Case/Scenario
In November this year, a large car dealer, Cars’Are’US advertised a new car model of a sedan for sale:
VTX Golden Sedan – leather seats, automatic and contains Bluetooth connection of devices. Fully compatible with Apple IOS and Android. Only
$20,000.
Chris saw the advertisement, visited Cars’Are’US, and purchased VTX Golden Sedan for the advertised price. Later, Chris was dismayed to discover that her new car would not connect to her mobile phone, which used the latest Android operating system. Her VTX Golden Sedan would work properly with her friends’ Apple IOS phones, Microsoft phones and also with phones using older Android operating systems than Chris’s.
Advise whether Chris has a legal claim against Cars’Are’US, for breach of a guarantee under s 56 Australian Consumer Law (ACL), also taking into account the extract from Metal Roofing and Cladding Pty Ltd v Amcor Trading Pty Ltd [1999] QCA 472 as extracted below, and the cases referred to in the extract below.
Note: In your advice, you should refer only to authority provided by s 56 ACL (reprinted below) and the law provided by Metal Roofing and Cladding Pty Ltd v Amcor Trading Pty Ltd [1999] QCA 472 in the case extract provided below. You should not refer to any other legal rules (either cases or legislation) that you may happen to know but which are not expressly referred to in the attached case extract or legislation reprinted below. Be sure to demonstrate legal reasoning in your answer using HIRAC.
Australian Consumer Law (sch 2 Competition and Consumer Act 2010 (Cth))
S 56 Guarantee relating to the supply of goods by description
(1) If: (a) a person supplies, in trade or commerce, goods by description to a consumer; and
(b) the supply does not occur by way of sale by auction;
there is a guarantee that the goods correspond with the description.
(2) A supply of goods is not prevented from being a supply by description only because, having been exposed for sale or hire, they are selected by the consumer.
…
In 2010, the Australian Consumer Law (‘ACL’) replaced the Trade Practices Act 1975 (Cth) and its matching provisions under state Sales of Goods legislation. The case Metal Roofing And Cladding Pty Ltd V Amcor Trading Pty Ltd [1999] QCA 472 related to alleged breaches of a similar section in the relevant state Sales of Goods legislation:
Sale of Goods Act 1896 (Qld) S 16 Sale by description
When there is a contract for the sale of goods by description there is an implied [guarantee] that the goods shall correspond with the description; and if the sale is by sample, as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description.
Metal Roofing And Cladding Pty Ltd V Amcor Trading Pty Ltd [1999] QCA 472 McPherson JA [1] Polyvinyl chloride, or PVC, pipes are manufactured and widely used in Australia for the purpose of reticulating or transmitting water and other liquids. Such pipes are commonly made from PVC resin by suspension polymerisation, which is a chemical process that involves dispersing the resin in water, heating it with additives that combine with the PVC homopolymer in the resin, and then passing it through an extruder to make the pipes. The resin is a powdery substance which is supplied to the manufacturer in containers or bags. It is a derivative of petroleum and a by-product of that industry, which is produced locally in Australia; but quantities of PVC resin are also imported from Europe and Asia.
[2] Amcor, which is the plaintiff in the action and the respondent to this appeal, is an entity that sells PVC resin which it imports from overseas. Pipemakers, which is a division of the appellant defendant in this action, is a manufacturer and seller of PVC pipes. Late in 1993, the defendant began buying PVC resin from the plaintiff, which was then “relatively new” to the business of supplying PVC resin in the Australian market. At first, the resin supplied by the plaintiff was of Korean manufacture; but, when supplies from Korea ceased to be available, the defendant began supplying PVC resin manufactured in Shanghai in China according to technology developed in Japan and referred to as the Shenitsu process. This product, which, when the plaintiff introduced it, was new to Australia in the sense that (according
to the plaintiff’s sales representative) no one had used it here before, carried the code S1000, and, later on, WS1000; but these designations were internal forms of identification used by the Chinese manufacturer for its own purposes. They have no relevance to the issues here except that the appeal is concerned only with PVC resin bearing the designation S1000. [3] In about May 1995, the plaintiff agreed to sell, and the defendant to buy, a quantity or quantities of PVC resin of Chinese manufacture for delivery in late June or early July 1995. The relevant purchase notes, sales orders and invoice, or a typical example in each instance refer to so many tonnes of “PVC resin S1000”, to a price per kilogram, and to a total price for the particular consignment in question. The resin was delivered to the defendant in bags in Brisbane, and was applied by it in manufacturing pipes using the suspension polymerisation method.
Sale by description [4] There is no doubt that this transaction, and others like it, amounted to a contract for the sale of goods “by description” within the meaning of … the Sale of Goods Act …. It was a contract to sell goods that were not “specific” but “unascertained” at the time of agreement, and it was one into which the description of the goods as “PVC resin” plainly entered. Those were the words used to identify the kind of goods to be supplied: Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 [U.K.]. …. In the court below, the learned trial judge seems to have accepted this view of the contract; but, in any event, there can, in my opinion, be no doubt about its correctness. It follows that, under …the Act, there was an implied [guarantee] that the resin sold should correspond with the description “PVC resin”. It was those goods which it was… the duty of the plaintiff to deliver to the defendant.
[5] The questions on appeal are:
(1) whether the resin designated S1000 delivered by the plaintiff to the defendant answered the description “PVC resin”; if not,
(2) whether the plaintiff was in breach of contract, and liable to the defendant in damages; and,
(3) in what amount.
It is convenient to approac h these questions s eparately ….
PVC resin [6] … As to the question whether the goods delivered by the plaintiff consisted of PVC resin, several witnesses gave statements or oral evidence, or both. There is a measure of agreement among them that there is no such thing as 100% “pure” PVC resin. Contaminates or additives, including water, are invariably introduced in the course of manufacture, and some of their residue always remains in the PVC resin. Statements about “pure” PVC resin take account of this residue. Such residues are, however, not expected to be present in the residue in substantial percentages. In cross-examination, Mr Aylett, a consulting specialist in plastics who prepared a report and gave evidence for the plaintiffs, considered the question he was asked to address was, When does it cease to be PVC? He answered by saying that, for PVC homopolymer, he “certainly wouldn’t expect less than 99.7 per cent” PVC. … …
[12] In my opinion, on the evidence of the witnesses in the present case, the defendant succeeded in proving that in the Australian market at the relevant time the description “PVC resin” meant resin that was at least 99.7% pure PVC and to that extent at least free from contaminants or additives.
Breach of [guarantee] [13] The next question is the extent to which, if at all, the defendant established a breach of the [guarantee] under … the Act that the goods must correspond with the description PVC resin. Various tests were carried out by different experts on the resin designated S1000, as well as that designated WS1000. According to one test conducted by Chemical Laboratories in Western Australia, a sample of the S1000 resin showed a contaminant or “non PVC” content of as much as 3.2%; but Mr Aylett rejected the method of analysis used there as unreliable. …
…. [15] … Mr Aylett, who, it will be recalled, was the plaintiff’s principal expert witness at the trial, said that he would not expect less than 99.7% for PVC resin homopolymer. On this footing, the defendant established that the resin S1000 delivered by the plaintiff failed to correspond with the description “PVC resin”, and so was in breach of a [guarantee] of the contract.
[16] … The question is, … what a buyer in the Australi an market wou ld expect to receive on bu ying resin described a s PVC resi n. …
Measure of Damages
[17] This leaves for consideration the question of damages, which in some ways is the most difficult of the issues on the appeal. …
… [27] The result in my opinion is that the defendant has established a breach of contract on the part of the plaintiff in supplying, under the description PVC resin, S1000 which contained polyvinyl alcohol to the extent of some 2%. … … [41] The result is that in my opinion the defendant’s appeal against the judgment on the claim in the action should be dismissed. The appeal against the judgment dismissing the counterclaim should be allowed and that judgment set aside. … Thomas JA and Cullinane J
[43] This case arises out of a sale of goods (PVC resin) by the respondent (Amcor) to the appellant (Metal Roofing and Cladding). It will be convenient to refer to Amcor as the vendor and to Metal Roofing and Cladding as the purchaser. Issues [44] The purchaser declined to pay the balance of purchase price of resin, delivered over an extended period, claiming that some of the resin did not conform to the commodity which it had ordered. The vendor sued for the full price, and the purchaser counter-claimed for damages for misrepresentation and for breach of implied [guarantees] …. The learned trial judge rejected the purchaser’s contentions in both its defence and counter claim, and granted judgment against it for $589,086.50 with a declaration of the vendor’s entitlement to interest. [45] The principal issue which arises on this appeal is whether the learned judge erred in rejecting the purchaser’s claim that the goods failed to correspond with their description. …
Did the goods conform to their description? [46] It was submitted that the learned trial judge ought to have held that the relevant contract for the sale of PVC resin from the vendor to the purchaser was a contract for the sale of goods by description and that the goods in question did not correspond with the description. It is common ground that the goods in question consisted of PVC resin. [47] At trial the issue of description or identity of the goods the subject of the submissions was raised by the Further Amended Defence and Counter-claim of the purchaser, which was supplied to the court on the first day of hearing. It alleged: “PVC resin is a material which consists of at least 99.6% poly vinyl chloride, and 306 metric tonnes of the goods so delivered to it by the Plaintiff purporting to be PVC resin consisted of 96.8% poly vinyl chloride and 3.2% of an unknown substance, or 98% poly vinyl chloride and 2% poly vinyl alcohol, and as such did not constitute PVC resin. Particulars It is a recognised industry standard that PVC resin would consist of a minimum of 99.6% poly vinyl chloride. The “Recognised Industry Standard” is found in three places. First, the term “PVC” is descriptive in that it refers to poly vinyl chloride. Second, it is customary within the Australian Manufacturing Industry which uses PVC resin that “PVC resin” would consist of a minimum of 99.9% poly vinyl chloride. Third, the Standard is set out in the American Standard for Testing Methods (“ASTM”) which requires PVC to contain 100% poly vinyl chloride.”
… [49] The learned trial judge’s fin dings on this questi on include the following: “The evidence supports a conclusion that it could be expected that PVC resin would contain quantities of other substances notably poly vinyl alcohol which is an agent used in the production of the resin. There was some disagreement as to the quantities which might be expected but the overall range was between 0.1 and 0.3 per cent. The evidence is far from founding a custom binding on the plaintiff. It cannot be said that the American Standard applied and there was evidence that material not containing 100% poly vinyl chloride was sold as PVC. The evidence simply does not establish that the resin supplied by the plaintiff was other than poly vinyl chloride satisfying a contractual arrangement between the parties. …
[50] …[A]s his Honour pointed out there is considerable variation in testing methods and their reliability. If tests other than chlorine microanalysis were to be relied on, it would be open to hold that the PVC content of the resin in question lay somewhere between 96.1 per cent and 99.26 per cent. If the figure from chlorine
microanalysis (which on the evidence his Honour considered preferable) is adopted, the correct figure for the PVC content of the resin in question should probably have been between 99.1 and 99.26 per cent.
… [53]… [T] he bulk of the evidence, (including some evidence from the vendor’s experts) supports the existence of an “expectation” in those dealing in the commodity of a purity level of at least 99.6 per cent although there was no consensus on what that level should be. Further there was no consensus on the more specific issue of whether material of a lesser degree of purity would be regarded by those dealing in such materials as unable to be described as PVC resin.
… [66] Under [the Act] the term “sale of goods by description” has been regarded as being concerned with the question of identity, and, so far as specific goods are concerned, to refer to a sale of goods as belonging to a particular kind, class or species. In Christopher Hill Ltd v Ashington Piggeries Ltd [1972] AC 441 [U.K.], Lord Diplock stated: “It is open to the parties to use a description as broad or narrow as they choose. But ultimately the test is whether the buyer could fairly and reasonably refuse to accept the physical goods proffered to him on the ground that their failure to correspond with that part of what was said about them in the contract makes them goods of a different kind from those he had agreed to buy”. [67] Issues of this kind have been considered in numerous cases …. In Sopers v Johnston [1944] 2 All ER 586 [U.K.] there was a sale of bottles of drink described as “cordials”. It was found that the beverages, although labelled “cordials”, contained no sugar. It was held that the word “cordial” implies that the beverage contains a substantial percentage of sugar … It is doubtful if the issue in that case would be decided the same way today when sugar substitutes are well recognised, but this is merely to underline that the question is one of fact to be decided upon the evidence given in the particular case. [68] Despite the preponderance of evidence supporting a general expectation of a high level of purity, we do not think that the evidence as a whole requires the finding which the purchaser now seeks from this court. … [W]hilst the learned trial judge did not see fit to express either a general preference for one of these witnesses over the other, his Honour expressly held that “the evidence simply does not establish that the resin supplied by the plaintiff was other than poly vinyl chloride satisfying a contractual arrangement between the parties”. … [69] It was submitted for the purchaser that there was evidence that the market would discount the price by at least 20 to 25 per cent in respect of a product the quality of that supplied by the vendor. That however introduces the subject of quality which is quite different from the question under consideration. … [71] Looking at the evidence as a whole we see no reason to think that his Honour erred in holding that it was not established that the resin failed to satisfy its description. … …
[73] It follows that there is no basis upon which the counter-clai m can succeed. …
[74] It is therefore unnecessary to assess the damages, as no relevant breach has been established. We have had the opportunity of reading the reasons of McPherson JA who would set aside the learned trial judge’s findings and award damages on the counter-claim. Were a reassessment necessary, we should indicate that we would not be prepared to make a finding that the PVC resin supplied by the vendor to the purchaser in 1995 contained a poly vinyl alcohol contaminant of about 2 per cent, as suggested by one analysis that was conducted in May 1996. There is too much conflicting evidence for this court to essay satisfactorily the average level of non-PVC content. Another test produced an average result of one percent, and we apprehend that on such a finding the damages would be assessed at a significantly different level to those based on a finding of 2 per cent impurity. If damages need to be assessed it is preferable that the judge who had the advantage of seeing the witnesses should make a finding as to what evidence is accepted, rejected or preferred on these questions. There is the further possibility that if a deal of uncertainty surrounds the best finding that can be made (as is likely in a case where only a few disparate samples are taken of substantial material delivered over an extended period) some discounting might be appropriate.
[75] If, contrary to our view, the purchaser is entitled to judgment on its counter-claim, the question of damages thereon ought to be referred back to the learned trial judge with a direction to assess such damages and enter such judgment as is just.
…
Task
Advise whether Chris has a legal claim against Cars’Are’US, for breach of a guarantee under s 56 Australian Consumer Law (ACL), also taking into account the extract from Metal Roofing and Cladding Pty Ltd v Amcor Trading Pty Ltd [1999] QCA 472 as extracted below, and the cases referred to in the extract below.
Assessment criteria
Your submission must:
• Identify and analyse issue/dispute/problem. Deconstruct it by considering it from multiple perspectives.
• Identify and explain the relevant elements in the legislation. Connect aspects of the issue/dispute/problem to the relevant a nd specific elements in the legislation.
• Logically reason and structure your argument. Demonstrate legal reasoning in your answer using a HIRAC approach.
• Conclude and offer clear and focused advice to the client
• Write clearly and succinctly in the third person.
• Reference your work as per AGLC.
