Business Law

Martha owns Quality Products Pty Ltd which manufactures a range of paper products including napkins, paper towels, table covers and packaging. Pippa, one of Martha’s customers, runs a business that delivers party kits to high end party & wedding planners and promoters. Business has been great and Pippa has been profiled several times recently in the press for a ‘magic touch’ in making a distinctive contribution to partying by ‘transforming the average to the memorable’ – which is the company’s slogan. Martha and Pippa have been doing business for the past two years. Every month for the last year, Pippa has phoned Martha and placed an order for a range of products. During the conversations, they have always discussed and agreed upon the relevant items, price, quantity and delivery date deadline. The price is usually cost price + 15% + shipping charges. Pippa sends that amount electronically to Martha and then Martha packages the goods, puts a sold note on it that sets out a number of terms, including the above but also stating on the back the standard clauses on which the company does business. Martha then turns over the goods to the courier for delivery to Pippa. On arrival of the most recent shipment, Steve – Pippa’s head of accounts and inventory – checked in the items and filed the ‘sold’ invoice with all prior documents received. In the process, however, Steve alerted Pippa that the most recent order of goods had been damaged in shipping – that is the packaging around items had become torn. The impact of the torn labels meant that the goods no longer met the health and safety requirements for the catering industry. Pippa arranged to sell the items for 1/3 of the original cost and then telephoned Martha to ask for a refund for the remaining losses. Martha responded ‘No worries. We will credit you with this amount on your next order.’ Pippa placed an order the following month and, when the invoice came in, Steve paid the amount and handled the order as normal. Shortly thereafter, however, when Pippa checked the books she realised Steve had paid – and Martha had billed for – the full amount. No discount for the damaged items had been made. Pippa notified Martha of the problem; Martha responded that she had realised after the last conversation that the damage and losses were Pippa’s responsibility contractually so she had therefore simply proceeded as normal. Martha pointed out the provision on the back of the ‘sold’ document that accompanies all deliveries that states: Quality Products (and Martha) will not be liable for loss, injury or damage resulting from any breach of warranty or from injury suffered in any manner after leaving the Quality Products factory. Pippa is not willing to absorb this loss and has sought your advice on what to do. Please advise Pippa of the legal issues that arise here, the likely resolution of these and, in your opinion, the best way forward in resolving this. Getting started: This is a reasonably straight forward problem that will benefit from you reviewing a range of legal concepts around contract formation. Included in this applications and implications of principles of offer, acceptance, breach and consumer protection (ACL of the CCA), Sale of Goods Act (Qld). [login to view URL] [login to view URL]