4.3 Key legal requirements — trade practices legislation

Question 1

What is a business owner responsible for?

Answer 1

A business owner is legally responsible for implementing health and safety practices in the workplace when they establish a business.

Question 2

What is the legislation that requires business owners to follow in regards to their business?

Answer 2

Work Health and Safety Act 2011 (Cwlth)

Question 3

How does the Work Health and Safety Act 2011 (Cwlth) ensure that occupational health and safety laws are consistent across all states and territories in Australia?

Answer 3

Under the Work Health and Safety Act 2011 (Cwlth), a business owner must ensure the health and safety of workers while they are at work in the business, so far as is reasonably practicable. Each state and territory in Australia is expected to pass its own laws consistent with the Commonwealth Act so that occupational health and safety laws are uniform across all states.

Question 4

How does the Occupational Health and Safety Act 2004 (Vic) address the health and safety of employees and other persons at work in Victoria, and what mechanisms does it provide for the involvement of stakeholders in the formulation and implementation of health, safety, and welfare standards?

there are 4

Answer 4

In Victoria, the Occupational Health and Safety Act 2004 (Vic) is the principal legislation covering occupational health and safety. This Act:

-secures the health, safety and welfare of employees and other persons at work

-eliminates risks to health, safety or welfare of employees and other persons at work

-ensures that the health and safety of other members of the public are not placed at risk by the conduct of undertakings by employers and self-employed persons

-provides for the involvement of employees, employers and organizations representing those persons in the formulation and implementation of health, safety and welfare standards.

Question 5

What does WorkSafe Victoria do?

Answer 5

a government agency that aims to reduce workplace injuries and support injured workers.

In Victoria, work health and safety legislation is administered by WorkSafe Victoria.

WorkSafe has the power to inspect work sites and prosecute employers for any breaches of health and safety requirements.

Question 6

What types of coverage does WorkSafe’s WorkCover insurance provide for Victorian employers if their workers are injured or become ill due to their work?

there are 4

Answer 6

WorkSafe provides WorkCover insurance, which is a compulsory expense for Victorian employers. It provides employers with insurance cover if workers are injured or become ill as a result of their work.

The insurance may cover:

-replacement of lost income

-medical and rehabilitation treatment costs

-legal costs

-lump sum compensation in the event of a serious injury.

Question 7

What is code of practice?

Answer 7

a written set of guidelines that are intended to help businesses achieve the standards set by the government (e.g. in dealing fairly with customers)

Question 8

Why is it important for businesses to familiarize themselves with their industry’s code of practice and relevant state or federal laws, and what are the potential consequences of failing to comply with these regulations?

Answer 8

each major industry has its own code of practice, which provides businesses with guidelines for dealing with customers. A business must familiarise itself with its industry’s code of practice as well as any state or federal laws that may affect its day-to-day operations. A failure to abide by these laws can result in heavy fines for the business.

Question 9

What legislation regulates with business behaviour in Australia and how does it regulate business behavior in Australia, and what aspects of business operations does it cover?

Answer 9

The Competition and Consumer Act 2010 (Cwlth).

The Competition and Consumer Act 2010 (Cwlth) is a federal law that specifies what business behaviour is acceptable in relation to a wide range of issues, from product safety and pricing to the way in which a business competes in the marketplace.

Question 10

What is the Australian Competition and Consumer Commission (ACCC)?

Answer 10

a government body that has the role of enforcing the Competition and Consumer Act 2010 (Cwlth) and a range of additional legislation promoting competition and fair trading, and regulating national infrastructure.

Australian courts and tribunals can enforce the Competition and Consumer Act and the Australian Consumer Law.

Question 11

What is the Consumer Affairs Victoria?

Answer 11

Victoria’s government body established to regulate the marketplace, helping ensure fairness for businesses and consumers

Question 12

How is the Australian Consumer Law implemented in Victoria, and which organization is responsible for its administration?

Answer 12

In Victoria, the Australian Consumer Law is enacted through the Australian Consumer Law and Fair Trading Act 2012 (Vic). This legislation is administered by Consumer Affairs Victoria.

Question 13

What does the Australian Consumer Law do?

Answer 13

The Australian Consumer Law is set out in Schedule 2 of the Competition and Consumer Act and covers issues such as misleading or deceptive conduct, unfair practices, conditions and warranties.

Question 14

How does the Competition and Consumer Act 2010 (Cwlth) address anti-competitive practices by businesses?

Answer 14

The Competition and Consumer Act 2010 (Cwlth) either prohibits or places strict controls on activities run by businesses

Question 15

What are some of these practices?
(hint: regarding anti competitive practices)

Answer 15

1, Cartels (ss.45AA–45AU).
2, Misuse of market power (s.46).
3, Exclusive dealing (s.47).
4, Resale price maintenance (s.48).
5, Mergers and acquisitions (s.50).

Question 16

What are cartels?

Answer 16

Cartels (ss.45AA–45AU). A cartel exists if two or more businesses that would normally be in competition with each other agree to act together. The Act prohibits businesses from making agreements with competitors to fix prices, rig bids, share markets or restrict outputs. For example, it is illegal for businesses to communicate before lodging bids and agree among themselves who will win and at what price (rigging bids). It is illegal for two businesses in competition with each other to agree to set identical prices for their products (price fixing).

Question 17

What is the misuse of market power?

Answer 17

Misuse of market power (s.46). The Act prohibits businesses with a substantial degree of market power from engaging in conduct that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market. For example, a business should not take advantage of its power to damage or get rid of a competitor, prevent anyone from competing in a market or prevent another competitor from entering a market.

Question 18

Explain exclusive dealing

Answer 18

Exclusive dealing (s.47). This occurs when one business trading with another imposes restrictions on the other’s freedom to deal with other businesses. An example is when a hair products supplier will only sell to a hairdresser on the condition that the hairdresser does not purchase hair products from a competitor of that supplier. This can be legal in some circumstances if it is not seen to lessen competition in the market for the products in question. For example, McDonald’s sells Coke products but not Pepsi. Businesses that wish to enter such an arrangement, and believe it may be legal, must notify the ACCC of the agreement. The ACCC will then examine the details before either approving or disallowing the arrangement.

Question 19

What is resale price maintenance?

Answer 19

Resale price maintenance (s.48). This occurs if a supplier sets the prices at which retailers will sell their products. Suppliers can recommend a retail price for the sale of their goods, but it is illegal to attempt to force a retailer to sell at that price. It is also illegal to set a minimum price that sellers must not sell below, and to force a retailer not to discount goods. On the other hand, it is quite legal for a supplier to insist on a maximum price, as this can discourage a retailer who has a monopoly in a particular location from overcharging customers.

Question 20

Elaborate on mergers and acquisitions

Answer 20

Mergers and acquisitions (s.50). The Act prohibits any merger or acquisition that would have the effect, or be likely to have the effect, of competition being substantially lessened. Mergers between one or more businesses and acquisitions can be important for the efficient functioning of the economy, as they can allow businesses to achieve efficiencies and spread their risk. Therefore, a merger or acquisition may be permitted if it does not substantially limit competition. Planned mergers and acquisitions must be notified to the ACCC, which will determine if they can proceed.

Question 21

What is a merger?

Answer 21

the joining together of two or more businesses to form one business

Question 22

What is an acquisition?

Answer 22

 when one business takes over another business

Question 23

What are some of the undesirable and misleading practices that are illegal under the Competition and Consumer Act as per the Australian Consumer Law?

Answer 23

-Misleading or deceptive conduct.
-Unconscionable conduct.
-Unfair contract terms.
- False or misleading representations regarding goods or services.
-Offering gifts and prizes in connection with the supply of goods and services and then not providing them.
- Bait advertising.
- Pyramid schemes.
-Referral selling.

Question 24

What is misleading conduct?

Answer 24

A business must not engage in conduct that is misleading or deceptive or that is likely to mislead or deceive. For example, advertisements must avoid words that are deceptive or make false claims or impressions about a product. Businesses must reveal full information about prices (especially in ‘buy one get one free’ situations) and not mislead customers about the origin of products (e.g. using a ‘Made in Australia’ logo when the product was manufactured overseas).

Question 25

What is Unconscionable conduct?

Answer 25

This is conduct in business transactions that is unfair or unreasonable and goes against good conscience. It is illegal for businesses to engage in unconscionable conduct when dealing with other businesses or with customers. Our contemporary case study Bupa provides an example of how a business can engage in unconscionable conduct.

Question 26

Explain Unfair contract terms

Answer 26

A contract is a legally binding agreement between two or more parties. Unfortunately, some businesses draw up unfair contracts that are detrimental to the consumer. An example is if a contract allows a business to vary prices without notifying the consumer. Contracts must be clearly worded, legible and available to all parties.

Question 27

What is False or misleading representations regarding goods or services. ?

Answer 27

A false or misleading representation is a statement that is untrue, such as claiming that a motor vehicle has a certain fuel consumption performance when it does not.

Question 28

What is Bait advertising?

Answer 28

This involves advertising products at reduced prices without a reasonable supply for customers to buy. A business attempts to attract customers by advertising some products at lower prices. When the advertised products quickly run out, customers are directed (or switched) to higher priced items.

Question 29

Explain Pyramid schemes

Answer 29

Participation in pyramid schemes is illegal. A pyramid scheme involves a person or business making money by recruiting people, rather than providing a genuine good or service. Promoters at the top of the pyramid profit from having people join their ‘money making’ scheme. New members are promised payments for recruiting other investors or new participants. Those at the top pocket the fees and other payments made under them. Most participants, however, never make money; most lose all the money they paid to participate.

Question 30

What is Referral selling?

Answer 30

This occurs when a business offers a customer benefits, such as a special deal or special price, if the customer refers other potential customers to the seller. This is illegal because it may encourage consumers to spend more money than they planned with the expectation that they may recoup some if they encourage others to buy.

Question 31

What is Unsolicited consumer agreements?

Answer 31

Unsolicited agreements refer to when a business contacts a consumer without the consumer having invited the contact. It happens most commonly through telephone and door-to-door sales. This practice is legal, but only between the hours of 9 am and 6 pm on weekdays, and 9 am and 5 pm on Saturdays. It is not permitted on Sundays or public holidays. A further limitation is that salespeople must show identity cards, must leave immediately if requested and must refrain from further contact for at least 30 days.

Question 32

What is Lay-by agreements?

Answer 32

These must be in writing and be transparent (expressed in plain language, legible and presented clearly). The agreement must specify all terms and conditions, including any termination charge.

Question 33

Explain ‘Proof of transaction’ and itemised bills.

Answer 33

A retailer must provide an itemised bill on request; a retailer must provide a receipt for all transactions over $75 and, on request, for transactions under $75.

Question 34

What are some lawful (legal) sales practices under the Competition and Consumer Act?

Answer 34

1. ‘Proof of transaction’ and itemised bills.
2. Lay-by agreements
3. Unsolicited consumer agreements

Question 35

What is unsolicited consumer agreements?

Answer 35

Unsolicited agreements refer to when a business contacts a consumer without the consumer having invited the contact. It happens most commonly through telephone and door-to-door sales. This practice is legal, but only between the hours of 9 am and 6 pm on weekdays, and 9 am and 5 pm on Saturdays. It is not permitted on Sundays or public holidays. A further limitation is that salespeople must show identity cards, must leave immediately if requested and must refrain from further contact for at least 30 days.

Question 36

What is lay-by agreements?

Answer 36

These must be in writing and be transparent (expressed in plain language, legible and presented clearly). The agreement must specify all terms and conditions, including any termination charge.

Question 37

What is ‘proof of transaction’ and itemised bills?

Answer 37

A retailer must provide an itemised bill on request; a retailer must provide a receipt for all transactions over $75 and, on request, for transactions under $75.

Question 38

What protections does the Australian Consumer Law provide for consumers regarding guarantees on goods and services?

Answer 38

The Australian Consumer Law sets out protections for consumers who buy goods and services from businesses. Consumer guarantees are a comprehensive set of rights and obligations in relation to the supply of goods and services to consumers. All suppliers and manufacturers automatically provide guarantees on the products they sell to consumers. These exist regardless of any express warranty provided by the manufacturer. A business cannot eliminate consumer rights under the consumer guarantees, but they can extend and improve these basic rights.

Question 39

What are some of the guaranteed rights provided to consumers under the Australian Consumer Law, and how do these rights ensure the quality and suitability of goods and services?

Answer 39

Australian Consumer Law provides the following guaranteed rights:

• The consumer will gain clear legal title to goods; that is, that the seller actually owns the goods being sold, and can legally transfer ownership to the buyer.
  -Goods must correspond to any sample, demonstration model or description provided to the buyer.
  -Goods must be of acceptable quality; that is, they must be safe, durable, free from defects, acceptable in appearance and finish, and do all the things that the goods are ordinarily used for. If a consumer purchased a sandwich that contained human hair or was past its use-by date, the sandwich would not be considered of acceptable quality.
  -Products must be fit for a particular purpose. Fitness of purpose means the product will perform as the instructions or advertisement implies. A pair of running shorts being sold as football shorts, for example, would be a breach of a condition to supply goods for the purpose for which the seller knew they were intended.
  -Repairs and spare parts are reasonably available.
  -Services are carried out with reasonable care and skill.
  -Services are completed within a reasonable time.

Question 40

What remedies are available to consumers under the Australian Consumer Law if a purchased good or service fails to meet a consumer guarantee?

Answer 40

If a good or service that a customer purchases fails to meet a consumer guarantee, they have the right to ask for remedy through a repair, replacement or refund under the Australian Consumer Law.