LEGT 1710 BUSINESS AND THE LAW

ASSIGNMENT 2: SESSION 1, 2011

Length: 2000 words

Due date: Monday 2 May 2011, by 5pm
(See Course Outline at para 4.4 on p 8 for Submission Procedure)

Vincent operates a business, painting murals and other art works in o ffices
and other commercial buildings. Over the past two years he has bought paint
twice a month from Claude, a local paint manufacturer.

Recently, Vincent bought 100 cans of paint from Claude, which Vincent then
put in his storeroom together with some valuable works of art. Over the next
week, Vincent used 10 cans of the paint on one of his jobs, but because of
negligent manufacture by Claude, the paint was of poor quality and cased
damage to the client’s building. Vincent had to pay $20, 000 compensation to
the client.

Later, 40 of the other cans exploded in the storeroom and damaged Vincent’s
valuable works of art. This happened because Pablo, one of Claude’s
employees, had a personal grievance against Vincent and deliberately put the
wrong substance into those 40 cans. The damage to the works of art is worth
$40, 000.

Vincent has demanded compensation from Claude. However, there is a

notice on the receipt that Claude gave to Vincent at the time of purchase that
states:

“Claude is not liable for any loss or damage caused by the paint, regardless of
how much loss or damage may be caused.”

The same words also appear on a small sign on the counter of Claude’s sales
area.
Claude is refusing to pay compensation, saying he is protected by the words
on the receipt and the sign.

Vincent has never read either the notice on the receipt or the sign.

You are now asked to advise Vincent whether:

(a) He is bound by the words on the receipt or the sign? (16 marks)

(b) Would it have made any difference to your answer if Vincent had
read the sign at the time of buying the paint and had asked what it
meant and been told by Claude’s salesman that it excluded
Claude for liability only if the paint fumes affected people with an
allergy to those fumes? (4 marks)
 LEGT 1710 BUSINESS AND THE LAW

GUIDELINES FOR STUDENTS, ASSIGNMENT 2

SESSION 1, 2011

1) Students are to focus on the common law of CONTRACT, making

references to relevant common law principles and key decisions in
accordance with their research.

2) As we have not yet covered negligence in lectures, students are NOT

required to analyse whether there was negligence by Claude or his
employees. Assume that there was. You should ONLY consider whether
the words on the ticket and sign will be effective to exclude liability for
Claude.

3) As we have not yet covered the Australian Consumer Law (ACL) in

lectures, students are NOT required to discuss the effect of the ACL or of
any other statutes.

4) If you need further information to help with your answer, say what that
information is and why it is significant, in your view.

Suggested Research Approach

• Ask yourself whether:

(a) the words on the ticket and sign have a contractual effect?
(b) the words protect Claude in this case?

• With these questions in mind, start your assignment by reading

Latimer’s Australian Business Law 2011 from ¶6-180 to ¶6-250:
Exclusion clauses.
 You cannot and must not only rely on your readings of Latimer:
this is your starting point and will give you an understanding of the
issues involved in this problem.

• From Latimer, you will need to expand considerably by reading,

understanding and applying the to the extra reading materials
placed on Blackboard under Assessments/Assignment 2 . For a
very good answer, you should also do some research and try to find
other references.

• Focus your research on materials you can find ONLINE: it will be

a lot easier for you to access materials online and you can find cases,
journal articles and other materials produced by legal publishers (such
as their looseleaf services) online, using the UNSW library database.

• Please do not bother the UNSW librarians unnecessarily.

• Please make sure you footnote all references properly – do not

plagiarise! Students should refer to the Australian Guide to Legal
Citation 3 rd Edition for how to reference source materials accurately.

• You should also include a bibliography at the end of your answer.