Commerical Law
— Topic 10: Dealing with Consumers: Specific Protections
Commercial Law
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Overview of this topic:
Specific prohibitions; and
Consequences of contravention
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Learning Outcomes:
What are the consequences of getting caught engaging in the prohibited conduct?
What are the consequences of a business failing to protect consumers’ information privacy?
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Reading materials
Chapter 11 (pages 361-377) of Nickolas James's Business Law (Wiley, 5th ed, 2020)
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Specific prohibitions
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AUSTRALIAN CONSUMER LEGISLATION: Specific prohibitions
s 29 False Representations
A business must not make a false representation:
That its goods are of a particular standard, quality, value, grade, composition, style or model or have had a particular history or particular previous use.
That its goods are new,
That it has a sponsorship, approval or affiliation it does not have, with respect to the price of its goods or services,
Concerning the availability of facilities for the repair of its goods or of spare parts for its goods,
Concerning the place of origin of its goods, or
Concerning the existence, exclusion or effect of any condition, warranty, guarantee, right or remedy.
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AUSTRALIAN CONSUMER LEGISLATION Specific prohibitions
Section 35 Bait advertising
A business must not engage in bait advertising.
A business engages in bait advertising when it advertises a product at a price that is likely to attract buyers to its premises when it knows or should know that it is likely to run out of stock very quickly.
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AUSTRALIAN CONSUMER LEGISLATION Specific prohibitions
Section 36 Wrongfully accepting payment
A business must not accept payment from a buyer when it either does not intend to supply the product or it knows or should know that it will be unable to provide the product within the specific time or a reasonable time
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AUSTRALIAN CONSUMER LEGISLATION Specific prohibitions
Section 40 Assertion of right to payment for unsolicited goods.
Inertia selling is sending an unsolicited product to a person and then pressuring the person to pay for that product;
No right exists to assert payment unless seller reasonably believes that it in fact has a right to payment.
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AUSTRALIAN CONSUMER LEGISLATION Specific prohibitions
If a business has sent an unsolicited product to a person, the person:
does not have to pay for it, and
is not liable for the loss of or damage to the product unless the loss or damage results from a wilful and unlawful act.
Section 41
After the expiry of a certain period, the product becomes the property of the person, free of charge.
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AUSTRALIAN CONSUMER LEGISLATION Specific prohibitions
Section 44 Pyramid schemes
A person is prohibited from participating in, or inducing others to participate in, a pyramid selling scheme.
A pyramid scheme is a type of product distribution scheme whereby a participant makes a profit or receives a commission for the sale of each product to a buyer;
the participant is rewarded for the introduction of other participants to the scheme, usually by receiving a commission for each new participant.
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AUSTRALIAN CONSUMER LEGISLATION Specific prohibitions
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AUSTRALIAN CONSUMER LEGISLATION: ACL Consumer guarantees
Recall the definition of a consumer. The ACL implies into contracts for the sale of goods to consumers, guarantees that:
the seller has title: ACL s 51;
the consumer will have undisturbed possession: ACL s 52;
there are no undisclosed securities: ACL s 53;
the goods are of acceptable quality: s 54;
the goods are fit for any disclosed purpose: s 55;
the goods correspond with their description: s 56;
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AUSTRALIAN CONSUMER LEGISLATION ACL Consumer guarantees
the goods correspond with any sample or demonstration model in quality, state or condition: s 57;
the manufacturer will ensure that repair facilities and spare parts are reasonably available: s 58; and
the manufacturer will comply with any express warranties given in relation to the goods: s 59.
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AUSTRALIAN CONSUMER LEGISLATION ACL Consumer guarantees
the services will be rendered with due care and skill: s 60;
the services, and any product resulting from the services, will be fit for any disclosed purpose: s 61; and
the services will be supplied to the consumer within a reasonable time: s 62.
Unlike the terms implied by the Victorian Sale of Goods Act 1958, these ACL guarantees cannot be excluded.
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AUSTRALIAN CONSUMER LEGISLATION: Consumer Guarantees, Remedies against manufacturer
DEFECTIVE PRODUCTS
Sections 271 – 272 provide for a claim in damages from manufacturer for breach of ss 54 or 56 by the retailer.
If there is a breach of either s 54 or s 56 or both by the retailer, the consumer or an affected person may sue the manufacturer for damages.
s 272 sets out the amount of damages which may be claimed, including the price of the goods.
s 276 prohibits exclusion clauses by the manufacturer.
Note the definition of a manufacturer: s 7(1) (a) and (e)
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AUSTRALIAN CONSUMER LEGISLATION: Consumer Guarantees, remedies against manufacturer
SAFETY DEFECTS
Sections138 -141 deal with loss incurred by the consumer or an affected person in the event of a product having a safety defect.
s 9 Defines ‘safety defect’.
s 150 prohibits exclusion clauses by the manufacturer.
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AUSTRALIAN CONSUMER LEGISLATION Information standards
ACL Pt. 3-4 regulates the use of information standards for goods or services.
s 134: An information standard sets out the form and content of the information that must accompany the supply of goods or services (for example, on the product packaging);
ss 136-7: A person must not, in trade or commerce, supply goods or services if the relevant information standard has not been complied with.
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Consequences of contravention
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AUSTRALIAN CONSUMER LEGISLATION Consequences of contravention
If a business breaches a general prohibition it may be the subject of a civil action (e.g. it can be sued for compensation) but there are no criminal penalties.
If a business breaches one of the specific prohibitions it may be the subject of both a civil action and a criminal penalty such as a fine (the greater of $10 million, 3 x value of benefit or 10% of annual turnover for companies and $500,000 for individuals).
Penalties are also imposed for breach of any of the consumer guarantees.
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AUSTRALIAN CONSUMER LEGISLATION Consequences of contravention
Remedies that can be granted by a court for contravention of the ACL include:
s 228 Pecuniary penalties;
s 232 Injunctions;
s 236 an order that the defendant pay damages to any person who has suffered loss because of the contravention:
s 237 a compensation order for injured persons;
s 243 an order declaring a contract void, varying a contract,
refusing to enforce a contract, ordering a refund, ordering
compensation, ordering repair of the goods, or ordering the
provision of services;
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AUSTRALIAN CONSUMER LEGISLATION Consequences of contravention
s 246 non-punitive orders including orders directing the defendant to perform a community service, directing them to establish compliance and education programs for their employees, requiring them to disclose information, or requiring them to place an advertisement;
s 247 an adverse publicity order; and
s 248 an order disqualifying a person from managing a corporation.
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AUSTRALIAN CONSUMER LEGISLATION Consequences of contravention
s 259: Where a business has failed to comply with a
consumer guarantee and the non-compliance is not a
major failure, the consumer can require the business
to remedy the failure within a reasonable time.
The business can remedy the non-compliance by:
curing the defect in title (if any),
repairing the goods,
replacing the goods, or
providing a refund.
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AUSTRALIAN CONSUMER LEGISLATION Consequences of contravention
s 260: Where the non-compliance is a major failure or cannot be remedied, the consumer can:
reject the goods (that is, return the goods for a refund or a replacement) or
require the business to pay to the consumer the difference between the value of the goods and the price paid for them.
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Takeaways from today?
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