Meaning and History of Australian Consumer Law

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In contemporary business environments, marketers have embarked on strategic market segmentation and consumer targeting strategies to improve their sales; with the aggression that comes with marketers, governments have seen the need to formulate and protect the rights of consumers, businesses, and the community. Australian business environment has both international and domestic players; the Australian Competition and Consumer Commission (ACCC), which was established in 1995, has its main aim as facilitating the growth of favourable business environment, where there is mutual respect among different stakeholders. It aims at promoting fair competition practices; when undertaking the crucial role, the commission considers the interests of businesses, consumers, local community, and the globe at large.

To fulfil its objectives, the commission is mandated with the task of regulating national infrastructure services and oversees the compliance of Commonwealth competition of which Australia is a signatory, fair-trading and consumer protection laws recognized in domestic and international consumer protections legislations¹ The demand of consumer, business and competition protection and respect of their right has called for legislations to support the Australian Competition and Consumer Commission (ACCC), they include Competition and Consumer Act 2010 formally Trade Practices Act 1974. Schedule 2 of Competition and consumer Act (2010) recognizes the Australian consumer Law 2010 (ACL) which is mandated with the task of creating cooperative reform of Australian government and states and Territories through the Ministerial Council on Consumer Affairs (MCCA).

The ACL has a set of objectives and aims as follows:

Enacting policies that facilitate the development of fair contract terms law that look into all matters of a case with its own merits; there are some blue prints that that offer guidance to decide over a case.
Looking into the best way that conditions and warranties on sales can be adjusted or changed for the good of the consumers, traders and the communities.
Develop other improved revolution of safety law targeting on consumer, business, and the community; they will also look into how the new set can be enforced.
Make laws that consolidate the consumer agreements within the territories; the laws where aimed at ensuring the businesses have respect and conduct their business in the best manner for the good of the general community.
making lay-by agreements as simple as possible for the general understanding of every one; and
To set new enforcement measures, which included fining the offenders, and giving the offended the right to seek their rights enforcement.

ACL looks into the behaviours, the conduct and the ethical operations of manufactures, the default system is that manufacturers should have fair trading, respect for their fellow manufacturers as well as look into consumers’ welfare. The following are the areas addressed by ACL:

Unconscionable Conduct

According to ACL, unconscionable conduct mean unethical conduct or operation that is likely to injure the parties concerned; the parties include consumers, competitors or the community; the above meaning is an implied meaning since the law is silence on its express meaning. In the ambiguity of meaning, the law has some guidelines that the court is expected to follow when making a decision whether some act falls in the brackets of unconscionable conduct, though the court is not confined to the suggested ones only. sections.20, s.21 and s.22, give the conducts that should be considered as unconscionable conducts, they are s. 20, provides that ‘a corporation must not, in trade or commerce, engage in conduct that is unconscionable within the meaning of the unwritten law’, (ACL, s.20) this means that firms are expected to conduct their affairs in a way that is generally accepted by the society.

In the application of s. 20 , courts have implemented and enforced the law on people who have been engaged in unfair deals that injures a third party whether the party was aware of the situation and the operation or not.

In the enforcement of S.20, courts have interpolated the section of the act and opted to have a differentiating factor between opportunistic approach to striking a hard bargain, and unconscionable conduct; in that right, they suggest that acting in good conscience should not be exploited to forfeit a company’s chances of taking advantage of a certain situation. The interpolation is seen as a protection of the firms whom the unconscionable conduct seemed to have more negative focus on; for instance, the interpolation stated that in the case of a contact, the fact that one party made a bad bargain that benefited the other more should not be taken as a ground of cancellation of the contract.

When it comes to legal rights against another party, the court has the power of questioning the legality of contract especially if one party was taken advantage of unknowingly buy the other party who is thought to have prior knowledge of the situation. The act and the mind of the offender should be the subject of discussion however, as illustrated earlier; any ignorance or lack of information on the offended cannot stand a trial. In Federal Court made a ruling in the case ACCC v Samton Holdings Pty Ltd [2002] FCA 62 (at 48); in the case, the court was of the view that the conditions of the case should b e looked into to determine whether the situation should can be referred to as unethical; the areas noted were:

When the weaker party suffers because of the conduct of the stronger party; in this case, the offended have the prove that he was taken advantage by the other party.
In a situation when at the time the deal was drafted and enforced, a party entered the contract unconsciously.
In the case that one party of the contract that was in the contract through representation loses the representation element; in this case, the proxy is treated as the main party of the contract.
When a penalty clause or special situations was in the contract that can result to a different interpolation or can reshape the entire contract
In case one party can prove that, it entered the contract on a unilateral mistake; the engagement must prove that it was responsible for the injury on the offender.

Although the above were states as the main principles, the three judges involved in the case noted that it was not exhaustive, other conducts and performance of parties can lead to enforcement of S.20.

The concept of special disadvantages

To enable the court decide that there is a violation of the convention, one party to transaction must be under special disadvantages as long as the contact prevails. In this case, it must be proved that the stronger party saw a certain disadvantage on the other party a molded the transition in such a way that he would get the best of the other party. The definition of who is under special disadvantage has been extended to refer to a situation that cannot enable someone to make sound and straight decisions as his conditions do not allow; in line with the views, then the party taking advantage have the leeway of exploiting the other.

Unconscionable conduct towards tenants

When it comes to tenants, the fast that they are tenants will not offer them the advantage of enjoying the benefits under special disability; the rights of the tenants can be restored when the situation of the case prove that the tenant was acting in a different capacity other than that prohibited by the ACL.

Penalties

In case of corporation, the pecuniary penalties would go up to $1.1 million while in the case of natural person; the pecuniary penalties would not exceed $220.000 in the case of contravention of ACL s.20. Sec. 236 of the ACL empowers a person who has suffered some loss or damage from an unconscionable conduct to seek direct compensation. In section 237 of ACL, an injured party can seek for remedial compensation; other than the artificial persons and natural persons, the ACCC may seek compensation for non-parties under ACL s.239.

ACL s.21 is concerned with the supply of goods and services; the section seeks to implement a norm of conduct that prohibited unconscionable conduct that would harm the consumers. The section seeks to have consumers rights respected and the conduct of campaigners, marketers, and manufacturers should be seen to respect the rule of law as far as consumer issues are concerned.

Section 21 has set some factors that can be looked into to ensure that a company can be blamed of violation of consumer rights as per the requirement of ACL.s.21. These are:

Although the business and the consumers have some bargaining strengths, there should be some equity and value for each other
There was no interest of the business as far as consumer to compliance with the legal rights is concerned
The documentation that were used should not have been misleading or ambiguous to the consumer
An analysis needed to be undertaken to establish whether there was undue pressure on the consumer
There was no provision that the prices of goods needed to be the same elsewhere

Despite the above provisions, the court can consider other acts as a violation.

ACL s.22 The section is more concerned on the supply of services and goods to people who are not listed public company; in this case, there should be prove that unconscionable conduct was undertaken in course of the transaction.

The section has some factors that it suggests should be considered when determining whether an unconscionable conduct has occurred or it was mere business process that went mayhem, the conditions/factors looked into are:

The relative bargaining strengths the two parties involved in the transaction and there is need to figure out if there was an injured party from the differences
Whether the stronger power did use his powers to defraud to lead the weaker party to a situation that only was beneficial to the stronger party
The degree at which either party acted in utmost good faith considering the situation of the case
It considers whether the supplier has the exclusive rights to vary a situation in his or her own favor; the contract is thought that it should be fair and have equal rights and participation.

The court has the power to look into the situation and deduce whether there was a violation of any laws or not; in case of a violation, the penalties are provided for on sections 20 and 21 discussed earlier.

ACCC power’s in unconscionable conduct

In case there is a party that has contravened or gone against section 20, 21 or 22, irrespective of whether it is a natural person or artificial person, the ACCC has the power and legal backing to take legal or court action against a business or individual. The section does not offer the exact conduct that the ACCC may undertake on the person however, the powers given can make the administrator have a number of actions, like banning of production or supply of some products or seek a compensation on a party that has been injured.¹⁹ It has the power of seeking for interim suspension of goods production or it may reinforce a permanent withdraw of the products in the market, each case is determined in its own merit.

Misleading or Deceptive Conduct

In case a company deceives or misleads the consumers it will be said to have violated ACL s. 18 ; form the onset, the definition of the words deceive and mislead has been defined as simply as to lead someone else into an error; this means the company perform duties and tasks that do not go well with the consumers^.

In subsection 18(1) of the ACL Schedule 2; prohibits any person to engage in an activity that might injure another party either with the knowledge of the other party or not.

Section 19 of the ACL shields information providers and legislates that unless the information given relate to certain business or a certain commodity traded in, then the information provider will not be liable for misleading resulting from information dispensed.

When the ACL is addressing the issue of consumer misleading, it takes a wider picture and is of the view that if any conduct including advertising, marketing, promotion and other persuading tools lead to mislead to the consumer, then the company can be accursed of bleach of law.

Examples of misleading or deceptive conduct

Different situations leads to different misconducts or some actions can be termed as misconduct in a certain category of people while to others they don’t add up to be a misleading; thus every situation should be handled differently Some examples of conduct that may be misleading or deceptive are:

Mobile service provider engaging customers for service in an area of no network coverage
A real estate seller or advertiser giving some improved benefits on his piece of lack whares the benefits said are not there
An advert that created an impression that prices have gone down when in real case they had never been up for example ‘was’ $200 and is ‘now’ $100 when the store never sold the watch for $200
Medical facilities guaranteeing some improved services or remedy of diseases from a machine that has not be tested
A transport company the advertises giving an impression that the customer will use a certain means of transport but it offers a different means
A company giving an impression of better working condition that it cannot maintain
In case of stocks of a limited time, not offering such information expressing

There are different forms that the mislead concept can take and depends with how it has been argued by the parties concerned; however every situation should be considered with its own merit.

Puffery

The ACL defines puffery as an exaggeration regarding something that someone rational can note it’s a false claim or can know by the virtue of its representation that it cannot be genuine; such terms include the most comfortable car, the flying cars among other such exaggerations; this is allowed by the law.

In the case of Sanders v Glen Franchises Pty Ltd [2002] FCA 1332.

Any other move by another party not on products but on business with the aim of convincing the other party to take over the offer can be referred to as puffery; for instance when a franchising company creates the impression that the business is high profitable to make the franchisee agree the deal.

Spoken words

In the case of McLelland CJ said v Foxman (200) 49 NSWLR 315 at 318-319, the judges decided that in the case that there was some misleading arising from spoken words, the situation depending with the parties and the statements themselves can be termed as puffery or otherwise.

Silence as misleading conduct

In some instances, silence can lead to a misleading; this is in the instance where spoken or written advice was necessary and could likely have prevented danger. An example was in Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91, in which a wife was misleading by the silence of a lawyer when he was signing for his mortgage whose terms of offer hand changed.

Misleading conduct: confusion

In some situations a certain conduct may cause some confusion on another person, however for the situation to meet the standards of being a misleading, the situation of the case should be looked into. In case the confusion resulted from a misrepresenyayion of the facts by the person in strength, then this leads to misleading. To stand a successful suit of confusion, the parties to the deal should be prove that they were mislead by thinking rationally on the situation, and any other rational man would have conducted the same at the same situation.

Misleading conduct: transitory effect

According to transitory effect, it means that if there was a misleading occurring in a situation, it cannot be corrected by a subsequent change of information when the person the initial information was meant to was acting in line with the prior information. An example was in ACCC v target Australia Pty Ltd [2001] FCA 1326, where ACCL targets adverts in the Australian markets; in this case it has targeted adverts that showed 25% discounts on apparels and 15-25 % on household effects; however when a buyer acted in the light, he was shocked to get some further conditions on the adverts.

Penalties

Although there are no fines on misleading conducts, the court can have compensatory orders, injunctions, damages, declarations, orders for non-party consumers and non-punitive orders; the court may also ask the person concerned to apologize an drake good of the misleading he had given to the public.

The power of ACCC

ACCC has power to take a court proceeding on behalf of the general public against any person, whether natural or artificial, who is misleading the public: when protecting the consumer law, ACCC looks at the industry-wide conduct and the misleading conduct can have negative impact on the people. It is important to note that the nature and amount of misleading that can be interpolated are may, this the ACC cannot enforce them all, however those misleading conducts but businesses and given to the general public through public means like the internet, on national television, or through a nation-wide print advertising campaign, can be admissible.

Liability of Manufacturers for Goods with Safety Defect

In the case that a consumer has been injured by product that had provided for some safety measures, then the ACL allows the customer to take legal proceedings on the manufacturer. On the other hand in the case that the consumer cannot be able to identify the manufacturer, then he can enforce his rights and hold the suppler accountable and demand to be shown the manufacturer.

The definition and definition of the word injure is wide; however it can generally mean that the manufacture made some claims that were not the case and they lead to a loss or damage on the consumer.

Liability for Loss or Damage Suffered by a Person

Under Part 3-5 ACL, gives power to the court to accord personal injury, on people who have suffered from an injury; this provision does not include people injured for business purposes. The situation of the case should be looked into; in most cases if the injured person has had prior experience with the products, or there was a third, party to the injury, then the situation of the case may change to accord no liability.

Defences to Defective Goods Actions

Part 3-5 of the ACL offers some defence claims as:

In the case the defects were not present at the time the manufacturer supplied the products, the products were after the manufacturing;
In the case that the goods were offence by their nature of compliance with mandatory standard;
In the case that at the time of manufacture the technology at the time only allowed for the products to be in the state they are;
In the case, the defect was lead by some misunderstood markings on the packaging but the writings were clear to offer an indication that the product could only handle the situation to a certain level.

Cases example

In ACCC v Glendale Chemical Products Pty Ltd [1998] FCA 180, in the case, a company sold some caustic soda in supermarkets but they caused injury to consumers who used them in the wrong manner. The court held the company liable since on the label, it did not offer such information that could have lead to a different use of the product or could have prevented the use of the product in the way that leads to injury. In Graham Barclay Oysters Pty Ltd v Ryan [2000] FCA 1099, in the case an oyster farmer sold some defective products, however, the defects were only discovered when the oysters were destroyed; the court did not find the farmer liable and quoted the “state of technical knowledge”.

Unfair Practices

Unfair practice involves any move by a business to the consumers that was knowingly conducted but led to an injury to the consumer. This includes:

giving a representation of goods and services as if they are the goods of another company or they are other products that they are not;
creating a confusion or misunderstanding to the source or the supporter of the products for a gain;
having a faked affiliation, certification by another person or company connection or association with, into the move to get some advantage;
having some deceptive representations of goods and service includes the geographical location;
giving a fake representation or misrepresentation of the facts of a case for example creating an impression that certain benefits will be attained for a certain commodity of which they cannot;
when offering deteriorated, altered, reconditioned, reclaimed, used, or second hand, but having to represented them as if they are new;
misrepresenting the standard, quality, or grade or of goods; that is showing that your goods are of certain standard or quality while in real case they are not;
creating a false or misleading representations to give the impression that the goods on offer are of a certain character and can offer certain gains;
engaging in contract to supply goods of certain quantity to quality y but in the first place, the quality and quantity talked about does not exist;
engaging in a supplying contact where there is no intent to supply the goods;
making some fake representation on the base of the price, the weight and the quality of the products that have been supplied or are interned to be supplied;
making false or misleading statements of in the liking of having some favor in a certain contract;
packaging of goods in containers, and other labels that have the name of another supplier, this is seen to create the impression that the goods are of the labeled supplier;
using exaggeration, innuendo, to create some confusion that will facilitate the purchase if the products;
giving the impression that a certain transaction has some legal standings and rights of which it does not have;
stating there are some services that will have to go with a certain contract whereas nothing was required; for example an after sale service, repairs and maintenance.

The main reason that the section was enacted was to shield consumers from the supply of goods of low quality, and quantity than has been declared on the products or as the manufacture wants, done.

Cases example of unfair practices

In ACCC v Audi Australia [2007] FCA 1990, in the case, the Audi motor vehicle Audi Q7 3.6 was advertised to have a sitting capacity of 7 people while it has s5 seater, the Fedal court saw this as a misrepresentation and seen it as a misleading. The company was held liable.

In the case of ACCC v Goldy motors Pty Ltd 2000 FCA 1885, in the case, there was a misrepresentation regarding the importation of some motor vehicles that the company claimed that they would avoid taxation. The rulings illustrated that nature and the information that had been given to the people was misleading and assisted the company to make high sales that could not have been attained in the case that the information that was offered was not available.

Safety of Consumer Goods and Product

Consumer goods are those products that are used or likely to be used for domestic or household or personal use, the protection of consumers in this case is contained in parts 3-3 and 3-4: “Safety of consumer goods and product-related services” and “Information standards” respectively.

The sections are concerned on how the products should be made, how they should be represented to the buyer, the amount of disclosure that the seller should offer as well as the guarantee that the manufacturers should give their buyers.

The sections also gives guidance on the legal remedies and legal undertakings that should be taken on the manufacture if a buyer has been injured after using his goods that might have been misrepresented or never met the legal standards.

On areas of the ACL that have changed is to hold manufacturers liable of any danger that might occur to the buyer if in the first instance they did not offer such information that could have prevented the damage. When the manufacturer releases his goods, he should have a warning and offer guidance on how the products needs to be used; in the case the products were used differently and lead to an injury, then the manufacturer is held liable.

The buyer can aggravate or can lead to his personal injury, or in some cases, the manufacturer might have not seen some uses of the products; this calls for the need of great care when enacting this section of the legislation. The following are the main areas that are considered:

The facts and information on the case was not hidden from the supplier.
A verification that there was death, sickness or injury; it is the role of the offended to declare that the injury was because of the products consumed.
The effects of the products can be proved after they have been used or foreseen to have been used.
It is the express use of the product that caused the damage and probably the case was not special; or no liability on the buyer⁵⁰

The reporting obligation does not apply if:

In situations that the damage was not express; or cannot be directly attributed to the products
It was a special case where some liabilities can be proved on the buyers side;
In case, there was a violation of reporting rights as the required by ACCC. ⁵¹

Safety standards

The Commonwealth Minister has made some notices in the internet that will amount to making some safety standards; when the safety standards have been met, there is the believe that the manufacturer will make product that are not destructive to the buyers. The specifications are as follows:

Performance: the manufacturer should make the goods to the right standard and have the right technology adopted to offer quality and quantity products
Composition: the components of the products can be authenticated and be of the right standards and measure, the weights and volume should be as indicated on the packaging
Contents: what the manufacturer claims have been made should be real, there should be no cause of alarm
Methods of manufacture or processing, design, construction: the methods should be of high standard and ensured that when making it, the right disclosures are made
The testing of consumer goods when making or rolling out the products, as well as in prior processes, the products should be tested and quality noted.

In the case of a suit, the ACCC has the onus of proving that a certain commodity does not meet the set standards and level of compliance as should have been required.

Information standards

The ACL requires that the manufacturer should provide some information that might lead to an informed buyer as well as the supplier should be equipped with more knowledge to respond to consumer needs and inquires. In formations, include those on the use, any danger, storage and the subject matter of the products. Standards Australia International Limited or by an association prescribed by the regulations is mandated with the task of approving and preparing the standards; when they are polished, then they are published over the internet and every person with interest is expected to see and make use of them. Within the Australian binderies, the ACL puts it clear that the information given should be complied with; however, for those products going out of the country, the company has not control over the information concerned. Despite the reduced control of those goods meant for export, the ACL needs them to have the label for export.

Bans on Consumer Goods and Product-Related Services

Either State or Commonwealth minister can make an interim ban of products for a period usually 60 days although can be extended, in case they feel or have the prior knowledge certain products when produced are likely to cause some danger, injury or sickness to the consumers. When the case is aggravated to the level that the products will undergo some permanent ban, then the powers are only limited to the Commonwealth Minister. When making a ban, whether interim or permanent, the prerequisites is that the use or a reasonably foreseeable use (including a misuse) of the goods is more likely to cause some danger in the form of death, sickness or injury to the consumers and that there is reasonable need to have them scraped off the market to prevent the occurrence. The perceived danger to consumers can be substantiated and in the case of an otherwise move, the manufacturer is allowed to defend his stand and give the reason for it.

When imposing a ban (the permanent ban) the rules of the ACCC require there must be a publication that the ban has been made and the publication should follow the provisions of ACL;

Failure to comply with a ban is an offence with fines, of up to $1.1 million in the case of a corporation, and in the case of individual. In the case, that the cooperating has ignored the ban, then it will be liable to a fine not exceeding $1.1 million and in the case of natural person, the fine should not exceed $220.000.

Recall of Consumer Goods

The ACL has two form of recalls:

Compulsory recalls: though the recalls are not common, they happen when State or Federal minister recalls a certain supply in the market
Voluntary recalls: in this case, for its own interest, the manufacture may decide to recall some products in the market. This is mostly common as companies look make their brand name stronger and responsive to ethical standards of the people. Despite the requirements or provision that there might be a recall, the ACL does not offer guidelines on how or when it should be done.

To sum up, different countries have come up with legislations that protect their customer, businesses, and communities and the world; the business environment is expected to be fair and ethical. In Australia, ACCC has the role of overseeing the functional operation of consumer, business and community protection acts as provided for in Competition and Consumer Act 2010 under ACL 2010. It looks into unfair competition, consumer misguiding, false representation, information requirements, and liability of manufacturers of goods. The main aim of the legislations is to have market-environments that are fair, and where consumers’ rights are protected.