Enterprise law exam notes PDF

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Enterprise Law exam notes MODULE 2: STARTING AND RUNNING A BUSINESS I – BUSINESS STRUCTURES Types of business structures Sole trader • Owned and operated by an individual • Direct control over operations and has complete responsibility for its activities • Single owner means = advantage of being fle...

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Enterprise)Law)exam)notes)) )

§ If!term!would!cause!detriment!to!party!if!it!were!enforced!! • Should!always!be!drawn!up!by!lawyers!! • Most!unfair!terms!can!be!re-expressed!in!form!that!would!comply!with!ACL!! • Terms!may!‘balance’!other!terms!operating!to!counteract!affect!of!term!! ! Business'focus:'unsolicited'consumer'agreements'' • Unsolicited!consumer!agreements!=!consumer!agreements!that!consumer!had!not!invited!and!price!is!to! to!be!paid!by!consumer!cannot!be!ascertained!at!time!of!agreement!or!more!than!$100! • Not!prohibited!but!imposed!by!specific!requirements!! • Failure!to!comply!will!render!sale!void!and!fines!may!be!incurred!! • Bound!by!ACL!! • Business!may!not!contract!out!of!the!provision!! • Excluded:!genuine!opinion!polling,!research!calls! • Consumer!cannot!be!telephoned!on:! § Weekdays!before!9am!or!after!8pm!! § Saturdays!before!9am!or!after!5pm!! § Sundays!at!any!time!! • Consumer!cannot!be!approach!in!person!on:! § Weekdays!before!9am!or!after!6pm!! § Saturdays!before!9am!or!after!5pm!! § Sunday!or!public!holiday!anytime!! • If!consumer!request!you!to!leave!premises!–!must!be!complied!with!cannot!be!approached!again!for!30! days!! • Consumer!who!enter!agreement!must!be!given!copy!of!it!immediately!after!signing!or!within!5!days!! • Agreement!must!comply!with!all!requirements! § Specify!price!! § Clearly!identifying!supplier!of!goods!! § Business!address!! § Contact!details!! § Australian!Business!Number!and!Australian!Company!Number! • Agreements!must!be!signed!by!consumer!to!be!effective!! • 10-day!termination!period!where!consumer!can!change!their!mind!and!cancel!agreement! • Consumer!must!be!informed!of!right!and!notice!displayed!on!front!of!agreement!! ! Topic&5:&Prohibited&sales&methods&& Inertia!selling! • Selling!unsolicited!goods!to!consumer!or!business!by!providing!unsolicited!services!to!consumer!in!hope! they!feel!obliged!to!pay!for!it!! • Sometimes!recipient!is!told!to!there!is!‘time!limit’!to!return!unordered!goods!otherwise!be!responsible! for!payment!or!threated!with!legal!action!if!not!paid!! • ACL!prohibits!asserting!a!right!to!payment!for!unordered!goods!! • Legal!to!provide!unsolicited!goods!or!services!! • No!right!for!payment!to!be!made!by!recipient!! • ACL!prohibits!following!forms!of!inertia!selling:!! § Providing!unordered!goods/services!then!asserting!right!to!payment! § Sending!unsolicited!credit!or!debit!cards!! § Claiming!right!for!payment!for!entries!in!‘directories’!that!they!haven’t!authorised!! ! Pyramid!schemes! • Layered!marketing!schemes!à!operate!by!encouraging!larger!and!larger!numbers!of!investors!to! participate!in!scheme!& • Individual!investors!are!encouraged!to!purchase!share!from!scheme!with!promise!that!if!they!can!attract! a!sufficient!number!of!additional!investors!they!will!make!money!& • Make!money!from!fees!–!‘participating!payments’!which!must!be!paid!when!joined!& • Very!little!or!no!actually!selling!is!involved&

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Some!will!create!pretense!that!product/service!is!being!traded!to!impose!legitimacy!& Sometimes!‘sales’!of!goods!are!involved,!always!second!priority!to!recruitment!& Sometimes!promoted!as!clubs!or!even!motivational!programs!& ACL!prohibits!participating!in!scheme!and!inducing!other!to!participate!& Participants!may!be!prosecuted!& Different!from!‘multi-level!marketing!scheme’&

& Bait!advertising!! • Involves!luring!or!‘baiting’!customers!to!business!with!offers!of!bargain!goods/services!which!don’t!exist! or!don’t!exist!to!sufficient!quantities!to!satisfy!demand!!! • Offences!under!ACL:! § Advertising!goods/services!at!specified!price!when!they!know!there!aren’t!reasonable!quantities! § Failing!to!supply!goods!at!specified!price!in!reasonable!quantities!for!reasonable!time!! • Consumer!may!be!given!rainchecks!to!return!when!stock!is!available!! • Substitution!of!equivalent!good/service!avoid!liability!of!prohibited!method!! • Loss!leader!is!acceptable!! ! Referral!selling!!! • Consumer!is!induced!to!buy!product!by!offer!of!rebate,!commission!or!other!benefit!but!! • They!must!introduce!product!to!another!person!but!they!must!buy!product!! ! Undue!harassment!or!coercion!! • Range!of!conduct!from!high!pressure!selling!tactics!! • E.g.!repeated!pestering!! • Threat!! • Physical!violence!! • Not!just!committed!by!sales!people!but!also!debt!agencies!! • May!lead!to!criminal!offences!! ! Deceptive!pricing!practices!! • Range!of!action!relating!to!pricing!of!goods/services!! • E.g.!failure!to!specific!single,!all!inclusive!price!for!goods/services!! ! ! &

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MODULE'10:'FAULTY'AND'DANGEROUS'PRODUCTS:'REFUNDS'AND'OTHER'REMEDIES' Topic&1:&Introduction&& Overview! • Focusing!on!laws!that!regulate!products!and!services! • Business!must!be!aware!of!Australian!Consumer!Law!(ACL)! § Consumer!possess!range!of!rights!when!purchasing!goods/services! • Business!will!be!held!liable!if!harm!is!brought!to!consumer!through!their!goods!and!services!! • Role!of!ACCC!(Australian!Competition!and!Consumer!Commission)! § Protect!consumers!! § Removes!dangerous!items!from!sale! § Power!to!ban!dangerous!products!! § Other!consumer!protection!powers!under!ACL! • ACL!provides!‘consumer!guarantees’!for!goods!and!services!! § Protects!consumers!from!defective!products!(e.g.!defective!product!=!right!of!refund)! § Establishes!product!safety!and!information!standards!for!different!types!of!products!! § Criminal!offence!if!products!don’t!comply!with!standards!! ! Consumer!guarantees! • Consumer!guarantees!=!protects!consumer!against!problems!with!goods/services!! • ^binding!upon!supplier!of!goods/services! • Cannot!be!excluded!by!contract!! § Always!apply!even!if!agreement!has!been!made!to!contrary!! • If!it!doesn’t!comply!with!guarantees!–!consumer!is!provided!with!remedy!! • E.g.!–!acceptable!quality!! § If!good!is!not!of!acceptable!quality!consumer!can!be!provided!with!refund!! § Supplier!must!provide!refund!! § Supplier!cannot!insist!on!providing!alternative!or!credit!note!! § If!supplier!doesn’t!comply,!consumer!may!take!legal!action!! ! Application!of!the!consumer!guarantees!! • Not!all!goods/services!are!covered!by!consumer!guarantees!! • S!54!of!ACL:!Guarantee*as*to*acceptable*quality! 1) If:! a) Person!supplies,!in!trade!or!commerce,!goods!to!a!consumer;!and!! b) The!supply!does!not!occur!by!the!way!of!sale!by!auction;!there!is!a!guarantee!that!the!goods!are! of!acceptable!quality!! • S!60!of!ACL:!Guarantee*as*to*due*care*and*skill*! § If!a!person!supplies,!in!trade!or!commerce,!service!to!a!consumer,!there!is!a!guarantee!that!the! services!will!be!rendered!with!due!care!and!skill!! ! ‘Person’,!‘In!trade!or!commerce’!! • Have!the!same!meaning!in!relation!to!consumer!guarantees! • Person!=!any!business!structure!! • Trade!or!commerce!=!conduct!of!commercial!character!(buying,!selling)! ! ‘Supplies’! • Defined!in!ACL!as:! § In!relation!to!goods!–!supply!(includes!re-supply)!by!way!of!sale,!exchange,!lease,!hire!or!hirepurchase;!and! § In!relation!to!services!–!provide,!grant!or!confer!! • Relates!not!only!to!sales!but!also!other!transactions!(e.g.!hire!agreements)! • Excluded:!supply!of!gas,!electricity,!telecommunication!services!(s!65)! ! ‘Goods’! • Broad!range!under!ACL;!includes!! § Animals! § Minerals!

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§ Trees!&!crops! § Gas!&!electricity!! § Computer!software!!

§ Second-hand!goods!! § Any!component!or!accessory!to!goods!!

! ‘Services’! • Broadly!defined;! • Excluded:!supply!of!gas,!electricity,!telecommunication!services!! • Includes! § Contracts!for!work!! § Contracts!of!insurance!! § Contract!between!bank!and!customer!! § Amusement!! § Entertainment!! § Contracts!relation!to!lending!of!money!! § Recreation!or!instruction!! § Rights!of!real!or!personal!property!! ! ‘Consumer’! • S!3!of!ACL! • Consumer!=!person!who!acquires!goods!or!services!that!either!! § Costs!no!more!than!$40!000!(exception!of!vehicle!or!trailer!purchased!for!purpose!of!transporting! goods);!or!! § Are!‘of!a!kind!ordinarily!acquired!for!personal,!domestic!or!household!use!or!consumption’! § ^normally!purchased!by!individuals!to!fulfill!personal,!domestic!or!household!needs!–!covered!by! consumer!guarantees! • If!good/service!is!purchased!for!commercial!purposes!–!will!still!meet!requirements!if!its!‘ordinarily’! purchased!for!personal,!domestic!or!household!consumption! § E.g.!–!hair!dryer!normally!purchased!or!personal,!domestic!or!household!use!! § Hairdresser!business!purchases!bulk!for!salon!! § Covered!by!consumer!guarantees! • If!possible!to!have!commercial!and!domestic!use!–!will!normally!be!covered!by!consumer!guarantees!! • If!goods/service!have!no!domestic!use!–!unlikely!to!be!covered!by!consumer!guarantee!! § E.g.!–!large!tractors,!industrial!machinery,!large!capacity!photocopier,!management!consultancy!! ! Display!notices!! • Commonwealth!Minister!may!require!supplier!to!have!notices!advising!consumer!of!their!rights!under! consumer!guarantees!! • S!66!of!ACL!! ! Topic&2:&Consumer&guarantees&–&Goods&& Introduction!! • ACL!consumer!guarantees!relate!to:! § Correspondence!with!description!! § Title!to!goods!! § Correspondence!with!any!sample!or! § Undisturbed!possession!of!goods!! demonstration!model!! § That!goods!are!free!from!undisclosed! § Availability!of!spare!pants!and!repair! securities!! facilities!! § Acceptable!quality,!including!fitness!for! § Compliance!with!any!express!warranties!! usual!purposes!! § Fitness!specific!purpose!made!known!to! supplier!! ! Application!! • Consumer!guarantees!-!further!restriction:!the!goods!must!not!have!been!acquired!for!the!purpose!of!resupply!of!manufacture!(s!3(2)!ACL)!! • Consumer!must!be!end!user!of!good!! • Consumer!guarantees!don’t!apply!to!goods!acquired!for!purpose!of!re-selling!! • Don’t!apply!to!goods!acquired!for!purpose!of!using!it!to!manufacture!other!goods!! ! Title!of!goods!! • Cannot!sell!what!you!don’t!own!!

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• Cannot!validly!pass!title!in!goods!to!another!person!if!you!don’t!hold!title!yourself!(Nemo!dat!–!Latin)! • Goods!are!supplied!to!consumer,!supplier!has!right!to!pass!ownership!to!consumer!! • Exception:!Limited!title!! § Supplier!makes!deal!that!only!title!which!supplier!has!is!being!passed!onto!consumer!! § Must!be!clear!from!sales!contract!or!surrounding!contract!that!limited!title!is!being!sold!! § If!not!clear,!guarantee!of!full!title!stands!! • Doesn’t!apply!to!goods!by!lease!or!hire!–!supplies!goods!without!passing!ownership!! • S!51!of!ACL!! ! Undisturbed!possession!of!goods!! • Some!goods!are!subject!to!pre-existing!claims!that!consumer!wont!be!aware!when!purchasing!them!! § Borrow!money!to!buy!car! § Lender!requires!bill!of!sale!over!car!! § Therefore,!lender!can!take!it!and!sell!it!if!loan!is!not!repaid!! • If!there!are!pre-existing!claim!consumer!doesn’t!know!about,!there!is!risk!that!lender!may!assert! ownership!over!goods!! • Undisturbed!possession!=!physical!possession!of!goods!free!from!interference!from!other!! • Neither!supplier!or!other!person!can!claim!possession!and!reclaim!goods!! • Applies!unless!supplier!has!advised!consumer!in!advance!of!limitation!of!title!or!competing!interest!! • Applies!to!lease!and!hire!for!duration!of!agreement!! • S!52!of!ACL!! ! Undisclosed!securities!! • Goods!are!free!from!undisclosed!securities!=!any!‘securities,!charges!or!encumbrances’!that!affect!goods! (e.g.!loan!that’s!been!secured!against!goods)! • Addresses!conflicting!owner!claims! • Guarantee!will!be!effective!unless:! 1. Supplier!has!notified!consumer!in!writing!of!any!undisclosed!securities!before!supplying!goods!!! • Neither!supplier!or!person!with!claim!can!try!to!reclaim!goods!or!seek!payment!on!basis!of!undisclosed! securities!!! • Doesn’t!apply!to!supply!if!it!was!of!limited!title!! 1. Supplier!must!advise!consumer!of!any!securities!before!agreement!! • S!53!of!ACL!! ! Acceptable!quality,!including!fitness!for!usual!purposes! • Goods!must!be!of!acceptable!quality!! § Fit!for!all!purposes!for!which!goods!of!that!kinds!are!commonly!supplied!! § Acceptable!in!appearance!and!finish!! § Free!from!defect! § Safe!and!durable!! • ^Determined!from!POV!of!‘reasonable!consumer’!–!take!into!account!factors!such!as:! § Price! § Statements!made!about!goods!on!packaging!and!labels!! § Other!representation!made!about!goods!by!manufacturer!of!supplier! § Other!relevant!circumstance!! • Doesn’t!apply!to!goods!sold!at!auction!! • Should!bring!up!any!deficiencies!to!attention!of!consumer!! • Would!change!consumer!opinion!of!acceptable!quality!of!that!certain!good!! § E.g.!–!goods!with!minor!defects!are!sold!as!‘factory!seconds’!! § Different!acceptable!quality!for!factory!second!and!for!an!undamaged!item! • Requirement!of!durability!is!flexible! § Depends!on!what!good!is!used!for!! § Doesn’t!mean!goods!are!required!to!be!indestructible!! § Don’t!fail!requirement!if!damaged!by!abnormal!uses!or!accidents!! • Consumer!may!examine!goods!prior!to!purchase!! § Should!have!known!about!any!defect!assessed!in!examination!!

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§ Supplier!isn’t!required!to!correct!any!defects!that!examination!revealed!! • S!54! ! Fitness!for!a!specific!purpose!made!know!to!supplier!! • Goods!usually!have!one!purpose!or!use,!asking!for!those!goods!indicates!purpose!to!supplier! § E.g.!–!hot!water!bottle!has!one!common!use!! § Is!required!to!be!fit!for!purpose!! • When!more!than!one!purpose,!should!be!fit!each!of!them!! • Goods!supplied!must!be!fit!for!purpose!if:! § Consumer!can!make!specific!purpose!known!to!supplier,!manufacturer!or!sales!person! § Supplier!tells!consumer!product!is!fit!for!specific!purpose!(whether!or!not!consumer!raised!matter)!! • Specific!purpose!doesn’t!apply!if:! § Consumer!didn’t!rely!on!skill/judgement!of!person!they!communicate!their!purpose!to! § Unreasonable!for!consumer!to!rely!on!that!person’s!skill/judgement!! • Doesn’t!apply!to!goods!sold!at!auction!! • S!55!of!ACL! ! Correspondence!with!description!! • Goods!must!match!description!provided!by!supplier!! • Applies!to:!type,!colour,!size,!grade!! • Courts!principles!in!relation!to!supplies!by!description!! § May!still!correspondence!with!description!even!if!tainted!or!unsaleable!–!unless!to!the!extent!they! are!no!longer!same!item!! § May!include!requirement!of!how!goods!are!to!be!packaged!! § May!consists!of!brand!name!! • Doesn’t!apply!to!goods!sold!at!auction!! • S!56!of!ACL!! ! Correspondence!with!any!sample!of!demonstration!model!! • Goods!purchased!in!reference!to!sample!or!demonstration!model!must!match!goods!supplied!! • Consumer!may!have!difficulty!in!establishing!difference!between!goods!supplied!and!sample!! § Consumer!must!be!given!opportunity!to!compare!models!! § Samples!should!be!kept!for!comparison!! § Doesn’t!apply!to!demonstration!model!as!supplier!are!not!expected!to!keep!them!! • Goods!supplied!must!not!have!defects!that!weren’t!present!on!sample!or!demonstration!model!! • ^would!make!goods!of!unacceptable!quality!! • Must!correspond!to!description!and!sample/demonstration!model!! • Doesn’t!apply!to!goods!sold!at!auction!! • S!57!of!ACL!! ! Availability!of!spare!party!and!repair!facilities!! • Manufacture!of!goods!must!take!‘reasonable!action’!to!ensure!spare!parts!and!repair!facilities!are:! § Reasonably!available!! § For!a!reasonable!period!after!good!is!sold!! § Usually!for!expensive!items:!e.g.!appliances!! • ‘Reasonableness’!varies!according!to!circumstance!and!type!of!product! • E.g.!–!reasonable!for!car!parts!to!available!for!many!years!! • Not!reasonable!to!expect!parts!available!for!cheap!gadget!! • Exception:!manufacturer!notified!consumer!that!spare!parts!or!repair!facilities!not!available!for!all!goods! or!not!available!after!a!particular!time!! • Time!limit!is!advisable!as!it!makes!things!clear!for!consumers!! • Doesn’t!apply!to!goods!sold!at!auction!! • S!58!of!ACL!! ! ! !

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Compliance!with!any!express!warranties!! • Suppliers!and!manufacturers!must!comply!with!any!express!warranties!provided!to!consumers!! • Express!warranty!=!‘an!undertaking,!assertion!or!representation!about:! § Quality,!state,!condition,!performance!or!characteristics!of!goods!! § Provision!of!services!that!might!be!required!for!goods!! § Supply!of!parts!! § Future!availability!of!identical!goods!or!other!goods!in!a!set!that!goods!were!purchased!from! • Connected!with!supply!or!promotion!of!goods!! • Take!care!in!accuracy!of!presenting!statements!whether!verbal,!written!or!permanent!form! • Cannot!replace!other!guarantees,!limit!or!exclude!operation!! • Doesn’t!apply!to!goods!sold!at!auction!! • S!59!of!ACL!! ! Topic&3:&Consumer&guarantees&–&Services&! Introduction!! • Under!consumer!guarantees!services!must!be:! § Performed!(rendered)!with!due!care!and!skill!! § Reasonably!fit!for!purpose!or!expected!to!achieve!specific!result!that!consumer!has!made!know!to! supplier!! § Supplied!within!reasonable!time!! • Service!guarantees!don’t!apply!to!contracts!for!the!transport!or!storage!of:!! § Business!! § Trade! § Professional!! § Occupational!types!of!goods! • Transport!or!storage!for!commercial!types!of!goods!aren’t!covered!by!guarantees!! • Domestic!goods!are!covered!! • Doesn’t!apply!to!insurance!contracts! ! Due!care!and!skill!! • Service!providers!must!have!acceptable!level!of!skill!in!relevant!area!! • Flexibility!–!ACL!doesn’t!specify!all!provides!must!have!qualifications!! • Acceptable!level!of!skill!varies!between!trade!and!services!! • Some!industries!other!legislation!requires!formal!trade!qualifications!! § ACL!doesn’t!remove!any!of!these!requirements!! • E.g.!lack!of!due!care/skill:! § Installation!of!burglar!alarm!that!is!easily!bypassed!by!burglars!! § Airline!operators!losing/damaging!passenger’s!luggage!! • Protects!consumers!against!damage!done!to!property!in!course!of!providing!service!! • S!60!of!ACL! ! Purpose!or!desired!results! • ACL!makes!distinction!between!purpose!of!service!and!result!consumer!wishes!to!gain!from!service!! • Guarantee!as!to!purpose!or!desired!results!=!! § Consumer!has!communicated!wish!to!supplier! § Service!must!comply!with!requirements!! • Example:! § Consumer!contract!with!electrician!to!install!lighting!in!an!attic!! § Purpose!=!consumer!tells!electrician!the!lights!are!so!the!room!can!be!used!as!a!craft!room!! § Desired!result!=!consumer!tell!electrician!lights!need!to!be!bright!enough!to!do!fine!needlework!! • Statement!of!desired!result!is!more!specific!! • Purpose!usually!open!to!interpretation!! • Consumer!lets!supplier!know!purpose!=!service!will!be!reasonably!fit!for!that!purpose!! • Consumer!lets!supplier!know!result!=!service!will!be!of!such!a!nature,!quality,!state!or!condition!that! services!are!reasonably!expected!to!achieve!! • Consumer!may!make!supplier!known!through!expressly!or!implication!!

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• Guarantee!not!applicable!if:! § Consumer!didn’t!rely!on!supplier’s!skill!or!judgement!! § Not!reasonable!for!consumer!to!rely!on!supplier’s!skill!or!judgement!! • Exempted:!professional!engineer!or!qualified!architects!! ! Reasonable!time! • Contracts!usually!specify!time!services!are!to!be!provided!! • If!contract!doesn’t!state:!reasonable!time!is!applied!! • Reasonable!time!varies!accordingly!to!service!! • Businesses!should!specify!timeframe!services!to!be!provided!! • S!62!! ! Topic&4:&Consumer&remedies&& Introduction!! • If!supplier!fails!to!comply!with!consumer!guarantees;!consumer!will!then!have!remedy!! • Remedies!in!relation!to!goods:! § Repair!of!goods!! § Replacement!of!goods!! § Payment!of!costs!of!repair!or!replacement!of!goods!! § Refunds!of!costs!of!goods!! § Cure!of!defect!in!title!to!goods!! • Remedies!in!relation!to!services:! § Remedial!services!! § Supply!of!services!again!! § Payment!of!costs!of!having!services!supplied!again!! § Refund! • Remedies!available!depends!on!circumstances!of!supply!and!seriousness!of!failure!to!comply!! • Must!examine:!! § Whether!liability!was!limited!by!supplier!! § Seriousness!of!failure!to!comply!with!consumer!guarantees!! ! Limitation!of!liability!by!supplier!! • Legal!for!supplier!to!limit!consumer!to!specific!remedies!! • Limitation!of!liability!of!supplier!=!contract!for!supply!of!goods/services!may!contain!term!restricting! consumer!from!particular!remedy...