Case Study Report

  • Category:
    Business
  • Document type:
    Case Study
  • Level:
    Undergraduate
  • Page:
    3
  • Words:
    1620

BUSINESS LAW

Submission Date

The Bolt Worldly advertisement is in contravention of any provisions under the ACL.

The business world has undergone variousdynamics, and currently, organizations have implemented different strategies to increase their sales volumes, albeit unfair means to the consumers. However, irrespective of business communication method, either advertisement, logos, product endorsements, through their packages, logos or even sales pitch, the consumer have the right to be given accurate and truthful information in relation to the services or products being offered or received. According to the Australian Consumer Law (ACL) misleading or deceiving the consumers in order to increase sales volumes or market shares through advertisements and other business communication channels is illegal.

The law does not only apply to thedirect misleading of the consumers but also if the organization does not intend to mislead or deceive, but the consumer suffers loss due to the conducts portrayed by the organization offering the services or selling goods. According to the case scenario of Bolt, advertising their mobile products at a price different from the real price was a violation of the ACL (Corones, 2011). The company only offered three mobiles in stock for a price of $699 and had not conducted any radiation tests on their product as stipulated in the promotion message. In the business world, honest advertising is not only beneficial for the firm growth but also a requirement by law. The ACL contains a number of rules and regulations that each and every business must follow when advertising and selling various products and services.

The message in an advert often influences the consumer’s perception to a product or service in the industry. However, when undertaking a misleading or deceptive conduct during the business operations like that at Bolt, the most important question is whether the overall impression created by their conduct is inaccurate and will lead to a sustainable financial growth. Hannah approached Bolt for a laptop which could take her through her 8 hours lecture. The sales representative assured her of the battery lifespan only to realize the information given was wrong and could not take her through her 8-hour lecture. This was illegal as per the Australian Consumer Law. Even though a business should not disclose all the information regarding product sales or service provisions, there are situations that all the information must be provided to avoid engaging in misleading conducts. In this case, the sales representative should have informed Hannah about their law regarding return and exchange of goods at Bolt. Enough information was not given to Hannah that could significantly change her mind about buying the laptop.

Misleading advertisements are against the ACL and violates legitimate business operations Australia. It is essential that Bolt and their affiliate suppliers engage in honest and genuineads when selling their products for a sustainable business growth and a larger market share. It should be clear in the advert if offers are valid for a given period and when the stocks are genuinely low, for instance, clearance sale. In case the demand for a given product rises, the suppliers can be contacted for extra stock rather than increasing prices as seen in the case.

Bolt is in breach of the guarantee provisions under the ACL. What rights or remedies (if any)
are available to Hannah?

Under the Australian customer law, breach of guarantee provision is subject to criminal offenses which can lead to a maximum penalty of $1.1 million for Bolt as a corporate body and up to $220,000 for each who participates in the offense. These criminal fines are however subjected to amounts of fines published in the TPA. Some of the remedies available to Hannah include injunctions, compensation through the court of law, non-punitive and adverse public orders. Subsequently, there exist civil pecuniary penalties that can be imposed to Bolt as well as adisqualification; public warning notices given to them or even redress for non-parties.

Australian customer law allows any court to issue an injunction which has a broad power in the business environment and can restrain Bolt as a corporate organization from doing wrong business activities. Section 236 also provides the right to apply through the court of law for compensation, which is a similar right that has existed in TPA since its initiation in 1974. Redress can also be applied as a remedy in the context, which includes refund and non-financial compensation like apologize but with the authority of the consumer. In an event for non-party redress, the court may decide to make an award for the damages since it is essential in assessing the damages to evaluate the effects caused by the violation of the law. Section 241 states that the consumer is not obliged to accept any form of redress undertake under the non-party order but in case they do, should forfeit any other right of action.

In case goods sold fail to meet the buyer guarantee, Bolt as the seller may be required under the ACL to repair or replace the product with the consumer’s specification, provide a refund or give compensation in a consequential loss. Additionally, when the issue with the product is minor, the law stipulated that the supplier or the service provider can remedy through repair, replacement or refund. This is meant to maintain and promote the organization reputation in the market and gain a larger market share. Major product failure like in our case shorter laptop battery duration, Hannah can choose to reject the product and either chooses to be refunded or go for a replacement. She can also ask for a certain percentage of compensation for the product (Morandin & Smith, 2011).

According to the law, there Hannah has the right to seek compensation for the being misled to buy the laptop at Bolt. First, she will report the matter to the local consumer protection agency for further investigation or take the matter to be heard in a court of law. The magistrate court decision is always legally binding and cannot side with the organization for compensation or fair hearing. However, the legal actions can be applied in a situation where Bolt decides not to compensate or replace a product. Hannah can also assert her right under the consumer guarantees or even ask for compensation for a consequential loss due to the Bolt’s failure to provide enough information in relation to the product being sold and terms of sale.

Bolt has engaged in any prohibited conduct under the ACL in relation to their dealings with
Crisco?

In relation to Bolt dealings with Crisco, they have violated, they have violated some parts of the 2012 Australian Consumer Law and Fair Trading Act. Section 30 states that no business organization should include prohibited terms in a supply contract of both services and goods. According to the Act, such actions include a change of conditions made during the negotiation, before the commencement of a contract or breach of warranty. Bolt in a move to increase their profit margin decided to violate their agreement with Crisco. They have threatened terminating the contract incase Crisco will not pay a monthly rebate. Additionally, they claim Crisco of being expensive and would only continue working with them only after paying the monthly rebate. This is a violation of their initial contract which also violated the ACL.

Section 98(1) of the 2012 Act states that no organization should demand an amount more than 30 percent of the initial price in order to provide services. In this case, Crisco supplies Bolt with laptop batteries and the supplies covers 90 percent of Crisco revenue and sending a letter with a condition to give rebate is part of the violation of the law. Since Crisco has no option to survive in the market, they engage with Bolt, an act which is seen to jeopardize the organization shortly. Bolt could not provide the required information to Crisco and further disagreed to negotiate the terms of thecontract. This offered anunfair business platform for Crisco, who were unable to sustain their business operations and therefore went ahead to sign the contract. By law, supplier’s contract should involve both parties whereby negotiations are made to reach a common ground.

In response to any notice under the ACL, no organization or individual should make afalse or misleading statement, especially in contract terms and communication. The contract should also comply with the contract terms laws but in this case, Bolt management engaged in prohibited conduct. Their actions caused a significant imbalance between them and Crisco and caused detrimental effects related to financial gain to Crisco as their supplier. Bolt changed the contract without consulting with their supplier, Crisco for their economic benefit and further imposed additional fees and charges which were not involved in the initial contract agreement. In other words, they avoided their responsibility when things went wrong. They wanted to gain profit margin, but the consumers had a negative perception.

The Australian Consumer Law stipulates clear and precise guidelines for relations to contract agreements and thefair trading environment. Small organizations like Crisco looking to supply various products or services should understand the contract terms before signing and ensure that it promotes and encourage a fair and a balanced business environment. Furthermore, there should be transparent business operations in the marketplace that can affect smaller organization like Bolt, who took advantage of Crisco. Bolt should provide the required information to Crisco and also agree to negotiate the terms of thecontract to offer a legitimate business platform and ensure they sustain their business.

Bibliography

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Corones, S. G. (2011). The Australian consumer law. Rozelle, N.S.W., Thomson Reuters (Professional) Australia.

Morandin, N., &Smith, J. (2011). Australian Competition and Consumer Legislation 2011. Sydney, CCH Australia.

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