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## Monash University

Skip to 0 minutes and 4 secondsEMMANUEL LARYEA: At common law, there is a lot of emphasis on individual rights and individual responsibility. So a purchaser has to beware. There is a phrase callled-- in fact, it's a Latin phrase-- which says, caveat emptor, which is, buyer beware. So if you're going to buy something, the onus is on you to investigate, to ensure that you're getting the right deal. The interventionary statute also helps-- It's actually there's an economic efficiency argument for it, that if the law-- if the statute impose a basis, a standard, then parties do not have to negotiate it, even if they can. So they can take it that these are starting points. The law says that the apple I'm buying must be fit for consumption.

Skip to 0 minutes and 56 secondsI don't have to be asking the supplier, are you sure the apple is fit for consumption? Are you sure it's good? You don't have to spend time to do that, because the law puts a floor under that. At common law, the way the law works out whether there is a contract is to go through this process called offer and acceptance. It will be looking to see whether there is an agreement. And the agreement will be seen to have come into being where one party has made an offer to buy, for instance, in this case. And let's say the shop owner would have accepted the offer. Then there will be agreement.

Skip to 1 minute and 35 secondsOf course, there are other elements that will have to come in, such as is it supported by consideration, that this money paid, something of value? And I'll say another element that often the law will look at, and that is whether the parties had an intention to have a legal relationship. If they can find these elements, and in this case, if you've gone to a shop, obviously it's something that you intended to have legal relations. So then there will be contracts.

Skip to 2 minutes and 7 secondsJUSTIN MALBON: Sometimes the parliament takes the view that the common law isn't quite working, and so legislation is passed. And in some cases the legislation can overrule, or contradict, the common law. And if there's a difference between the statute and the common law, the statute will always apply. And what's happened in Australia, and a number of other countries in Europe and other places, they've brought in a new system under the statute. In Australia, it's called Australian Consumer Law. And under the Australian Consumer Law, the question is not actually whether there is a contract at the time he bought the apple. The question is, was he a consumer that purchased goods in trade or commerce?

Skip to 2 minutes and 57 secondsThe next question you ask under the statute is, who was the supplier? And the supplier in this case was the person who supplied the apple. What we have then is the supply of goods in trade or commerce that automatically triggers the statutory guarantee. The statutory guarantee says that the goods being sold must be of acceptable quality. Having the bug in it would suggest that it's not of acceptable quality, because a person who was aware of the full situation, knew there was a bug in it, wouldn't buy it. So it's clearly not of what people can reasonably expect. Then the question is, what is the remedy? And the remedy is the law divides it into major failure or non-major failure.

Skip to 3 minutes and 39 secondsI think if you can't eat the apple, that would fall into major failure. And therefore you can ask for the new apple. So you can return the apple, say, give me a new one without a bug, and that's your remedy.

Skip to 3 minutes and 52 secondsEMMANUEL LARYEA: To be clear, if there is a major failure, under the statute, the purchaser has the first go, or the option, and can get a refund of his or her money. If it's a non-major failure, then the shop has the option. They can propose to rectify whatever problem there is with it. Or they can actually, on their own accord, say they will refund and take their product back.

Skip to 4 minutes and 24 secondsJUSTIN MALBON: But they still have to provide you a remedy. They still have to put you-- They have to fix it up. They don't have the option of doing nothing.

Skip to 4 minutes and 32 secondsEMMANUEL LARYEA: Yeah. Can he demand that a shop supplies him with a lemon? Well the simple answer is no. It may be that they had it and it's finished. And if they are sold out, the shop will not be under any obligation to have to provide what they don't have.

Skip to 4 minutes and 53 secondsJUSTIN MALBON: There can be advertisements saying, we're selling-- Say lemons are normally $1.50 a kilo, and they put out an advertisement saying, lemons selling at$1 a kilo. So it's much better. And everyone wants lemons, because they're so tasty. So an advertisement goes out, there is a risk that it could be misleading and deceptive or deceptive. However, you'll often see in the small print on the advertisement saying, while stocks last. So that would normally cover of the seller by saying, well we're only offering it at that price while there were stocks. However, there are some bait advertising problems. So the legislation does deal with situations.

Skip to 5 minutes and 39 secondsOne trick that some sellers engage in is to offer something at a really, really good price. What it's doing is it's trying to get you into the store, but they're actually not selling it. It's an old trick. So the law does deal with those situations. They have to have reasonable stocks. Under these consumer laws, in many countries you have a regulator, and in Australia, it's the Australian Competition and Consumer Commission. So you can say, I'm going to take this to the Australian Competition and Consumer Commission. That usually worries them. The seller will go, oh. Actually, no, we do have a box out at the back.

Skip to 6 minutes and 16 secondsEMMANUEL LARYEA: The law distinguishes between a situation where time is very important. And we use in law, we use kind of the magical phrase, time is of the essence. If time is of the essence, then if any slight breach will give you a remedy, will give you the right to terminate-- So for instance, the seeds are delivered late, if time is of the essence, and the seeds are delivered, let's say, even a day late, you'll be able to say, I don't want it anymore.

Skip to 6 minutes and 47 secondsI want my money back, or I don't have to pay if you haven't paid yet, If time is not of the essence, or the parties, you haven't stated that time is very important to you, then even though you may have stated a time for delivery and the specified time has been breached, you would still have to accept the goods and maybe ask for some compensation for whatever you've lost if you've lost something.

# Case study 1 analysis: Harry goes shopping

Watch Justin and Emmanuel explore contract law and the way it operates with their analysis of the “Harry goes shopping” case study.

## Talking point

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