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Better Brakes Manufacturing Ltd (the manufacture...

Better Brakes Manufacturing Ltd (the manufacture...

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Author: Patricia Rhone
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Better Brakes Manufacturing Ltd (the manufacturer) entered into an exclusive contract (the contract) for the sale and distribution of its premium brakes with Steve Auto Supplies Pty Ltd (the dealer)

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Better Brakes Manufacturing Ltd (the manufacturer) entered into an exclusive contract (the contract) for the sale and distribution of its premium brakes with Steve Auto Supplies Pty Ltd (the dealer).
Under the contract the dealer agreed:
1. not to give a discount greater than 10% off the recommended retail price set by the manufacturer to any of its retailers, and
2. to obtain an undertaking from its retailers that they would not sell below the manufacturers price.
The contract was mutually advantageous for both the manufacturer and the dealer until one of its retailers, Mick’s Mechanics, (the retailer) started to discount the brakes by up to 20% off the retail price set by the manufacturer.
The manufacturer is outraged and wants to sue both the dealer and the retailer for breach of contract.
Advise the manufacturer and give reasons for each of your answers:
1. whether it will be able to enforce the recommended retail price condition in its contract upon the dealer and the retailer,
2. Whether your answer would be different, if the retailer was a party to the contract,
3. Whether your answer would be different, if the retailer was an agent of the dealer.
Refer to relevant case law and legal principles. Apply the Common Law only. Do not apply the Competition and Consumer Act 2010, nor any other piece of legislation.


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