Tutorial work - Australian Consumer Law scenarios PDF

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Australian Consumer Law scenarios...

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Exercise 1 Issue: Whether Tom is entitled to compensation for the non-functioning DVD player. Law: Australian Consumer Laws (the ACLs) S64 – exclusion clauses in agreements, such as liability exclusion clauses, are invalid. S54 – guarantee that goods are of acceptable quality. “A failure to comply with the consumer guarantee of acceptable quality is established by showing that the product has failed to last as long as a consumer would reasonably expect” S260 – definition of “major failure” of the goods and the ‘reasonable consumer’ test. S262 –If sections 54 is breached and definition of “major failure” in section 260 is met, remedies available to consumer include rejection of goods, compensation for reduction of value in goods as a result of noncompliance with the guarantee (section 259(3)(b)), or recover damages caused by the failure to comply with the guarantee (section 259(4)).

Application: While the terms of the contract of sale stated that Tom only has a 12 month warranty, this term has no legal effect under Section 64 of the ACLs. Therefore the court is likely to hold that the 12 month warranty term of the contract does not restrict him from pursuing a claim under the ACLs. As per section 54(2) of the ACLs, the goods are of acceptable quality if they are – among other things – durable. In addition, section 54(3) of the ACLs outlines various factors regarding the state and condition of the goods in determining what acceptable quality is. In this case, these factors are:  

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The nature of the goods are that the DVD player is an electronic device that is able to play DVD’s. It is important that the DVD player is able to play DVD’s; Tom purchased a top model DVD player and paid a premium price for it ($250). It can be reasonably expected therefore that the quality be higher than or similar to other DVD players of its kind; Assumption that statements on the packaging to the effect that the DVD player’s main function was playing DVD’s; and, The supplier made a statement in the contract of sale to the effect that they did not make any representation as to the quality of the good prior to being purchased.

A reasonable consumer is likely to reasonably expect that a top of the range model DVD player bought new would last for many years, not just for 13 months. Based on the expectation of durability and taking into consideration the factors outlined above that relate to Section 54(3), it could be argued that there was a reasonable expectation on behalf of the consumer that the DVD player would have lasted longer than 13 months before becoming non-functional. Pursuant to section 54 of the ACL’s, it is likely to be established that a failure of the consumer guarantee relating to acceptable quality occurred. While the defendant (the supplier of the good) made no representation of the quality of the DVD player, this is immaterial with the reasonable expectations of the durability of the DVD player.

Therefore the court is unlikely to give weight to this factor when balanced against the other factors relevant to section 54(3). While the defendant included terms in the contract of sale limiting its liability to the product, section 64 of the ACL’s negates these terms and the relevant provisions of the ACL’s have effect. Applying the ‘reasonable consumer test’ outlined in section 260(a), a reasonable consumer would consider that a new DVD player can play DVD’s without fault for several years. Moreover, it could be said that if a consumer knew a similarly priced DVD player would experience problems with it after 13 months they are more likely to not buy it and instead choose another brand that is expected to last longer. As the DVD player in this scenario became non-functional after 13 months when there is an expectation that it would last for several years, the court is likely to conclude that this satisfies the definition of “major failure” in section 260 of the ACLs. When this point of information is combined with factors listed in section 54(2) and (3), section 262 relating to remedies available to the consumer comes into force. Under section 262(1), a possible remedy available to Tom includes the refund or replacement of the goods if the rejection period for the goods has not ended. Considering the elements listed in this section, including that the internal workings of the player are contained within a box, a reasonable consumer is unlikely to be aware of possible defects with the internals of such a product that could manifest into obvious issues, it is reasonable to argue that the rejection period in this case has not ended. Conclusion: The court is likely to provide the defendant with an order to award Tom a refund of the purchase price of the DVD player in the amount of $250 and court costs.

Exercise 2: Issue: Whether Mary has been the subject of misleading conduct by the defendant. Law: Section 18 of the Competition and Consumer Act 2010 (Cth) – ‘a person must not, in trade or commerce, engage in misleading or deceptive conduct, or conduct that is likely to mislead or deceive’. Application: In this scenario, Tom and Mary completed their contracts of sale in two different weeks. While Mary’s perception of the offer changed after she was advised that Tom secured a better offer, what is relevant then is the offer that was offered to Mary. The offer Mary was given is one which she accepted. Businesses have the ability to change their offers prior to acceptance being made. While the defendant confirmed that the advertising campaign was made in error, under section 18 of the Competition and Consumer Act 2010 (Cth), it is unlikely that the court will find that the defendant engaged in misleading or deceptive conduct. Conclusion: Mary is unlikely to have a strong case to pursue....