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Business and Corporate law (Australian writer only). Referencign as per enclsoed pdf. Essay Example

  • Category:
    Management
  • Document type:
    Essay
  • Level:
    Undergraduate
  • Page:
    3
  • Words:
    1828

Speedways Airways Pty Ltd

Speedway’s Airways Pty Ltd launches a promotion amid hard economic times to boost sales. The promotion entails awarding any customer who collects bonus air miles through domestic bookings. Customers collecting 5000 miles could redeem them for an online code, entering the draw for a chance to win range of prizes. In addition, a customer with an accumulated 50,000 miles could enter the online code for a chance to win a confirmation email to the company’s head office and get a chance to win a fully sponsored holiday around the world. Speedways posted the promotion in the media.

Williamina and Jim may opt to launch a legal suit against Speedways Airline seeking compensation. There are several legal issues in the situation. In the first place, the Airline has a right to launch any promotional programs so long as it is according to the law of which it did and well attracted participants. The problem developed when the technological error occurred including faulty email confirmations from the draw. This mistake put the company at a tricky position since it had sent out invitation and clients have pursued to have their wins honored.

Customers were prompted to book and buy more tickets by the promotion.

A customer, Jim Smith comes across Speedway’s advertisement online which prompts him to start booking flights for the next holiday, and he attains the bonus threshold for the email confirmation. While awaiting the confirmation, the thought of what lies ahead gets him excited, he collapses and gets admitted in hospital. Another client, Williaminas Brown, also prompted by the posted advertisement, collects 50000 bonus miles, enters the promotion and wins a confirmation email. When she goes happily to the head office to claim the prize, an employee puts up a notice nullifying all emails citing an information technology error.

This can be dealt with using the Tort Law as a case of negligence where a criterion of salient features determines whether a duty of care need be imposed on the defendant. This situation may be viewed as a misrepresentation which involves deceit passing off and negligent advice. The airliner is responsible for every situation ensuing, apart from the error. Applying the golden rule of negligence, duties of care are to be recognized where there are substantial factual features linking the parties, creating pathways to harm. 1The onus lies upon the court or the defendant, Speedway’s Airways Pty Ltd, to define why duty should not be imposed, by considering the plaintiff’s vulnerability and boundaries of liability. The defendant is liable for prompting action from the defendant, Jim’s collapsing and the waste of time incurred at the headquarters.

Despite the nullified emails, one client’s claim for the award is honored; others do not know.

The situation is such that a client had a presented claim honored. Jim and Williamina can also launch a suit on the grounds of discrimination, citing they were discriminated against, in the occurrences. The court may want to consider the circumstances under which the claim was honored. The factor of silence after this was honored presents an even more suspicious scenario and may be considered an unconscionable conduct since it defies good conscience.

This attracts a $1.1 million penalty for a body corporate and $220,000 for an individual2 as defined by the Doctrine of Unconscionability, with its relief being available wherever the ‘special disadvantage’ exists by some condition of circumstance3, as an unfair or unreasonable conduct in business transactions that goes against good conscience in a schedule to the Competition and Consumer
Act 2010. Section 22 outlines several factors a Court can consider. These include: whether the stronger party made adequate disclosure to the weaker party, the stronger party imposed conditions necessary to protect their legitimate business interest, unfair tactics and the extent of good faith displayed by each party, amongst others

In a case Legal reference: TPC v Calderton Corp Pty (1994) ATPR 41-306,4 a retailer of stereo equipment pleaded guilty to misrepresentation. The retailer had extended the closing date and added fake names to the draw having felt that the promotion was not successful. The retailer got fined. In the case against the airliner, it honored a claim in unclear manner, especially having had an unsuccessful promotion. Whether silence amounts to a misrepresentation will depend on whether, in all of the circumstances constituted by acts, omissions, statements or silence, there has been conduct likely to mislead or deceive.5 Unless the Airliner presents solid evidence, the complainants have a strong case for misrepresentation. This position was recently confirmed by the High Court in the case of Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited [2010] HCA 31 where it was held that unless the circumstances give rise to a reasonable expectation that if a relevant fact exists, it would be disclosed, mere silence will not generally support the inference that the fact does not exist. In deciding whether a reasonable expectation existed the Court considered the nature of the parties and the character and context of the transaction.6

Why did it award one client? What criterion was used to select the awarded client from amongst all those who received the faulty email confirmations even after the draw and prizes were nullified in a public notice? The caption on the notice read “Due to an information technology error, faulty email confirmations were included in the Speedway promotion. As a result of this error, Speedway Airlines regrets to advise that all email confirmations are null and void.” If all email confirmations were nullified, how then was one customer awarded? Or is it that the error occurred after the honored claim had been released?

The client may also sue the company for withholding crucial information from them.

All those seeking to have their confirmation did not have information that someone had been awarded. Had they been well informed on time, they’d not have come to waste their time. Remembering that Jim had collapsed on the account of the promotion, and though the company does not know this, Jim may feel that he deserves to know what is happening. There is deception in this case.

The Australian Consumer Law (ACL) principally prohibits deceptive conduct in trade and commerce. Chapter 3 Section 29 of the Australian Consumer Law 2011 states that “A person must not make false or misleading representations in connection with the supply or possible supply of goods or services or in connection with promotion by any means of the supply or use of goods or services.”

Specific Protections are provided for specific activities considered detrimental by the law. These include specific false or misleading representations or conduct in trade or commerce, in relation to goods and services, land transactions or employment and failing to supply gifts and prizes or not supplying them as supplied.7. A business failing to disclose relevant and necessary information, promises, opinions and predictions can be misleading and or deceptive. Failure to disclose all necessary information, also referred to as silence, can mislead when one person fails to alert another to facts only known by them, yet the facts are relevant to the decision;8 must-know details are not passed on; and that information previously supplied is nullified by a change of occurrences. The law defines conduct to include actions such as advertisements and promotions.Whether or not the promotion was botched by an error on not, there would be only one winner of the around-the-world holiday. Had the company staff communicated that a client’s claim had been honored, the others presenting claims at the desk would not have come. In addition, the promotion was well communicated even on line. The error and the effects thereof should have been equally well communicated. By the virtue of the business type, the business keeps personal information of the clients. They should have personally contacted them and dealt off the issue.

In section 32, the ACL provides that “a person that offers rebates, prizes or other free items in connection with the sale of goods must honor that offer”. This prohibits a party from making any offerings in a promotion or a marketing activity of goods or services while not intending to provide them, and not providing them as offered. This is within the specified time in the offer or within a reasonable time, if the time was not specified.

Any misrepresentation can attract penalties of up to $ 220,000 for an individual or $1.1 million9 for a corporate, either civil or criminal.

What options does Speedway’s Airways Pty Ltd have? Does it honor the claims, or see through the legal suit, get fined and demanded to pay compensation? If the court finds the defendant guilty, it may be for two charges: misrepresentation, and unconscionable conduct. Each of these attracts a heavy fine of $1.1 million, and the Court may slap the two fines. This is addition l to the compensation and legal expenses. Considering that the company has been facing hard economic times, this could run the company bankrupt.

To ensure it keeps customer trust through the situation, and considering the public image the legal suit would portray of the airliner, I would advise it to honor the claims, but may be with less expensive cost effective travel packages for each of the customers.

Conclusion

Misrepresentation and unconscionable conduct in business can be very costly for organizations. They are defined by situations and circumstances. In the case against Speedways, the airliner was obligated by law to provide adequate information and as well be transparent. This is despite the error that occurred. All evidence in the case scenario makes the conduct of the airliner liable and guilty as charged.

References

Australia, Attorney General’s Dept, Avoiding Unfair Business Practices: A guide for Businesses and Legal Practitioners <http://.consumer.vic.gov.au/CA256902000FE154/Lookup/CAV_Publications_Shopping_and_Services/$file/avoiding_unfair_business_practices.pdf> 2010.

Australia, Attorney General’s Dept, Consumer Guarantees: A Guide for Business and Legal Practitioners < http://. www.consumerlaw.gov.au/content/the…/consumer_guarantees_guide.pdf> 2010

Australia, Attorney General’s Dept, Implementing the Consumer Law: Informational Note <
http://.consumerlaw.gov.au/content/the_acl/downloads/Implementing_ACL_Information_Note.pdf>July 2010

Australia, Attorney General’s Dept, the Australian Consumer Law: A Guide to Provisions <
consumerlaw.gov.au/content/the_acl/downloads/ACL_guide_to_provisions_November_2010.pdf> November 2010

Aviva Freilich & Eileen Webb, ‘The 2009 Review of Australian Consumer Law: An opportunity to clarify the rationale and scope of s 51A Trade Practices Act 1974 (Cth)’ (2009) 17 Competition and Consumer Law Journal 1

Aviva Freilich, Lynden Griggs & Eileen Webb, Consumer Protection Law (Melbourne: Oxford University Press, 2008)

Competition and Consumer Act 2010

Corones, Stephen, The Australian Consumer Law. (New York: Thomson Reuters Australia Ltd, 2011)

Human Rights and Equal Opportunity Commission Act 1986

TPC v Calderton Corp Pty (1994) ATPR 41-306

1
Melbourne University Law Review: Tort Law, Policy and the High Court of Australia

2
Avoiding unfair business practices: A guide for businesses and legal practitioners (2010)

3
Commercial Bank of Australia v Amadio (1983) 151 CLR 447

4
TPC v Calderton Corp Pty (1994) ATPR 41-306

5
Business Law Section, Law Council of Australia submission – 18 October 2010

7
the Australian Consumer Law- An Introduction

8
Avoiding unfair business practices: A guide for businesses and legal practitioners