Legt free essay sample

On completion of this week in you should be able to: Explain what is ‘unconscionable conduct’ within the meaning of the 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 Sale of Goods/Product Liability Please note – in this unit we are NOT DEALING with: †¢ Sale of Goods †¢ Product Liability Therefore the following paragraphs in Latimer are NOT RELEVANT:  ¶7-011 to  ¶7-215 3 4 Competition and Consumer Act 2010 (Cth) †¢ As discussed last week, 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 †¢ Australia Consumer Law (ACL) is Schedule 2 of the Competition and Consumer Act 2010 (Cth) †¢ In this course we will focus on the following types of conduct: ss 20-22: unconscionable conduct s 18: misleading or deceptive conduct s 29: false representations 5 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. We will write a custom essay sample on Legt or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page accc. gov. au Australian Consumer Law (ACL) Who is a â€Å"consumer†? See Latimer at  ¶7-012 †¢ Supply of goods or services †¢ Cost less than $40K: s3(1)(a) †¢ Cost more than $40K and are â€Å"of a kind ordinarily acquired for personal, domestic or household use or consumption: s3(1)(b) 8 Australian Consumer Law (ACL) Note: The ACL implies non-excludable consumer guarantees for the supply of goods and services to â€Å"consumers†: to be discussed later Australian Consumer Law (ACL) Who is a â€Å"consumer†? See Latimer at  ¶7-012 †¢ Purchase of goods by a business will be a consumer contract if: goods are personal, domestic or household goods AND not used up in business (eg for re-supply or in the process of manufacture etc) Australian Consumer Law (ACL) †¢ Who is a â€Å"consumer†? See Latimer at  ¶7-012 †¢ Section 3 asks: whether goods are acquired to be used or consumed (a consumer transaction) OR whether goods are to be used up in a business (a non-consumer transaction) Unconscionable conduct †¢ The unconscionability provisions provide consumers (and small business) with protection from unconscionable (unfair) conduct 12 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. on-English speaking) and the other party takes advantage of this for gain Unconscionable conduct Amadio’s 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 plaintiff’s disability and not taken advantage of it AND †¢ Actions of defendant wer e unconscionable 13 Unconscionable conduct †¢ Section 20 (ACL): defines unconscionability in general terms â€Å"A person must not, in trade or commerce, engage in conduct that is unconscionable†¦. Applies the common law principles from Commercial Bank of Australia Ltd v Amadio to business disputes 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 †¢ Section 21: prohibits statutory unconscionability in connection with the supply or acquisition of goods or services †¢ Section 22: statutory checklist (see next slide) 15 See Latimer at  ¶5-756) 16 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’ 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 Section 18 was formerly s 52 of the Trade Practices Act 1974 (Cth) 17 18 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 Latimer at  ¶7-240 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 19 20 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, see Latimer at  ¶7-250 The test = question of fact to be determined in context of evidence/facts of each case 21 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 Latimer at  ¶7-250 †¢ †¢ 22 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 purchasers 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? Case: Taco Company of Australia Inc v Taco Bell Pty Ltd See Latimer at  ¶7-250 23 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 Latimer at  ¶7-250 4 What is misleading or deceptive? Whether conduct is misleading or deceptive is determined by the court using an objective test of: ‘†¦whether a reasonable person would be misled or deceived. ’ 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 25 26 Likely to mislead or deceive †¢ Not necessary to pro ve that anyone was actually misled †¢ Need real possibility or not remote chance that someone might be misled 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), will not be taken to infringe s 18 27 28 Silence Silence may be misleading or deceptive: TPC v The Colonial Mutual Life Assurance Society Ltd Silence †¢ Failure to communicate a relevant fact may cause the true representation of another fact to be misleading Abigroup v Peninsula †¢ No general duty of disclosure BUT conduct may be misleading or deceptive if facts give rise to a REASONABLE EXPECTATION OF DISCLOSURE See Latimer at  ¶7-250 †¢ Traditional secretiveness of a bargaining process is NOT a licence to deceive Poseidon Ltd v Adelaide P etroleum NL See Latimer at  ¶7-250 29 Misleading/deceptive conduct What is misleading or deceptive? †¢ Mere confusion or causing uncertainty will not amount to conduct that is misleading or deceptive. †¢ McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd †¢ Parkdale Custom Built Furniture Pty Ltd v Puxu See Latimer at  ¶7-250 How to avoid acting in breach of s 18 †¢ Comparisons must be ACCURATE †¢ Compare like with like 31 32 Misleading/deceptive conduct Roadmap of s 18 †¢ See Latimer at  ¶7-251 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 Latimer at  ¶7-290 to  ¶7-375 33 34 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 35 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 36 Other unfair practices Bait advertising – s 35, ACL: A person is prohibited from advertising of goods or services at a special price where it does not intend to offer those goods or services for a reasonable period and in a reasonable amount See Latimer at  ¶7-420 No wrongly accepting payment – s 36, ACL: Knowing you will not or cannot supply the promised goods/services See Latimer at  ¶7-440 No misleading representations about certain business activities – s 37, ACL: A business must not make false or misleading representations about business opportunities See Latimer at  ¶7-450 37 Other unfair practices Referral selling – s 49, ACL: A person shall not induce a consumer to acquire goods or services by representing that the consumer will benefit after the contract is made by providing names of prospective customers See Latimer at  ¶7-480 No harassment and coercion – s 50, ACL: No use of pressure tactics or physical force/undue harassment or coercion See Latimer at  ¶7-485 38 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 Latimer at  ¶7-470 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 39 40 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 publisher’s 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 Latimer at  ¶7-530 41 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 See Latimer at  ¶7-510 to  ¶7-540, see especially Table 1 at  ¶7-510 Misleading/deceptive conduct: Remedies Breach of s 18 is not an offence resulting in a criminal penalty: see Latimer, Table 1 at  ¶7-510 †¢ Remedies for breach of s 18 include: injunction damages but the misleading or deceptive conduct must have caused the loss or damage suffered †¢ Enforcement and Remedies Penalties (except for s18): $1 100 000 per offence in case of a corporation $220 000 per offence in case of a natural person Undertakings Substantiation notices Public warning notices Infringement not ices Injunctions Damages Other orders: Varying or refusing to enforce a contract Refund money or return property Specific performance Community service Corrective advertising Compliance programs †¢ †¢ †¢ †¢ †¢ †¢ †¢ See Latimer at  ¶7-520 43 44 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 See Latimer at  ¶7-370 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 45 Consumer Guarantees when goods are supplied The ACL implies into consumer contracts certain non-excludable conditions and warranties (by retailers/suppliers and manufacturers 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 Next lecture †¢ Final lecture: week 12 †¢ Tutorials will continue until week 13 (Note the above are mirrored in State Sale of Goods legislation, NOT studied in this course) See Latimer at  ¶7-035 to  ¶7-100 47 48