A sales representative in a shopping centre handed Karl a flyer promoting a style cut and shave for $12 at Lion’s Mane Barber Sh
op. As he was actually in need of a haircut and shave, Karl dropped by the barber shop, which was also located in the same shopping centre. When he arrived at the shop and presented his flyer to one of the barbers, he was told that there had been an error in the statement of price on the flyer - it was supposed to be $22 and not $12. The shop manager tried to convince Karl that this was still a bargain price given that a style cut and shave would normally cost $30 in other barbershops. Karl got upset, as he passed by two other barbershops in the same shopping centre that sold haircuts and shaves for $20 to $25. If he had known about the supposed mistake in the Lion’s Mane flyer, he wouldn’t have bothered coming to the shop.
Answer the following:
(a) Does Karl have any legal grounds to claim the price of $12? (5 marks)
(b) Would your answer be different if Karl already had his hair cut and shave before being informed by the real cost of the services was $22? Does he have to pay the full price in this case? (7 marks)
in both cases the flyer was presented to the barber before the service was provided.
a) no, because Karl was informed about the mistake and the real price and could then still have decided to take his business elsewhere. but if he then agreed to still have the service performed under the now updated conditions, then that is what the "contract" is basing on.
he has no grounds to claim the other price afterwards.
b) no, because the service provider saw the flyer information, did not object to or correct the information right away, but performed the service instead. now the "contract" is based on that agreement based on the conditions of the flyer.
Answer: The negligence penalty is 20% of the amount you underpaid
The IRS may impose the negligence penalty if it decides that a taxpayer's negligence or disregard of the rules or regulations caused an underpayment of taxes.
