A real estate agency

 SECTION A
Question 1
A real estate agency was selling apartments with a view of the sea.  The agency assured prospective buyers that the view was protected because the land between the apartment block and the sea was zoned for low-rise development. This was based on information provided by a council officer.  However, the council officer was wrong. The zoning was about to change, allowing high-rise development.

Would you consider the agency liable for this commitment?  Explain your answer.

Answer
The agency is not liable for this commitment.

Australian law recognizes that building owners who suffer losses arising from defective buildings may have a cause against negligent contractors and agents, including municipalities who negligently certify defective buildings (Koltai, 2012, p.34). Subsequent owners therefore have a right of recovery against the contractor, agency and the relevant authorities or consultant who negligently oversaw the construction of the defective building. The building is defective in the sense that the high-rise development will obscure the view of the sea, which was one of the factors that motivated the prospective buyers to purchase the apartments.  The buyers will therefore suffer an economic loss because the knowledge of future high-rise development would have substantially reduced the value of the apartments at the time the contract was being signed. Regardless of the fact that the buyers will not incur any actual costs to restore the building to any specific standard, they arguably acquired property of a lower value than they had reasonably believed.

Notwithstanding, the real estate agency was only acting in good faith and had no intention whatsoever of deliberately misinforming the clients in order to obtain a higher price for the apartments. On the other hand, the council officer who provided false information is liable for the commitment having negligently misinformed the real estate agency, which in turn conveyed the false information to the prospective buyer.

Question 2
Whereisit.com Pty Ltd proposes to offer customers exclusive rates and benefits for selected accommodation on condition the customer acquires the goods or services with their MasterCard credit, debit or pre-paid card and such promotion was to be from November 2013 to February 2014.

Could this be a breach of the law?  Discuss what possible breach(es) this might entail and the consequences.

Answer
The company’s offer is an example of a ‘standard form’ contract. Such contracts are non-negotiable and are offered to customers on a ‘take it or leave it’ basis. Section 23 of the Australian consumer law (ACL) provides that “a term of a consumer contract is void if: (a) the term is unfair [and] (b) the contract is a standard form contract.” The offer is a breach of contract because the terms stated therein are unfair thereby rendering them void. According to section 25, article 1 d of the ACL, A term is considered unfair if it permits the supplier but not the consumer to vary the terms of the contract.  In this case, the company is only obliged to provide exclusive rates and benefits when the consumer complies with a particular formality, that is, the acquisition of goods or services with a MasterCard credit, debit or pre-paid card. Moreover, because the offer only applies to selected accommodation, it is implied that the company can vary the type of accommodation available to eligible clients. Even though unfair terms do not normally warrant the termination of a contract, there is only one term in this contract and consequently the entire contract is void. Termination of the contract would mean that the client reserves the right to decline to pay for any goods and services consumed under the unfair terms. Other consequences include injunction against the company and remedial orders for the losses incurred by the clients.

Question 3
What are the consequences of supplying goods and services that do not comply with an information standard?

Answer
The supply or distribution of goods and services that do not meet relevant information standards is considered as a criminal offence under Chapter 4, Part 4-4 of the Australian Consumer law (Commonwealth of Australia, 2010, p.36). Individuals who do not comply with this provision are liable to a fine not exceeding $ 220,000 while corporate bodies are liable to a maximum fine of $1.1 million. Possible remedies and penalties for the breach of an information standard include compensatory orders, damages, non-punitive orders, injunction and adverse publicity orders. Infringement notices, disqualification orders, public warning orders and redress for non-parties are also provided for this breach.

 

Question 4
Would a term in a gym membership contract, that allowed the operator of the health club to change location of the club within 12 kilometres without allowing the customer to terminate the agreement, be considered an unfair term?  Would it m