[Solution]Principles of Business and Corporations Law

HYPOTHETICAL QUESTION Answer the following question using the Issue, Law, Application of Law and Conclusion (ILAC) format. Franco Aponso, a Mexican national, had immigrated to…

HYPOTHETICAL QUESTION Answer the following question using the Issue, Law, Application of Law and Conclusion (ILAC) format. Franco Aponso, a Mexican national, had immigrated to Australia in 2005 and had lived with his family in New Farm, in Brisbane where he ran a Mexican take away restaurant. Demand for take away food has increased dramatically in the last few years and business has been doing well. The business has extra money, so Franco decided to invest some of its profits in the share market. Franco is now 60 years old, speaks and understands limited English. He and his wife Greta have no experience in investing in the money market. They sought advice from a financial advisor, Felix Brown on how and where they should invest. Felix is employed by Finco Pty Ltd and has over 20 years’ experience in the industry and a very good professional reputation. In June 2019, Franco and Greta make an appointment to visit Felix at the Finco business premises to discuss new investment opportunities. Felix tells Franco about a new solar energy producing company, Rainbow Power Pty Ltd, (Rainbow) which provides homeowners and businesses with solar panels on their roofs and generate enough power to cover their individual energy needs. Felix states that solar panel products are popular at the moment. He believes that Australia’s renewable energy sector is set to boom in the next couple of years and global investors are waking up to the market’s abundant opportunities. Felix advises that Rainbow will be the ‘next big fortune’ in solar power sector and he is also thinking of investing some of his own money in Rainbow. Felix also provides Franco with some written material on the company, which explains its future plans and financial benefits in solar energy. Franco asks Felix whether he should invest some of his money in other companies. Felix responds that Franco does not need to worry about diversifying his investment portfolio because Rainbow was a “lucrative investment”. Franco relied on Felix’s financial advice and invested the restaurant’ s annual profit of $500,000 in Rainbow. In December 2018, the Australian Clean Energy Council has reported that resistive heat causes power loss when electricity travels along transmission lines, especially over long distances where many solar energy generators are in remote locations in Australia. Decreasing electricity transmission loss figures are harming the financial sustainability of existing solar energy companies. As a result, Rainbow shares plunge to around 10% of their original value. Felix does not read the Energy Council’s report or undertake due diligence inquiries of Rainbow company’s financial records and share market performance, before giving investment advice. Both Franco and Greta lost a significant amount of money and blame Felix for their losses. One month later the couple decides to renovate their take away restaurant. They decided to replace the old timber floor with ceramic tiles, so it’s easy to clean and low maintenance. They visited the showroom of the Uptown Tiles which sell the standard and premium tiles. The couple indicated to a sales representative, Jake, that they needed to purchase floor tiles to replace all of the old timber floors for their business. It was apparent to Jake that the couple did not speak English well; that they were not experienced with the quality and the type of the tiles. Jake advised them to use nonslip premium tiles and showed the sample to them before they decided to purchase the tiles. He also offered a package deal which consists of tiles and the installation service. He also promised to send his best and experienced tilers to do the job. Jake sold the tiles and tile installation service as a package deal for $35,000. The couple purchased the package deal and in doing so, signed a 15 page contract which indicated that the customers acknowledged that the seller will not be held responsible for any events related to both, the quality of the tiles and the quality of the installation service after the tiles installation has been completed. The following day, Jake realised that the store has run out of stock of the non-slip premium tiles. It takes 3 months for new stock to arrive from the manufacturer. Jake did not want to miss out the sales and used this opportunity to dispatch the standard non-slip tiles which have been sat in the warehouse for months. The tile installation job commenced on the 1 September and completed on 1 of October. Four months later, Franco and Greta found several cracked/broken tiles in the front area of the coffee shop and floor. The problems with the installation work did not end this, tiles were loose and various cracks appeared on the surface. The couple is extremely disappointed about their investments and renovations. PART A: Advise whether Felix owe a duty of care and has breached his duty of care to Franco with respect to his investment in Rainbow Power Pty Ltd. (Do NOT discuss ‘causation, damage and defences’) Consider both the common law and the Civil Liability Act 2003 (Qld) in your answer. PART B: Advise if Uptown Tiles may be liable for breaches of the Australian Consumer Law 2010 (Cth). What remedies (if any) are available to Franco and ACCC against Uptown Tiles under ACL?

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