments in your answer. (5 marks) (c) Explain how your answer would be different under (b) if RepairsGalore had been affected by an unexpected lockdown due to a pandemic and hence, was unable to complete the repairs on time. (2 marks) QUESTION 2: 15 Marks Sienna is a retired nurse who has $ 800,000 in retirement savings. Sienna asks Michelle, who is a financial planner, if it would be a good idea for her to invest $500,000 of her retirement funds in Shonky Investments Pty Ltd (hereafter ‘Shonky Investments’). Sienna lacks commercial knowledge. Michelle prepares legal advice addressed to Sienna stating that she has reviewed the 2019 company accounts and that it is a good investment. In this regard, the following wording was inserted into her financial advice: “No responsibility is taken as to the accuracy of the information or advice given. Advice and information given is purely based on the 2019 company accounts reviewed and no other sources were consulted. The client is advised to seek independent advice regarding the workings of the investment scheme as Shonky Investments is new to the market although it does appear to have delivered high returns in the 2019 financial year.” Sienna was keen to boost her retirement savings and decided to invest with Shonky Investments based on Michelle’s advice. She did not seek independent advice regarding the investment scheme. Shonky Investments has subsequently gone into liquidation as laws were subsequently passed deeming the business model upon which the investment scheme was based, illegal. Sienna has suffered a $500,000 loss. Sienna now discovers that financial planners in the industry would have been aware of the questionable business model that the investment scheme Shonky Investments Pty Ltd used as it was being discussed about in journals and financial newspapers at the time Michelle had given the advice. On a separate note, Sienna’s husband, Bill, is a developer who was keen to buy particular land in the Glenhurst region. He contacted the Local Council and enquired whether the land would potentially be affected by any Council road-widening proposals in the next two years. A Council representative who was new to the job stated that there was no such proposals when in fact, there was one which would affect the above-mentioned land. Bill purchased the land only to discover there was a road-widening proposal which lowered the value of the property and prevented the proposed redevelopment, which incurred him further heavy losses. Bill further came across publicly exhibited plans for redevelopment of a separate inner-city area (Masiville) as a new office district, which were exhibited by the State Planning Authority. No feasibility study was attached to the plans. He subsequently purchased land in the Masiville area relying on these plans, which were ultimately abandoned three years later. Bill suffered heavy losses as he could not develop the land as he had hoped. Advise Sienna and Bill whether they are likely to succeed under Tort Law. (15 marks) QUESTION 3: 20 Marks David has set up a recreational playcentre which caters for children to use trampolines and various play equipment. He has leased a suitable location and begins to fit out the premises. He buys $200,000 worth of gym mats from Gym Matz Pty Ltd. The mats are described as ‘industrial quality’ and ‘designed for long lasting use’. David opens the business and is regularly fully-booked, with up to 200 customers each weekend. A few months after the business is opened, David notices that many of the mats are worn out or damaged, resulting from the heavy foot traffic. It turns out that there were almost 3 injuries a week associated with slipping on the mat. He contacts an employee of Gym Matz Pty Ltd named Ian, and demands that the mats be replaced or that he get a refund. Ian refuses, saying that the damage is a result of wear and tear and points out a clause in the contract David has signed that states: ‘Gym Matz Pty Ltd assumes no responsibility or liability regarding the fitness of the supplied mats for any purpose’. On the premises as well, is a café selling coffee and pastries to patrons of the playcentre. The café earns substantial revenue throughout the year, and especially during school holiday periods. The pastries have been described as ‘freshly baked’, although in reality, the dough used for the pastries was made in Europe and shipped to Australia only to be baked almost 3 weeks after the dough is made. Further, the café claims that these pastries are made using purely ‘organic’ ingredients which are certified five stars by the ‘Health Foundation’ as being healthy due to having low fat and sugar. In fact, the ingredients are not organic, have a high fat and sugar content and no such authority as the Health Foundation exists. These pastries are in turn supplied in bulk for various party functions held at the playcentre. A number of customers have now discovered the truth of the nature of the pastries being sold. Please answer the below answers, based on the above facts: (a) Advise David whether he satisfies the definition of ‘consumer’ under the Australian Consumer Law (ACL), whether any of the consumer guarantees have been breached and if so, what remedies he is entitled to. (b) Advise whether the café has engaged in any prohibited conduct under the ACL. END OF EXAM (10 marks)  Business Management Business Law