Consumer law is enacted by the parliament in order to provide guidelines to the buyers and the sellers in relation to the purchase and sale of goods and services. The law strives to protect the consumers from the being exploited by the manufacturers and sellers. If consumer law was not present the consumers would have been exploited in various manners such as hoarding of goods, adulteration, selling unsafe products, using wrong measures and weight, selling low quality goods and charging price in excess. Consumer law pressurizes the business entities in Australia so that they restrain themselves from exploiting the consumers. The law enlightens the consumers about their rights and responsibilities so that legal actions can be taken by tem and they are aware of the fact that what is right and what is not. Through this the consumers are made aware of the platforms through which they can raise their concerns such as appropriate consumer courts. The law provides a scope for the consumers to establish unity and provide collective resistance to companies who indulge in illegal trade practices. The main aim of the law is to enhance the quality of life for the consumers and to establish a fair market (Knake, 2014).
Not all buyers indulge in unfair trade practices but are at times made to suffer due to thee Mala fide intentions of a few consumers. The Australian consumer law not only aims to protect the consumers but also the buyers so that they can effectively carry out their business activities. Defenses against mala fide prosecutions are provided to the buyers along with tools to carry out business operations smoothly. The law seeks to provide a single framework by replacing various state and national law for the sellers so that compliance with the guidelines becomes easy and effective business operations are ensured. The law provides strict guidelines for the sellers so that they are able to fulfill the purpose of the consumer law provisions. The sellers are restricted through the law from indulging in any activity which brings unwanted detriment to the buyers in order to make more profit. Strict and sufficient penalties are imposed on them so that the buyers can be compensated for the loss faced by them. The examples of a few unfair practices which have been restricted by consumer law are multiple pricing, bait advertisements, deceptive and misleading conduct, offering price with no intention to supply and stating single price in particular situations.
As discussed in the preceding section consumer law is of utmost significance to ensure the safety of the consumer as well as making the compliance process easy for sellers and manufactures. The paper aims to discuss the Australian Consumer Law in relation to both the buyers and the sellers. The responsibility of the sellers towards the goods sold by them and the types of conducts they must not engage in during trade are discussed by the paper through referencing to the important provisions of the Australian Consumer Law. The paper also discusses how consumer law is enforced in Australia and who is eligible to be liable or gain protection under the law. The paper also discusses about the liabilities of the seller which arises when they do not comply with the provisions of the law (Steinwall & Griggs, 2015).
The Australian consumer law had been introduced into the Competition and Consumer Act as schedule 2. The present consumer law is a replacement of over twenty state, territory and national legislations. The provisions provided by the Trade Practices Act 1974, door-to-door sales legislations and Fair trading Acts in relation to consumer protection has been replaced by the law. The law has been enforced by all state, territory and federal courts and tribunals and is not only applicable on conduct which has been engaged into in Australia but also to conduct done outside Australia by its citizens and residents. Along with guidelines which have to be followed by the buyers and sellers the law also provides for remedies and penalties which a person is liable to pay in case of breach (Adams, 2013).
The major principles of the ACL are equal for both the buyers and the seller. The law seeks to protect the consumers against misleading and deceptive conduct, false representation, unfair contractual terms and other unfair trade practices. The law prevents anti-competitive and monopolistic conducts in relation to traders in order to achieve efficiency and greater competition in the marketplace. Implied warranties and conditions which were created by the TPA are replaced by Consumer Guarantees in the ACL. The ACL ensures Statutory Guarantees as well in which right to sue does not arise from the breach of a contract. Some form of statutory guarantees is supply of goods, supply of services and ownership. With respect to ownership ACL provides rights to Title, exemptions from undisclosed securities and undistributed possession. In relation to services the consumer guarantees provide exercise of due skill and care along with reasonable time for supply (Micklitz & Durovic, 2017).
The ACL seeks to provide protection to the consumers in areas such as Unfair contract terms which covers consumer contracts in the standard form, product safety, rights of the consumers in relation to the purchase of services and goods and unsolicited consumer agreements which cover telephone sales, Lay-by agreements and door-to door sales. The consumers are entitled to statutory as well as consumer guarantees. Section 3 of the ACL defines who is a consumer. According to the section a purchaser who purchases goods not over the value of $ 40,000 and in case the values exceeds the limit the nature of the goods is such that they are used for domestic, household and personal use or is a commercial road vehicle. A person indulging hire purchase and contract of hires excluding commercial road vehicles is also regarded as a consumer. The consumers are provided with a guarantee that the goods supplied to them would be of a quality which is acceptable. The quality must be met with reference to the price and nature of the goods, statements on the labels or packing on the goods, representations made by manufacturer and suppliers and any special circumstances which arise during the supply of goods. In the case of McWilliams Wines Ltd v Llaweena Pty Ltd [1988] it was held by the court that all relevant circumstances in relation to the sale of services has to be considered in order to determine what quality is acceptable. The goods which are sold by the sellers has to be fit for a particular purpose which they were sold to the consumer based on the information provided by him to the buyer impliedly or in expressed form. A guarantee for description also arises when supplier is not a regular dealer of such goods, rather than quality description is related to identity, when the goods have been seen and the goods are selected based on description. In the case of Ashington Piggeries Ltd v Christopher Hill Ltd (1972) AC 441 it was provided by the court that goods must be corresponding to the both sample and description if they are sold according to them. The consumers are also provided guarantee that the goods purchased by them are subjected to repairs and availability of shared parts.
Section 60 of the ACL provides that due care and skills has to be observed by the manufacturers in relation to consumer guarantees. In the case of ovacevic v Holland Park Holdings P/L (2010) QLD 279 it was ruled by the court that the supplier was negligent by not observing care and skill with respect to the services supplied to the consumer.
As per general protection provided by the ACL to the consumers prohibition of misleading and deceptive conduct with respect to trade and commerce has been imposed, prohibition on Unconscionable conduct has been imposed and the sellers have been prohibited from including any unfair contract terms in contracts related to consumers.
Section 18 of the ACL is one of the most litigated sections under this law and provides that the sellers must not engage in actions which are misleading and deceptive or may result in being deceptive and misleading in relation to trade and commerce. The section does not require an intention of the seller to mislead or deceive the consumer and imposes a strict liability. The section can be used by both the consumers and the sellers. Three elements have to be satisfied in order to prove contravention of this section. What is misleading has been clearly provided by the case of Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) FCA 630. In this case the court ruled that any act which is capable of inducing a consumer to purchase goods and services without by making them believe about a certain fact accounts to a misleading act. However it has been provided by the ACL that a conduct which accounts to uncertainty and confusion is not capable of constituting misleading conduct alone unless an error is made by the consumer based on it as per the case of McWilliams Wines P/L v McDonald’s System of Australia P/L (1980) 33 ALR 394. Exclusion clauses can be used the sellers to exempt liabilities but they are not always adequate as provided by the case of eBay international AG v Creative Festival Entertainment P/L (2006) FCA 1768. In circumstances where clarification is required, silence accounts to misleading conduct as per the case of ACCC v Testra (2007) FCA 1904. Puffery can also account to misleading conduct according to the principles of ACCC v Turi Foods P/L (2013) FCA 665.
The section also provides powers to the consumer to take alternative actions for breaches such as defamation, misrepresentation, breach of contract, IP rights infringements , passing off and negligence.
Section 20 of the ACL protects the consumers against an unconscionable conduct done by the seller with respect to business activities with respect to unwritten law. Unwritten law is a combination of equitable principles and common law developed in Australia relating to unconscionable conduct. Unconscionable conduct has not been defined by the ACL however the guideline provided by the section includes bargaining power of the parties, whether the terms would be difficult to comply with, use of undue influence or unfair practice and the cost of similar goods as per the case of ACCC v Lux Pty Ltd (2004) FCA 926.
According to Section 23 of the ACL any term which is unfair in relation to a standard contract is not valid. This has been included in the ACL to protect the consumers against unfair terms of trade contract. According to Section 24 of the ACL a term in a contract can be regarded as unfair terms if a significant imbalance would be created by such terms with respect to the obligations and rights of the parties. It is not required to protect the interest of the party advantaged through it or the term if applied would cause a significant detriment to the party. A further protection is provided to the consumers through the provisions of Section 29 in relation to false misrepresentation (Corones, 2014). A false representation cannot be provided in relation to promotion or supply of services and goods, selling and advertising and particular history of goods and services as per the case of ACCC v Gordon Superstore P/L (2014) FCA 452. In the case of ACCC v Marksun Australia P/L (2011) FCA 695 it was held by the court that a false representation in relation to the country of origin is also regarded as false representation under this section. The consumers are protected from practices such as referral selling, taking payments without supply, pyramid selling, unsolicited credit cards, services and goods, harassment or coercion regarding supply of goods and services at a person’s residence, multiple pricing, bait advertising, misleading conduct services and single price.
The commonwealth government has duty to ensure the safety of products with respect to the consumers. Thus product safety standards are credited by the parliament to protect the interest of the consumers. In case the standards are not complied with it may result in recalls, bans and safety warning notices.
The sellers can make a claim under the ACL if the buyers accept payments from them even after having the knowledge that they will not be able to provide them with the product within a stipulated time frame. The concept was also discussed in details in the case of Dawson v World Travel Headquarters P/L (1981) 53 FLR 455. Section 9 (1) ACL entitles the consumers to safe goods and services according to the standard set by the ACL.
The ACL ensures compliance with its provisions through penalties and remedies. Remedies are provided to the consumer through various sections of the ACL. According to Section 236 damages are provided to the buyers in case the breach in provisions of the ACL causes damages or loss to them. The consumers can also make a claim for injunctions through Section 232 of the ACL. Compensation are provided to the consumers through Section 237-238 of the ACL in case the consumers face damages or losses due to the presence of unfair terms in a contract. The ACL also provides for penalties under for corporations and individuals. An individual has to pay a maximum penalty of $220,000 whereas a penalty of up to 1.1 million can be imposed upon a corporation. The ACL also provides for criminal penalties in case of certain breaches.
The consumer needs to be aware that in circumstances in which there is scope that they can discover the defect present in a product or its fitness for a specific purpose than they will lose the right they may have over the seller with respect to the unfit or defective goods. The maxim Caveat emptor prevails in this situation which means that the buyer should be aware. However the sellers are liable for any loss suffered by the buyers if there was no reasonable chance for an inspection or the buyer relied upon the special instructions of seller with respect to the product.
The ACL is a general law which is applicable equally on all sectors with respect to Australian jurisdiction. To make it simple all businesses in Australia have same responsibility and all the consumers have access to the same rights without considering the place where the transaction took place. General standards of business activities are covered by the ACL which provides for prevention of unfair practices in trade, regulation of particular business-consumer relationships, provisions for fundamental consumer guarantees and regulating the safety in relation to goods and services. If consumer law is imposed in a way which would only take side of the consumers the proper functioning of businesses in Australia would be obstructed. Thus the Australian consumer law provides for a balance between the rights of the consumer and responsibilities of a seller.
The sellers have the responsibility of providing consumer guarantees to person regarded as consumers within the scope of ACL. In case the businesses fail to supply consumer guarantees they are liable to repair, replace or refund for the product, get the contract of services cancelled and compensate the buyers for the loss and damages faced by them.
It is the duty of the seller in relation to products to ensure that lasting, safe and faultless products are provided to the consumers. The products must look acceptable prima facie and are capable of performing all activities which a person would generally expect from them. Other requirements of what an acceptable product is as discussed above also have to be taken into account by the seller (Taylor & McNamara, 2014). The sellers have to provide compensation to the buyers if any of the consumer guarantees are deprived from the buyers subjected to the exception related to spare parts. The seller is not entitled to refuse repair , refund or replacement by sending the buyer to the manufacturer. However the sellers can claim compensation and other remedies from the manufacturers and importers directly depending upon their wish in case the goods are not matching the description and are not of acceptable quality or any extra promise had been made by the manufactures to them.
However the ACL provides certain protection to the sellers so that they can efficiently carry out their business activities. The sellers are not liable for the breach in consumer guarantees if the seller has provided what they have been asked to but the buyers changed their mind or found similar products at a cheaper rate somewhere else. The sellers are also not liable if the product has been misused by the buyer. The sellers are also not liable if the buyers were made aware of the faults which existed in the product before the product had been bought by them. The sellers can evade the liability arising out from the ACL if the buyers use the product in a way which was not advised by the seller or the seller was not made clear about the demand of the buyer.
Further liabilities in relation to replacement, repair and refund of products are not applicable according to the ACL in case if the product cost in excess of $40000 and have been purchased solely for business use such as farming equipments. The good was bought as a one-off sale with respect to a private seller such as garage sale.
The sellers are not allowed to include any term which is unfair into the trade contract. An unfair term as discussed above is any term which brings detriment to a party having a lower bargaining power with respect to the contract. However the ACL provides that only the term which has been pointed out as an unfair term is regarded as void and the overall contract is still binding in case it can function without the presence of the unfair term. The three tests which are used to find out that a term is unfair or not by the court are verifying that the term would not cause a significant imbalance with respect to the bargaining powers, no necessity of protecting the party advantaged by the term and in case the term is incorporated the party would be subjected to detriment.
The sellers are thus prohibited from incorporating a term into the consumer contract which lacks transparency as the term would be regarded as an unfair term. In order to determine whether a term is transparent or not the court analyzes that the terms has been expressed in a language which is reasonably plain and simple, the term is legible, it has been clearly presented and is available readily to the parties who could be affected by the terms. However only the court has the powers to determine whether a term is transparent or not and the seller cannot claim that they ensured transparency. In the case of Director General of Fair Trading v First National Bank it was provided by the court that not only the above factors should be used to verify transparency but also the court should analyze that the term has no trap or pitfall for the consumers.
The seller has to be aware that the fairness of a term is analyzed based on taking into account the contract as a whole. Only the term cannot be taken separately for the purpose of analyzing its fairness as a term which can be taken as a very unfair term in a particular context can be proved to be a fair term in another context (Eldridge, 2016). Thus the sellers are provided this protection by the court in relation to unfair terms for properly carrying out business activities. This concept had been provided by the case of Director of Consumer Affairs Victoria v AAPT Ltd (Civil Claims) [2006] VCAT 1493.
Section 35 of the ACL provides provisions in relation to a concept known as bait advertisements. According to the concept the sellers are not allowed to provide false advertisements about goods and services in relation to its price or free gifts having the knowledge that they would not be able to satisfy the demands of the consumers. The ACL provides further scope for the sellers in form of statutory defenses. In case the goods are defective the seller can claim defenses under Section 142 of the ACL. The sellers can evade liability if the defect claimed by the buyer did not exist, only because a mandatory compliance was present the goods were subjected to a defect, the technical knowledge at the time of sales was not adequate to discover the defect and in case the goods which has defect are a part of some other goods than the design, marking and instructions on the other good were not complied with. Section 207-211 provides further defenses to the sellers. If the seller is able to prove before the court that the cause of the contravention is totally relied to a mistake of fact which also includes the dependence on an information provided by a third party. However the defense cannot be availed by the defendant if the person who provided the information to the seller was an agent or employee of the defendant and in case the seller is a company than the directors or employees of the seller. The seller further has to ensure that reliance of the defense is only applicable when a leave in the respect has been granted by the court.
It is also a defense for the seller if the contravention was due to the fault of another person and if the seller is able to prove that the circumstances were not within his control and reasonable precautions were taken by him to avoid the contravention. The same exception as per section 206 is also applicable to this defense.
Section 54(2) of the ACL also provides guidelines which help the sellers to provide the buyers goods of acceptable quality and beyond such guidelines the buyer cannot claim against the quality of the goods. The seller has to ensure that the goods are fit for the ordinary purpose for which they have been supplied, have an acceptable finish and appearance, defect free, durable and safe with respect to the nature and price of goods, and any extra promise made by the seller or manufacturer.
In the case of Grant v Australian Knitting Mills [1936] AC 85 it was ruled by the court that warranty is not applicable in case the buyer did not use the judgement or skill provided by the manufacturer or seller with respect to the usage of the concerned product. In the case of Drummond Van Ingen (1887) 12 App Cas 284 it was ruled by the court that a manufacture does not have any liability in case the sample of the product requested by the buyer was not provided by him. In relation to the rule of spare parts as discussed above the provisions are not applicable if a notice to the contrary is provided by the seller at the time of sale. It has been further provided by Section 62 of the ACL that consumer warranties are not applicable with respect to the work of a qualified engineer or architect.
Conclusion
The paper can be concluded by stating that the Australian consumer law provides for a balance between the rights of the buyers and the sellers. The bargaining power of the seller much more compared to that of the buyer. Thus powers have been provided to the buyers so that they can be protected against exploitation. Along with increased powers to the buyers protection has been provided to the seller in form of defences which they can use when they are actually not at fault. This ensures that a healthy relationship between the buyers and the seller is maintained.
References
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