TABL 1710

BUSINESS AND THE LAW

Lecture 8
Consumer Protection
2016 The University of New South Wales
Sydney 2052 Australia
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permission. Enquiries should be addressed to the Head of School, Taxation and Business Law, UNSW, Sydney

Major assignment
Due in around three weeks time
Tuesday 4 October 2016 no later than 5
pm.
Online submission only.

Public holiday
Monday 3 October 2016 (immediately
after mid-semester break) is a public
holiday.
No lecture that day.
Monday lecture students will need to
listen to recording of Wednesday
lecture, which will be uploaded to
Moodle.
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This week
Consumer Protection
Consumer Law - the statutory provisions:
Unconscionable conduct
Misleading or deceptive conduct
False representations

Defences
Remedies
No refunds
Implied guarantees for sellers and manufacturers

Overview
On completion of this week in you should be able to:
Explain what is unconscionable conduct within the meaning of the Australian
Consumer Law (ACL)
Explain what is meant by misleading or deceptive conduct in s 18, ACL and
identify different types of conduct that might be misleading or deceptive
Identify the different types of false representations set out in s 29, ACL
Identify defences available for breaches of the consumer protection provisions
Suggest possible remedies for breaches of the consumer protection provisions
Explain what the law says about no refund signs
Identify the non-excludable implied guarantees applicable to consumer
contracts

Sale of Goods/Product Liability

Please note in this unit we are NOT DEALING
with:
Sale of Goods
Product Liability
Therefore Gibson & Fraser, pp 647-652 are NOT
relevant.

ACCC online learning modules

Excellent materials covering consumer law
and competition law. Highly recommended!
Links to the materials in Moodle.

What is consumer protection

Aim of consumer protection laws
Prevent businesses from harming consumers
Promoting fair competition between businesses by
preventing businesses from gaining an unfair advantage in
the market at the expense of customers and competitors

Competition and Consumer Act 2010 (Cth)

The Competition and Consumer Act (CCA) is a

federal/Commonwealth statute that:
Regulates RESTRICTIVE TRADE practices to produce
greater competition and efficiency in the market for the benefit
of consumers; and
Protects the interests of consumers of goods, services and
land against UNFAIR PRACTICES

Prior to 1 January 2011, the CCA was known as the Trade

Practices Act 1974 (Cth)

Australian Consumer Law (ACL)

Consumer law and unfair practices dealt with by the Australian
Consumer Law
Australian Consumer Law (ACL) is Schedule 2 of the
Competition and Consumer Act 2010 (Cth)
ACL is NOT the name of the legislation only the name given to
Schedule 2
Legislation is the Competition and Consumer Act 2010 (Cth)
(referred to as CCA)

In this course we will focus on the following types of conduct in

the ACL:
ss 20-22: unconscionable conduct
s 18: misleading or deceptive conduct
s 29: false representations
See Gibson & Fraser, p 617

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The Regulator
Australian Competition and Consumer Commission (ACCC)
Regulator responsible for administering the CCA
Primary responsibility: to ensure individuals and businesses
comply with Commonwealth consumer protection, fair trading
and competition/trade practices laws
Until 1995, was the Trade Practices Commission (TPC)
Also see: http://www.accc.gov.au
(Further discussion on role of ACCC later in lecture)

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Australian Consumer Law (ACL)

Who is a consumer?
A person (or business) will be defined as a consumer if they
acquire goods or services for:
Up to $40K: s3(1)(a)
More than $40K and the products or services are normally used for
personal, domestic or household purposes: s3(1)(b)
See Gibson & Fraser at p 617

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Australian Consumer Law (ACL)

Who is NOT a consumer?
A person who purchases products for resupply or
for use in the manufacture or repair of other items

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Unconscionable conduct
The unconscionability provisions provide consumers
(and small business) with protection from
unconscionable (unfair) conduct

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Unconscionable conduct
Where one party to a transaction is at a disadvantage, because
of:
age
sickness
illiteracy
financial needs
lack of explanation when required
language (i.e. non-English speaking) and the other party
takes advantage of this for gain

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Unconscionable conduct
Amadios case:
The plaintiff has to establish:
They were in a position of special disadvantage
That substantially affected their ability to protect
themselves
The defendant knew, or ought to have known, of the
plaintiffs disability and not taken advantage of it
AND
Actions of defendant were unconscionable

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Unconscionable conduct
Section 20 (ACL): defines unconscionability in general terms
A person must not, in trade or commerce, engage in conduct
that is unconscionable within the meaning of the unwritten law
from time to time.
Applies equitable principles from Commercial Bank of Australia
Ltd v Amadio to business disputes
Section 21: prohibits statutory unconscionability in connection with
the supply or acquisition of goods or services
Section 22: statutory checklist (see next slide)

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Unconscionable conduct
Section 22
Relative bargaining positions of the parties
Did the consumer have to comply with conditions that were
not reasonably necessary?
Did the consumer understand the documentation?
Was there any undue influence, pressure or unfair tactics?
Could the consumer have obtained the same goods or
services elsewhere
See Gibson & Fraser at pp 629-632

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Misleading or deceptive conduct

Section 18 (ACL):
A person shall not, in trade or commerce, engage in
conduct that is misleading or deceptive or is likely to mislead
or deceive
Section 18 was formerly s 52 of the Trade Practices Act 1974
(Cth)

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Misleading or deceptive conduct

Section 18 (formerly, s 52): most sued on piece of legislation in
Australia
Not restricted in its usage to consumers and can be equally
enforced by competitors or suppliers against other competitors
or suppliers

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Misleading or deceptive conduct

and the financial services industry
Misleading or deceptive conduct, misrepresentation
and unconscionable conduct in relation to financial
services are caught by the Australian Securities and
Investments Commission Act 2001 and looked after
by the Australian Securities and Investments
Commission (ASIC)
See Gibson & Fraser at pp 620, 659-660

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Misleading or deceptive conduct

prohibited
Section 18 is made up of the following elements:
Conduct by a person
In the activity of supplying goods or services in
trade or commerce; and
Who has engaged in misleading or deceptive
conduct or conduct that is likely to mislead or
deceive
See Gibson & Fraser, p 621
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What is misleading or deceptive?

Conduct is misleading if it will:

lead a consumer astray in action or conduct or
lead a consumer into making an error

Conduct is deceptive if it leads people to believe what is false, if it

misleads as to a matter of fact: Weitmann v Katies Ltd

The test = question of fact to be determined in context of

evidence/facts of each case

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What is misleading or deceptive?

Courts have formulated the test that a statement is misleading if:
it would lead one ordinary member of the public,
who is likely to read the statement or be influenced by it
into error
Case: Taco Company of Australia Inc v Taco Bell Pty Ltd

See Gibson & Fraser at p 624

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Relevant section of the public

Who is likely to be misled or deceived by the conduct in
question?
Need to identify the class of persons who are prospective
consumers and who are likely to be affected by the conduct
Ask:
At whom was the conduct directed?
Would those persons have been likely to be led into error by
the conduct?

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Relevant section of the public

Once relevant section of public identified, consider all who come
within it
'..the astute and the gullible, the intelligent and the not so
intelligent, the well-educated as well as the poorly educated,
men and women of various ages pursuing a variety of
vocations.'
Case: Taco Company of Australia Inc v Taco Bell Pty Ltd
See Gibson & Fraser at p 624

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What is misleading or deceptive?

Whether conduct is misleading or deceptive is
determined by the court using an objective test
of:
whether a reasonable [or representative] person
[within the relevant class] would be misled or
deceived.

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Standard for assessing conduct

The standard should be set by reference to that section
of the public who is exposed or potentially exposed to
the relevant conduct

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'Likely to mislead or deceive'

Not necessary to prove that anyone was actually
misled
Need real possibility or 'not remote chance' that
someone might be misled

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Misleading/deceptive conduct
What is conduct?
Conduct has a broad meaning and includes:
Statements of opinion
Broken promises and false predictions
Statements that are literally true but which create a false impression
Pre-contractual statements
Silence
BUT: 'puffery' or self-evident exaggeration that are promotional
statements in advertising and that cannot be taken literally (eg 'the
juiciest oranges in Qld, Red Bull gives you wings), will not be taken to
infringe s 18
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'Silence'
Silence may be misleading or deceptive:
No general duty of disclosure BUT conduct may be misleading
or deceptive if failure to communicate a relevant fact may cause
the true representation of another fact to be misleading
ASK: is there a REASONABLE EXPECTATION OF
DISCLOSURE?
Case: Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd
See Gibson & Fraser at p 621

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Misleading/deceptive conduct
What is NOT misleading or deceptive?
Mere confusion or causing uncertainty will not amount to conduct
that is misleading or deceptive.
McWilliams Wines Pty Ltd v McDonalds System of Australia Pty
Ltd
Parkdale Custom Built Furniture Pty Ltd v Puxu

See Gibson & Fraser at pp 625-626

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How to avoid acting in breach of s 18

Comparisons must be ACCURATE
Compare like with like

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False Representations
False Representations: s 29 (ACL)
Breach of section 29 will result in either:
- prosecution by the ACCC for a criminal offence
OR
- the injured party being provided with civil remedies (eg
damages).
The section prohibits the making of false representations in
connection with the promotion and supply of goods and services
in 14 subsections.

See Gibson & Fraser at pp 635-638

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False Representations
s 29(1)(a): No false representation about the standard, degree
of quality, value, grade, composition, style, model, history
or previous use of goods
s 29(1)(b) no false representations regarding services
s 29(1)(c): no false representations that goods are new
s 29(1)(d): no false representations that goods or services
have been ordered
s 29(1)(e)/(f): no false representations regarding testimonials
relating to goods or services
s 29(1)(g): no false representations about performance
characteristics, accessories, uses or benefits of goods or
services
s 29(1)(h): no false representations regarding sponsorship,
approval or affiliation
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False Representations
s 29(1)(i): no false representations about the price of goods or
services
s 29(1)(j): no false representations about repair facilities or
spare parts
s 29(1)(k): no false representations about place of origin
s 29(1)(l): no false representations about the need for any
goods or services
s 29(1)(m): no false representations about the existence,
exclusion or effect of any condition, warranty, guarantee,
right or remedy
S 29(1)(n): no false representations concerning a requirement
to pay for a contractual right
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Other unfair practices

Pyramid Selling s 44 to 46, ACL:
A trading scheme in which a 'promoter' offers to sell to a
'participant' both the right to sell a particular product or
service and the right to introduce others into the scheme in
the same way
Both the promoter and participants trying to recruit others in
the scheme are caught under this section

See Gibson & Fraser at p 642

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Other unfair practices

Unsolicited Credit Cards s 39, ACL:
Prohibits the sending of unsolicited credit or debit cards to
a person unless they were requested
See Latimer at 7-460
Unsolicited goods or services ss 43, ACL:
Prohibits a business pushing a right to payment for
unsolicited goods or services
See Latimer at 7-460

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Unfair practices & the ACL

See figure 22.1
Gibson & Fraser, p 619

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Consumer Guarantees
when goods are supplied

The ACL implies into consumer contracts certain non-excludable

conditions and warranties (by suppliers to consumers):
Regarding title and right to dispose of the goods: s 51, ACL
Undisturbed possession: s 52, ACL
Freedom from undisclosed securities: s 53, ACL
Goods are of acceptable quality: s 54, ACL
Goods are fit for purpose: s 55, ACL
Goods match their description: s 56, ACL
Goods match the sample (or the demonstration model): s 57, ACL
Repairs and spare parts will be available: s 58, ACL

See Gibson & Fraser at pp 646-647

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'No refund' signs

No need to display signs about refunds
BUT if sign is displayed, need to be sure that it does not mislead
consumers about their rights under the ACL
For example, cannot claim No refunds, No refunds after
7 days, 'Exchange or repair only', or 'We do not refund
Signs like these are likely to create the impression that
consumers have no right to a refund at all

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'No refund' signs

Consumers are legally entitled to a refund if the implied
guarantees have not been met
See www.accc.gov.au: brochure on Warranty and Refund
Obligations

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Defences
Defences for breach include:
reasonable mistake of fact
breach caused by a third party or due to some cause beyond the
control of the defendant
defendant took reasonable precautions and exercised due
diligence to avoid contravention
publishers defence: reliance on information supplied by another
person, information/advertisement received in the ordinary course
of business and publisher had no reason to suspect that
publication would breach the ACL
See Gibson & Fraser at p 655

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Enforcement and remedies

Part VI of the CCA is entitled Enforcement
and Remedies
This part contains the provisions which
enable the ACCC to institute enforcement
proceedings against corporations and
individuals that breach the Act
See Gibson & Fraser at pp 653-656

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Enforcement and remedies

Civil proceedings for the recovery of
pecuniary penalties as a debt due to the
Commonwealth

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Enforcement and remedies

The ACL provides that certain breaches of
the law are sufficiently serious such that they
may be treated as criminal offences, to which
criminal sanctions apply

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Misleading or deceptive conduct:

remedies
Breach of s 18 is not an offence resulting in a
criminal penalty: see Gibson & Fraser, p 628
Remedies for breach of s 18 include:
injunction
damages
but the misleading or deceptive conduct must have
caused the loss or damage suffered

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Enforcement and Remedies

Consumer Law Provisions

Penalties (except for s18):

Up to $1 100 000 per offence in case of a corporation
Up to $220 000 per offence in case of a natural person
Undertakings
Substantiation notices
Public warning notices
Infringement notices
Injunctions
Damages
Other orders:
Varying or refusing to enforce a contract
Refund money or return property
Specific performance
Community service
Corrective advertising
Compliance programs

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Next lecture
Competition law
Gibson & Fraser, ch 23

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