1. Contract & Consumer Law Chapter 10
Consumer Protection Law

2. 10.1 Consumer Protection Law
The Australian Consumer Law (ACL) is found under schedule 2 of the Competition and Consumer Act 2010 (Cth).
Provides consumers with significant protection when dealing with suppliers and manufacturers.
Replaced the Trade Practices Act 1974 (Cth) and many pieces of state consumer protection legislation in January 2011.
Focus is to protect members of the general public when making day-to-day purchases, rather than protecting large businesses when making commercial purchases.

3. What is a Consumer? Under the ACL a consumer is someone who acquires:
Any goods or services up to $40,000.
Any goods or services for personal, domestic or household purposes.
A vehicle or trailer for use on public roads.
A person will not be a consumer if the person acquired the goods:
For the purposes of re-supply;
For the purposes of using them in trade or commerce;
In the course of production or manufacture;
In the course of repairing or treating other goods or fixtures on land.

4. 10.2 Consumer Guarantees Acceptable Quality of Goods – S54 ACL
If a person supplies goods to a consumer, there is a guarantee that they are of acceptable quality.
“acceptable quality” means that they are safe, durable and fit for the purposes they are expected to fulfill.
To determine what can realistically be expected factors such as the price paid, where they are purchased, the nature of the goods and whether they are second hand must be taken into account.
Question: Do you think this is an appropriate measure or do you think it is too subjective and difficult to identify? Can you suggest any alternatives?

5. Consumer Guarantees Fit For Purpose – S55 ACL
To determine whether goods are fit for purpose the court will examine what information the supplier gave to the consumer.
A consumer has the right to rely on the skills of the supplier and how they describe the goods.
Fitness for purpose applies not only in circumstances where a consumer has specially asked for the supplier’s advice, but also where the sale of the item itself implies fitness for purpose. For example, a consumer does not have to specifically request that they be served a hamburger without botulism from a fast food shop – if the item is being sold for human consumption then to be fit for purpose, certain qualities can be presumed or implied.

6. Consumer Guarantees Correspondence with description and sample - S56 and S57 ACL
Goods must correspond with any description given.
It is common that consumers may purchase goods without physically seeing them, for example via internet or relying on a catalogue or the packaging surrounding an item.
The goods must match the description provided.
If goods are purchased by a consumer in reliance on a sample or store demonstration model, then when the bulk of the goods arrive they must match the sample exactly.

7. Consumer Guarantees Warranties – s59 ACL
An express warranty is where suppliers or manufacturers make promises about the quality of their goods.
A warranty against defects promises that certain action will be taken if something goes wrong with the goods. (e.g. repair or replace the goods).
These warranties are treated as consumer guarantees, suppliers and manufacturers are obligated to fulfill these promises.

8. Consumer Guarantees Repairs – s58 ACL
Consumers are guaranteed an opportunity to have their goods repaired.
Manufacturers or importers must take reasonable action to ensure repair of goods is available for a reasonable time after purchase.

9. Consumer Guarantees Right to Title – s51 ACL
A seller must have the right to sell the goods.
They must have full title (ownership) of the goods, in order to pass full ownership to the consumer upon sale.

10. Consumer Guarantees Remedies – ss260-261 ACL
When consumer guarantees in relation to goods are breached there are several remedies available. Remedy will depend on which guarantee was not met and the severity of the failure.
If the failure to meet the guarantee is considered a major failure the consumer can choose to:
Obtain a refund.
Obtain an identical replacement.
Detain the goods and receive compensation for the problem.
Have the goods repaired.
Question: Give an example of a major failure of a breach of consumer guarantee in relation to goods.

11. Consumer Guarantees Services – ss60, 62 ACL
Any services provided to the consumer must be provided with care and skill.
If an agreement for time for the completion of the service has not been made, then the consumer is entitled to assume that it will be completed in a reasonable time.

12. Consumer Guarantees Remedies – s267 ACL
Where there are major failures with services a consumer can:
Obtain a refund
Seek compensation for what went wrong with the service provided.
If a loss occurs as a consequence of a guarantee not being satisfied, the consumer can claim for compensation.

13. Consumer Guarantees Remedies
Manufacturers also have to meet the consumer guarantees and therefore there are some situations in which a manufacturer may be concurrently liable with the supplier for failure to meet a consumer guarantee.
Manufacturers must meet the following guarantees:
That the goods are of acceptable quality
The goods match their description
There is acceptable opportunity for repairs
Manufacturers must meet any express warranty they have provided.

14. 10.3 Product Safety
Under the ACL businesses must comply with various standards relating to the safety of goods used for domestic, household or personal purposes.
Any business that does not comply with these standards may:
have their products recalled or banned.
be forced to make a public notice that the product is under investigation.
receive fines.
One of the most important consequences of the ACL is that product safety, mandatory safety standards, safety warnings and bans are now addressed with a national perspective.

15. 10.4 Business Practises Misleading and Deceptive Conduct
Misleading and deceptive conduct may occur in relation to:
Statements
Silence
Future predictions
Disclaimers
Advertisements
Comparative advertisements

16. Misleading and Deceptive Conduct
A business must not engage in conduct that may mislead or deceive others, be it consumers or other businesses, (s18, ACL).
It does not matter whether or not they intend to mislead.
Statements made by the business staff or in its advertisements must not be misleading or deceptive.
Statements considered puffery (wildly exaggerated claims not to be taken seriously) will not be considered misleading or deceptive. e.g. ‘world’s best burgers’.
S18 is a broad provision intended to ensure that all businesses engaged in trade and commerce meet a certain base level norm of conduct – namely that however they promote or sell they always provide a ‘truthful impression’. It is interesting to note that frequently it is not a consumer taking action for harm caused by misleading an deceptive conduct, but instead business competitor against business competitor. For example, Panadol has taken action against Herron, Kellogs against Sanitarium, EveryReady Batteries against Duracell Batteries etc.

17. Unfair Business Practices False or Misleading Representations about specific matters – S29 ACL
A business must not make false and misleading representations about:
The quality, standard or composition of goods and services – s29 (1)(a) and s29(1)(b) ACL
Testimonials, sponsorship, approval or endorsement of the goods and services – s29(1)(e), (f) and (g) ACL
The price of the goods and services – s29(1)(i) ACL
The rights of consumers to conditions and remedies – s29(1)(m) ACL
The country or origin of goods - S29 (1)(k) ACL.
For an item to be considered manufactured in a particular country it must be:
Substantially transformed in that country.
50% or more of the cost of making the item must have been paid in that country.

18. Unfair Business Practices Continued
Free items – A business must not offer any gifts or prizes to promote certain goods or services, if it does not intend to provide them as offered (s32 ACL).
Bait Advertising - A person must not advertise goods or services at a specific price if they are not willing to offer it at that price to a reasonable number of buyers (s35 ACL).
Failure of intention to supply - A person must not accept payment for goods or services if they do not intend to supply these goods and services (s36 ACL).
Question: Give an example of bait advertising that you have encountered.

19. Unfair Business Practices Pyramid Schemes – s44 ACL
A person must not participate in a pyramid scheme, or encourage another to participate in a pyramid scheme.
A pyramid scheme is a ‘business’ where one tier of participants is paid a commission for every person they recruit.
Those persons then get a commission for those they recruit and so forth, new investors are charged an entry fee.
Profits do not come from the genuine sale of goods and services but from the commissions made on the entry fees.

20. Unfair Business Practices Pricing
If a business displays more than one price for goods, they must sell those goods for the lowest price - s47, ACL.
Businesses must charge a single price for goods and service. i.e. cannot add GST or batteries etc. What is important is that even if component parts of the price are displayed, there is also a clear and obvious statement of the overall total price - s48, ACL

21. Unfair Business Practices Unsolicited Transactions – s68 ACL
There are limitations on businesses that approach consumers rather than wait for the consumers to approach them.
Unsolicited Consumer Agreements occur when:
a business approaches a consumer via telephone or on premises that the business does not own,
without the customer inviting them to do so, and,
the value of the good or services sold is more than $100.
When an unsolicited agreement is made, the salesperson must:
Inform the customer of their rights to terminate the contract (i.e. cooling off) before it is entered into.
Give the customer a written copy of the agreement.
Obtain the signature of the consumer on the agreement.

22. Unsolicited Transactions
It is illegal to demand payment for unsolicited goods and services – s41 ACL.
The rights of the recipient in relation to the unsolicited goods and services – s42 ACL.
It is illegal for financial institutions to issue unsolicited credit cards – s39 ACL.

23. Unfair Business Practices
Referral Selling – A person must not promise consumers some type of benefit (a commission or discount) if they help lure in other customers, and that benefit is only bestowed if a certain event happens - s49 ACL.
Harassment and Coercion - A person must not use physical force or unfairly harass or coerce another person about the supply of, or payment for, goods or services - s50 ACL.
Proof of transaction - If a person supplies goods or services to a consumer for $75 or more, they must provide the consumer with proof of transaction, e.g. a receipt – s100 ACL.

24. Business Practices Unconscionable Conduct – ss20 – 21 ACL
The principle of unconscionable conduct also applies to consumer transactions under the ACL.
Conduct between a business and a consumer may be unconscionable when:
The business has exploited an imbalance of bargaining power.
The consumer was made to comply with conditions that weren’t reasonably necessary.
The consumer couldn’t understand the contract they signed.
The business has used pressure or unfair tactics.

25. Business Practices Unfair Terms in Standard Form Consumer Contracts
Under s23 of the ACL, an unfair term in a standard form consumer contract is void.
To be a standard form consumer contract the contract must deal which goods or services of a domestic nature that is written by the business.
Under s24, a term of a contract is unfair if it:
would cause a significant imbalance in the parties rights and obligations under the contract;
it is not reasonably necessary to protect the interests of either party; and/or
it would cause loss to a party if it were relied on.

26. Enforcement and Compliance
The ACL is regulated and enforced by State and Territory consumer protection offices and by the federal Australian Competition and Consumer Commission – the ‘ACCC.’
All of the agencies work to promote compliance by traders through education and advice.
Enforcement measures include dispute resolution, public warnings, injunctions, substantiation notices, compliance programs, corrective advertising and fines.