Australian Consumer LAW PDF

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Table of Contents AUSTRALIAN CONSUMER LAW...........................................................................................2 INTRODUCTION............................................................................................................................2 What is the ACL?.............................................................................................................................................2 Structure of the ACL.......................................................................................................................................2 Operation of the ACL......................................................................................................................................3

CONSUMER GUARANTEES............................................................................................................4 Introduction....................................................................................................................................................4 Meaning of consumer.....................................................................................................................................4 Ordinarily acquired for personal, domestic or household use or consumption............................................6 The non-consumer exception.........................................................................................................................6 Consumer guarantees list of provisions.........................................................................................................7 Guarantee as to title.......................................................................................................................................7 Guarantee as to undisturbed possession.......................................................................................................8 Guarantee as to undisclosed securities..........................................................................................................8 Acceptable quality..........................................................................................................................................8 Fitness for purpose.......................................................................................................................................10 Correspondence with description................................................................................................................10 Supply of Goods by sample..........................................................................................................................10 Guarantee as to repairs and spare parts......................................................................................................10 Guarantees as to express warranties...........................................................................................................10 Remedies for non-compliance with consumer guarantees..........................................................................11

UNFAIR CONTRACT TERMS.........................................................................................................12 Overview.......................................................................................................................................................12 Operative provisions.....................................................................................................................................12 The exception to unfair terms......................................................................................................................14 The meaning of ‘unfair’................................................................................................................................15

UNCONSCIONABLE CONDUCT....................................................................................................17 Introduction..................................................................................................................................................17 The elements of unconscionability...............................................................................................................17 Key cases for unconscionable conduct.........................................................................................................18 s20 of the ACL (unconscionable conduct within the unwritten law)...........................................................19 ss 21 and 22 of ACL (unconscionable conduct in connection with goods or services)................................21 Leading statutory unconscionability cases...................................................................................................21 Penalties and remedies................................................................................................................................22

PRODUCT LIABILITY....................................................................................................................23 Introduction..................................................................................................................................................23 Injury to persons caused by unsafe goods...................................................................................................23 Meaning of manufacturer............................................................................................................................24 Unknown manufacturer...............................................................................................................................25 Supply ‘in trade or commerce’.....................................................................................................................25 Safety defect – the consumer expectation test............................................................................................25 Defective goods actions................................................................................................................................27 Defences.......................................................................................................................................................27 Exclusion clauses..........................................................................................................................................29 Manufacturer’s indemnification of suppliers...............................................................................................29 Supplier’s claims against manufacturers......................................................................................................29 Role of the ACCC (s149)................................................................................................................................30

AUSTRALIAN CONSUMER LAW INTRODUCTION What is the ACL?  Rewrites TPA (into Competition and Consumer Act) o ACL is part of this rewrite (Schedule 2 of CCA) o Designed to harmonise state and Cth consumer protection legislation o Provides regulators with range of powers (Ch 5) o Provides consumers with a range of statutory remedies (Pt 5.4) o Introduces new unfair contracts provisions (Pt 2.3) o Move to guarantees, rather than implied terms (as per SOGA and TPA) Reasons for introduction The ACL will benefit Aus by…  giving Aus consumers the same rights and protections wherever they are  simplifying the law and reducing business compliance burdens, by replacing provisions set out in multiple law w single national CL; and  creating a national enforcement regime, with consistent enforcement powers for Aus’ consumer protection agencies to take effect action for consumers Structure of the ACL  Chapter 1 – introduction o Important definitions (e.g. consumer, future reps, manufacturer)  Chapter 2 – General protections o Misleading or deceptive conduct; unconscionable conduct; unfair contract terms  Chapter 3 – Specific protections o Unfair practices; Pt 3-2 consumer transactions; Pt 3-3 Product safety  Chapter 4 – Offences  Chapter 5 – Enforcement and remedies

Operation of the ACL

CONSUMER GUARANTEES Introduction Goods are covered by consumer guarantees as long as they are sold in trade or commerce and bought by a consumer. However, some consumer guarantees apple even if they are not sold in trade or commerce:  Guarantees as to title  Undisturbed possession  Undisclosed securities Definitions: Trade or commerce: Means in the course of a supplier’s or manufacturer’s business or professional activity, including a non-profit business or activity.

General notes The first step in deciding whether consumer guarantees apply is to determine whether a party is a consumer. The extent of consumer protections available to business-to-business transactions is very limited however, they can sometimes fall within the scope of a ‘consumer’ for the purposes of consumer law.

Meaning of consumer The ACL adopts three definitions of a consumer: 1. Objective approach – the guarantees defines consumer by reference to the kinds of goods and services purchased 2. Subjective approach – the ‘unfair terms’ approach defines consumers by reference to the purpose for which they were acquired 3. Hybrid approach – consumer goods are defined by reference to the intentions of the supplier and kinds of goods supplied ACL WILL ONLY APPLY TO PERSONS THAT FIT WITHIN THE STATUTORY DEFINITION OF A CONSUMER: s3 ACL – meaning of consumer Acquiring goods as a consumer 1) A person is taken to have acquired particular goods as a consumer if, and only if: o the amount paid or payable for the goods, as worked out under subsections (4) to (9), did not exceed: i) $40,000; or

ii) if a greater amount is prescribed for the purposes of this paragraph— that greater amount; or o The goods were of a kind ordinarily acquired for personal, domestic or household use or consumption; or o The goods consisted of a vehicle or trailer acquired for use principally in the transport of goods on public roads. 2) However, subsection (1) does not apply if the person acquired the goods, or held himself or herself out as acquiring the goods: o For the purpose of re-supply; or o For the purpose of using them up or transforming them, in trade or commerce: i) in the course of a process of production or manufacture; or ii) in the course of repairing or treating other goods or fixtures on land. (SECTION 3(2) = PERSON MUST BE THE END USER OF THE GOODS) Acquiring services as a consumer 3) A person is taken to have acquired particular services as a consumer if, and only if: o The amount paid or payable for the services, as worked out under subsections (4) to (9), did not exceed: i) $40,000; or ii) if a greater amount is prescribed for the purposes of subsection (a)—that greater amount; or o the services were of a kind ordinarily acquired for personal, domestic or household use or consumption. Presumption that persons are consumers – s10 (10) If it is alleged in any proceeding under this Schedule, or in any other proceeding in respect of a matter arising under this Schedule, that a person was a consumer in relation to particular goods or services, it is presumed, unless the contrary is established, that the person was a consumer in relation to those goods or services.

In summation: ‘consumer’ defined in section 3 of the ACL  A person is a consumer of goods or services if, and only if (s3(1)): o The amount paid or payable for the goods or services is $40,000 or less or as prescribed by the regulations; or o The goods or services were of a kind ordinarily acquired for personal, domestic or household use or consumption (if the cost is more than $40,000); or o The goods are a commercial road vehicle (i.e. to be used in the transport of goods or services on public roads)

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However, s3(2) provides an exception to s3(1): o This section adopts a subjective test and focuses on the purpose of a particular acquirer (i.e. are they used for business purposes?)

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There is a presumption that a person is a consumer o This places a burden on the person claiming that the opposing is not a consumer to prove otherwise

Ordinarily acquired for personal, domestic or household use or consumption Objectively a consumer is:  A person acquiring goods for under 40,000 or,  A person acquiring goods of personal domestic or household use or consumption However, this is deceptive as it requires subjective analysis:  The exercise of classifying the goods or services is most relevant when their price exceeds 40,000.  ‘ordinarily’ amounts to meaning ‘a matter of regular practice or occurrence’.  ‘domestic’ means something to do with occupying or using a home or dwelling The non-consumer exception This is set out in s3(2). It states:  However, subsection (1) does not apply if the person acquired the goods, or held himself or herself out as acquiring the goods: o For the purpose of re-supply; or o For the purpose of using them up or transforming them, in trade or commerce:  in the course of a process of production or manufacture; or  in the course of repairing or treating other goods or fixtures on land. For the purpose of re-supply  This means that a retailer purchasing goods for sale is not a consumer in relation to those goods.  In s2 ‘supply’ is defined to include re-supply by sale, exchange, lease, hire and hirepurchase. o So firms that lease cars, boats and equipment are excluded from being consumers For the purpose of using them up or transforming them  This section distinguishes between ‘using goods’ and ‘using goods up’. o Goods acquired to be used in a manufacturing process (e.g. sheet metal) are excluded from the application of s3(1) o However, were the manufacturer to buy tools valued at less than $40,000 to use in manufacturing the product they are a consumer in relation to those tools, and the non-consumer exception does not apply.

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Example of difference between using goods and using goods up: o A car manufacturer who purchases a tyre to fix a car which it produces to sell will not be purchasing something to be used up or consumed – rather it will have been acquired for the purpose of resupply – therefore not a consumer good o However, if an owner of the vehicle or the owner’s agent were to purchase a tyre to replace a worn tyre they will have acquired it as a consumer

Consumer guarantees list of provisions ACL imposes 9 guarantees in relation to the supply of goods:  s51 – Guarantee that the supplier has the right to sell the goods  s52 – Guarantee that the consumer will have undisturbed possession  s53 – Guarantee that the goods are free from undisclosed security  s54 – Guarantee that the goods are of ‘acceptable quality’  s55 – Guarantee that the goods are fit for a particular purpose made known to the supplier by the consumer  s56 – Guarantee that the goods comply with the description when sold by description  s57 – Guarantee that the goods comply with the sample or model when sold by sample or demonstration model  s58 – Guarantee that the manufacturer will take reasonable action to ensure that facilities for repair of the goods and parts for goods are reasonably available for a reasonable period after goods are supplied  s59 – Guarantee that the manufacturer or supplier will comply with express warranty where the manufacturer or supplier provides an express warranty Guarantee as to title The right to sell is a condition which allows the buyer to rescind and/or claim damages where the seller has failed to transfer all the title rights in the goods and the defect in title has resulted/could result, in an essential interference with the buyer’s use, possession or right of resale. 

Title to goods: Section 51 of the ACL provides that a business must have the right to sell the goods (i.e. clear title) unless the consumer is alerted before the sale that the business only has a “limited title”. Limited title can arise when goods are sold from a deceased estate. While alive, the deceased person may have pledged the assets as security. Individuals who are then owed money by the deceased may try to recover the goods. In short, if limited title exists a consumer must be clear on this before the sale. This section does not apply to hire or leased goods.

An exception is provided under s51(2)  the guarantee as to title does not apply if supply is of limited title  a supply of limited title occurs when the supplier tells the prospective purchaser that they do not know whether there are any claims over particular goods and that, in the event of sale, they will be transferring only the title they have.

Guarantee as to undisturbed possession s52(1) provides that the consumer has the right to undisturbed possession of the goods unless there is pre-existing security, charge or encumbrance. S52(2) provides that if the consumer is told about securities, charges or encumbrances that relate to the goods, this guarantee does not apply if the possessions are disturbed by those they were told of earlier. Guarantee as to undisclosed securities S53(1) provides that the supplier will supply to a consumer goods that are free from any security, charge or encumbrance. S53(3) provides that, in relation to a supply of limited title, there is a guarantee that all securities, charges or encumbrances known to the supplier and not known to the consumer were disclosed to the consumer before the consumer agreed to the supply. S53(4) provides that the guarantee as to undisclosed securities does not apply to supply by way of hire or lease. This guarantee also does not apply to a supply of ‘limited title’, where a supplier has disclosed to a consumer all known securities and charges on a good prior to the sale Acceptable quality S54(1) Goods that are supplied to a consumer in trade or commerce (a) (except when they are supplied by auction (b)) will be of acceptable quality S54(2):  Goods are of acceptable quality if they are as: o fit for all the purposes for which goods of that kind are commonly supplied; and o acceptable in appearance and finish; and o free from defects; and o safe; and o durable; In considering acceptability of the goods, a reasonable consumer can be expected to have regard to the following (s54(3)):  The matters for the purposes of subsection (2) are: o the nature of the goods; and a fridge would be expected to last longer than a toaster o the price of the goods (if relevant); and whether a premium price was paid for a top range product o any statements made about the goods on any packaging or label on the goods; and such as a claim about the goods on the packaging o any representation made about the goods by the supplier or manufacturer of the goods; and o any other relevant circumstances relating to the supply of the goods.

Notice of the unacceptable quality prior to the sale will mean that the goods are to be taken of acceptable quality (same concept as inspection) (4) If: (a) goods supplied to a consumer are not of acceptable quality; and (b) the only reason or reasons why they are not of acceptable quality were specifically drawn to the consumer's attention before the consumer agreed to the supply; the goods are taken to be of acceptable quality. (5) If: (a) goods are displayed for sale or hire; and (b) the goods would not be of acceptable quality if they were supplied to a consumer; the reason or reasons why they are not of acceptable quality are taken, for the purposes of subsection (4), to have been specifically drawn to a consumer's attention if those reasons were disclosed on a written notice that was displayed with the goods and that was transparent. General notes:  the question of whether goods are of acceptable quality is to be determined at the time goods are supplied to the consumer

Exceptions to acceptable quality S54(6) Goods do not fail to be of acceptable quality if: (a) the consumer to whom they are supplied causes them to become of unacceptable quality, or fails to take reasonable steps to prevent them from becoming of unacceptable quality; and (b) they are damaged by abnormal use. S54(7) Go...